HOFO #22/26
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RECEIVED IN REGISTRY NO. 51.
27 FEB 1981
DESK OFFICER INDEX
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FM B T C HONG KONG 22609452 |FEB 81
TO PRIORITY DOT
REGISTRY
Action Taked
AN
TELEGRAM NUMBER CREDA 69 OF 26 FEBRUARY
YOUR CREDA 28: MASS TRANSIT RAILWAY
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TONY SANSOME, CHAIRMAN OF METRO-CAMMELL, AND A REPRESENTATIVE OF WESTINGHACUSE BRAKE AND SIGNAL) WHO DID NOT CALL AT THE OFFICE) HAVE RECENTLY BEEN IN HONG KONG DISCUSSING WITH NORMAN THOMPSON, CHAIRMAN OF THE MASS TRANSIT RAILWAY CORPORATION (MTRC), THE POSSIBILITY OF NEGOTIATED CONTRACTS FOR THE SUPPLY OF RAILCARS AND SIGNALLING EQUIPMENT FOR THE ISLAND LINE EXTENSION.
2. AS USUAL TONY SANCOME HAS KEPT ME FULLY INFORMED. IT APPEARS THAT THE MTRC PREPARED THEIR BUDGET FOR THE ISLAND LINE EXTENSION ON THE ASSUMPTION THAT UK PRICES FOR E AND M EQUIPMENT WOULD BE APPROXIMATELY 50 PER CENT ABOVE THOSE QUOTED IN DECEMBER 1977 FOR THE TSUEN WAN EXTENSION. SANSOME TELLS ME IN CONFIDENCE THAT WITHOUT ANY INCREASE IN PROFIT FOR METRO-CAMMELL, UK INFLATION RATES MEAN A 55 PER CENT INCREASE ON DECEMBER 1977 PRICES TO WHICH MUST BE ADDED A FURTHER 38 PER CENT TO TAKE ACCOUNT OF THE DECLINE OF THE HONG KONG DOLLAR AGAINST THE POUND STERLING. THUS THE MTRC ARE FACED WITH A BARGAINING FIGURE OF AT LEAST 90 PER CENT ABOVE EXISTING PRICES FOR E AND M EQUIPMENT AND ( AS THOMPSON HAS SUBSEQUENTLY TOLD ME IN CONFIDENCE) ABOUT 30 PER CENT ABOVE THEIR BUDGET. 3. THUS, UNLESS MEANS CAN BE FOUND TO ASSIST METRO-CAMMELL AND WESTINGHOUSE IN THE PRICING OF THEIR OPENING BIDS, NORMAN THOMPSON WILL FIND IT DIFFICULT TO PERSUADE HIS BOARD TO PROCEED ON A NEGOTIATED BASIS RATHER THAN GO TO INTERNATIONAL TENDER, I HOPE, THEREFORE, THAT MR PARKINSON, MINISTER OF TRADE, WHO IS DUE TO DISCUSS FUTURE PROSPECTS FOR THE ISLAND LINE WITHMR THOMPSON (OR IN HIS ABSENCE MR ERIC BLACK) ON MARCH 23, WILL BE BRIEFED TO OFFER ALL POSSIBLE ASSISTANCE TO ENSURE BRITISH COMPETITIVENESS. IN THE MEANTIME YOU MAY LIME TO NOTE THAT A COMPARISON OF THE CURRENCIES OF MAJOR E AND M COMPETITORS BETWEEN END DECEMBER 1977 AND MID- FEBRUARY 1981 AGAINST THE HONG KONG DOLLAR SHOWS THAT THE POUND STERLING INCEASED IN VALUE BY 38.2 PER CENT, THE DEUTSHCE MARK BY 13.9 PER CENT THE YEN BY 33.5 PER CENT, THE AUSTRALIAN
DOLLAR BY 15.5 PER CENT, THE US DOLLARS BY 14.5 PER CENT AND THE
CANADIAN DOLLAR BY ONLY 4.7 PER CENT.
4. CAN YOU PERHAPS LET ME KNOW HOW MANY UK CIVIL ENGINEERING
CONTRACTORS HAVE REGISTERED INTEREST IN THE ISLAND LINE. AS YOU
WILL HAVE SEEN FROM OUR EISER 6 OF FEBRUARY 23 THE CLOSING DATE
FOR PRE-QUALIFICATION IS MARCH 15
MARCH
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