TNAG-1060-FCO40-1310-Mass-Transit-Railway-in-Hong-Kong-1981 — Page 172

P HONG KONG

GPS

400

HKK 173

RECEIVED IN REGISTRY 20, 51.

1 1 MAR 1981

DESK OFFICER

INDEX

PA

No

MS1

REGISTRY/ Action Taken

RESTRICTED

FROM DOT 0515342, MAR 81.

TO PRIORITY HONG KONG

TELEGRAM NUMBER CREDA 86 OF 5 MARCH

FROM DURIE PEP

YOUR CREDA 69 MASS TRANSIT RAILWAY.

Mi sente

2013

O DISTRIBUTION

дот

HKGD

TRED

seel 14

13

12+

I HAD DISCUSSED THE SITUATION ON THE E AND M CONTRACTS BRIEFLY WITH BOTH METCAM AND WESTINGHOUSE BEFORE RECEIVING YOUR TUR. ALTHOUGH THERE ARE A NUMBER OF DIFFERENCES, THE TWO VERSIONS ARE

SIMILAR.

2. ON PRICE HOWEVER, SANSOME SAID THAT METCAM'S FIGURES SHOWED THAT THEIR PRICES WOULD BE ABOUT 50 PER CENT HIGHER AS A RESULT OF INFLATION AND 30 PER CENT HIGHER AS THE RESULT OF THE EXCHANGE RATE, AND THAT THIS WAS 30 PER CENT ABOVE THE MTRC'S EXPECTATIONS. WESTINGHOUSE'S FIGURES WERE SIMILAR. BOTH METCAM AND WESTINGHOUSE FELT, HOWEVER THAT PROVIDED HONG KONG DOLLAR FINANCE COULD BE MADE AVAILABLE, THEY COULD GET TO THE NEGOTIATING TABLE. AS YOU POINT OUT OTHER COUNTRIES HAVE ALSO SUFFERED FROM CURRENCY APPRECIATION

AND THE PROBLEM IS THEREFORE NOT SOLELY THE UK'S.

3. SANSOME ALSO MADE THE POINT THAT THEIR CURRENT POSITION WOULD EE WORTH ABOUT 10 PER CENT IN PRICE TERMS COMPARED TO ANY COMPETITOR. THE QUESTION WE WILL HAVE TO EXPLORE IS WHETHER (PROVIDED THAT THESE CONTRACTS CAN BE FINANCED IN HONG KONG DOLLARS) THIS WILL BE SUFFICIENT OR WHETHER OTHER GOVERNMENT ASSISTANCE

WILL BE NECESSARY TO HELP REDUCE THE PRICE GAP.

4. THUS ON E AND M, OUR UNDERSTANDING IS THAT THERE IS STILL SOME PROSPECT FOR NEGOTIATED CONTRACTS FOR METCAM AND WESTINGHOUSE BUT NOT FOR OTHERS. SINCE INITIALLY THE MTRC ONLY REQUIRES TRAILER CARS, GEC TRACTION ARE NOT INVOLVED, AND, ACCORDING TO SANSOME, THOMPSON WILL DEFINITELY GO OUT TO TENDER FOR THE OTHERS. I THINK HOWEVER, THAT THE LAZARDS FIGURES, GIVEN IN YOUR EXCED 8, ARE LOW FOR METCAM AND WESTINGHOUSE.

SOUNDC

COM CACTCAMY

.