METRO CAM AND HONG KONG
COMMERCIAL-IN-CONFIDENCE
NOTE OF A MEETING AT 1 VICTORIA STREET ON 3 NOVEMBER 197
for Thompson,
Hkk 173/2
INDOXY
COT NO. 51
978
(34)
RECK
TRY
Action Taken
Those present:-
MR WILKS DOT
MR ROYCE ED, DOT
MR DRING CRE, DOT
MR BURLEIGH OPG, DoT
MR THOMPSON MR SIMPSON
FCO
IDU,
Do I
MR OLDHAM
MR CHARIK.
IIC, DOI M, DoI
1. Mr Wilks opened the meeting by saying that Metro Cammell were worried about their competitive position in regard to two contracts in Hong Kong the main Transit Railway stage II and the Kowloon and Canton Railway.
2. The Kowloon and Canton Railway was of immediate concern. Met Cam's bid for the supply of 135 cars was £52m. They understood that a German Swiss consortium had submitted a bid of £42m. The purchasers the Hong Kong Government were expected · to take a decision very shortly and it had been indicated to Met Cam that they had approximately oue week to think about any adjustment to their bid price if they wished to remain in the race.
3. Mr John Gardiner of the Laird Group had contacted the Department of Trade to check whether there was any way in which HMG could help them. The Kowloon/Canton Railway was regarded as an important contract as it was hoped that the Hong Kong business would provide an entree to further business both in regard to the Chinese section of the Railway and also other railway work in mainland China. Mr Gardiner had said that Met Cam and their subcontractors were giving urgent consideration to how their bid might be reduced but it seemed unlikely that they would be able to reduce it by the degree necessary to compete effectively with the German Swiss consortium. Mr Gardiner had added that £8.8m of their bid price was a straight allowance for inflation under the ECGD Cost Escalation Scheme and there seemed little that could be done about this.
4. Mr Wilks said that the purpose of the meeting was to establish whether there was any way by which HMG could help the firm at short notice. During discussion it was pointed out that Met Cam did have a domestic expansion programme planned but that this fresh investment might not be viable if the company was not successful in pursuit of both the Kowloon/Canton and Mass Transit contracts. It was therefore not so much a question of jobs being threatened by the loss of these contracts but rather that planned increases in their labour force would be put at risk.
5. Mr Simpson said that no direct price subsidy could be given through the Industry Act but that the Department of Industry would be pleased to look at any potential Industry Act or Science and Technology Act projects from Met Cam itself, the Laird Group as a whole, or subøcontractors, to see if these could be assisted within the criteria of specific assistance schemes. The first essential was for projects to be put to the Department. While not stone would be left unturned the prospects of any indications being possible in the time available were not encouraging.
6. It was also point out that the prospects of long term business in China itself were more likely tobe GEC's field rather than Met Cam's since the Chinese were known to be able to manufacture their own rolling stock.
7.
The position of Transmark as consultants to the Hong Kong Government was also considered but it was agreed that they would have to be seen to be acting in a totally, neutral manner in order to preserve their own professional integrity. Any approach to them on Met Cam's behalf would have to be carefully considered but it was possible that they might be persuaded to delay their submissions to the
Hong Kong Tender Board.