CODE 18-77
Reference
Lazards, on behalf of Metro-Cammell, have a representative in Hong Kong this reek, endeavouring to negotiate a special deal either with the Hong Kong & Shanghai Banking Corporation or direct with the Hong Kong government. The outcome of his efforts will be available to us next week. The contract price demanded by the MTR authority contains no profit margin for Metro-Cammell, and it seems likely either that we shall be asked for assistance towards meeting the cost of the special cover which Lazards have been able to negotiate, or to enter into some form of special arrangement to enable the company to exclude the exchange risk involved in Hong Kong pricing.
iii. Metro-Cammell are the sole suppliers of undergroună
railway cars to London Transport. London Transport's forward order requirements are already known and there is, with one minor exception, a purchasing gap in their requirements extending from the end of 1982 to 1990. Metro-Cammell have made representations to be given a share of British Rails requirements for Diesel Electric Multiple Units (DEMU's) to fill the LT order gap.
Enquiries of the Department of Transport yesterday
(Fr Staveley) have revealed that the department is still waiting for the British Railways Board to decide upon the required replacement programme for DEMU's. I understand that Mr Fowler has publicly, stated that he wishes to see private industry given the chance to bid for BR's DEMU requirements, but I am also advised that the Minister would not normally seek to influence the BRB on the placing of contracts.
4.
Although discussions on design and other aspects have taken place with Ketro-Cammell no commitment to place business with them has been made.
Metro-Cammell are extremely concerned about their ability to survive through the 1980s without BR business. Current weekly output of railway cars is approximately 8 employing a workforce of some 1,600.
5. Even if both the KCR and the Island Line contracts were secured output in 1983/4 would fall to 4 cars per week rendering the company unprofitable with little prospect of additional business if BR does not place orders with them.
The company
have stated that without BR business they can not see their way to staying in production and if an assurance is not forthcoming that they will have the opportunity to quote for BR work they question the viability of seeking the KCR and Island Line contracts on an unassisted basis or even at all.
STRICTLY COMMERCIAL IN CONFIDENCE
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