Alstom Wins NIS 1.5 Billion Israel Railways Maintenance Contract

Upkeep on 30% of rail cars to be outsourced to French company in efficiency move.

French company Alstom has won an outsourcing contract to handle the maintenance for 30% of Israel Railways train cars in a tender lasting 15 years and worth NIS 1.5 billion.

In the decision announced Tuesday, Alstom beat out Canadian and Spanish competitors Bombardier and Vossloh España during the year-long tender for the contract, after the German company Siemens unexpectedly withdrew from consideration. Alstom has served as a supplier to Israel Railways in the past and provides the cars used by the Jerusalem light rail.

The outsourcing of maintenance work of Israel Railways’ old railcars, which have relatively high maintenance costs, was agreed on in collective bargaining with railway employees in 2012. Some 144 railcars of the Bombardier IC3 model are covered by the contract and are among the oldest rolling stock still in use at Israel Railways. Some of the railcars were purchased second-hand from Sweden's national railway in the mid-2000s.

The outsourcing contract is part of a broader plan to help the railway save on costs and raise the quality of its maintenance work to international standards, Israel Railways said on Tuesday. Other elements of the plan include structural changes to the railway's maintenance system and an agreement with employees to keep the repair shops running 24 hours a day. Transportation Minister Yisrael Katz echoed the railway's statement regarding the importance of the contract.

Dozens of Alstom employees will perform the maintenance work at railyards in Haifa and Lod when the contract commences on January 1, 2014. Within three years, a new repair shop will be built on Israel Railways property to handle the repair work. The cost of the contract was based on the calculated maintenance cost per railcar per kilometer of travel.

As part of the collective agreement that made the outsourcing contract possible Israel Railway workers received a graduate salary increase of 25.4% and bonuses of between NIS 42,000-52,000 per worker. Privatization of maintenance services for the newer railcars and engines was not permitted. The railway's repair shop workers will also have an employment safety net until the end of 2030. The railway is expected to publish another tender in the future to outsource regular maintenance of the electric railway system.

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