The start of a new century for Norwegian railways

Norwegian railway history is both long and eventful, as was evident in 2004 when we celebrated its 150th anniversary. Besides offering a chance for a nostalgic look back, the anniversary year also provided an excellent opportunity for looking forward. In actual fact, the year 2004 provided many causes for celebration.

We experienced growth in both passenger and freight traffic, and never before in the history of Norwegian railways has punctuality been better. Achieving an average punctuality rate in rail traffic of more than 90 per cent is a remarkable feat given how much of the Norwegian rail network is single track.

An historical decision

In June 2004, the Norwegian parliament made an historical decision when it resolved to grant an additional NOK 10 billion for rail investments beyond that already earmarked in the National Transport Plan for the period 2006-2015. If this decision is followed up by annual appropriations, the Norwegian rail network will be able to boost its competitive position and help solve considerable transportation challenges in and around Norway’s major cities.

Norway’s population is densest in the central south-eastern area around Oslo and three-quarters of all journeys on public transport occur in this area. For this reason, it is natural to begin modernising the railway in this part of the country. In August this year, we will be opening a new section of double-track line between Sandvika and Oslo, the largest onshore construction project in Norway today. This marks the end of the first of several stages designed to increase capacity on the railway in and out of Norway’s capital. Following additional construction work, the daily lives of rail passengers in south-eastern Norway will be improved with the introduction of more frequent departures and shorter travelling times. These initiatives will yield synergies for long-distance services and freight traffic in and out of Oslo, which are currently being adversely affected by limited capacity. In other cities, too, new projects will give the railway a much-needed lift in the coming years. At the same time, public expectations in terms of service and information are increasing and the Norwegian National Rail Administration is striving to meet these expectations.

Safety

Safety is a key aspect of everything in which the Norwegian National Rail Administration is involved. Norway and the Norwegian National Rail Administration are currently at the cutting edge when it comes to introducing GSM-R, a new European-wide, digital radio system (which was featured in Issue 3 2004 of Global Railway Review). This NOK 1.7 billion development project will secure safe, rapid and effective communication between the line traffic controller and train driver, while also facilitating international rail traffic and increased competition between rail companies. Seen in relation to the topography of Norway, the introduction of GSM-R has been very swift, and priority has been given to stretches of track where present emergency communication systems have been unsatisfactory. The system is scheduled to be in place on all Norwegian lines by 2007. A total of 700 ground-based installations will provide coverage for 3,800 kilometres of track and 600 tunnels. Along with increasingly advanced signalling and safety systems, GSM-R provides proof that Norwegian and European railway networks occupy the forefront in terms of introducing new safety and communications technology.

The greatest risk factor associated with the rail network in Norway is the many level crossings established in conjunction with farmland and residential areas. Ongoing and systematic efforts have considerably reduced the number of level crossings, but there are still around 4,000 major and minor level crossings. Several of these are situated on stretches of track where development plans exist. The Norwegian National Rail Administration’s long-term objective, therefore, will be to eliminate level crossings in parallel with the modernisation of the rail network.

Safety work is an ongoing and dynamic process where requirements, standards and procedures are amended as new technology is introduced and our knowledge of the underlying causes of human error and deficient barriers increases.

Restructuring and a reduction in the workforce

In close dialogue with the trade unions, the Norwegian National Rail Administration has undergone a demanding restructuring process in recent years. Considerable organisational changes have been made so as to reduce administrative costs and channel these funds into the railway network. In conjunction with this process, the Norwegian National Rail Administration has been working to improve the efficiency of its production activities, which employed around 1,600 people at the end of 2004. In a proposal submitted to the Ministry of Transport and Communications in the spring of 2004, the Norwegian National Rail Administration suggested that the number of employees involved in production activities be reduced by 400 people over a three-year period by means of natural wastage and voluntary redundancies. In the opinion of the Norwegian National Rail Administration, this initiative, combined with its decision to hive off BaneService – its business and construction unit employing 250 people, as a limited-liability company – would produce more efficient railway operations while boosting the enterprise’s new-found profitability. However, in the autumn of 2004 the Norwegian Government issued its own, considerably more extensive proposal. The proposal that was adopted by the Norwegian Storting (parliament of Norway), involves competitive tendering for all the Norwegian National Rail Administration’s production activities apart from signalling and telecommunications. In reality, this means that the Norwegian National Rail Administration’s workforce will be reduced by 1,250 people before 2010, after which the maintenance of all railway lines in Norway will be carried out by private service providers. The Norwegian National Rail Administration will for its part have a controlling and ordering function. The Storting decision presupposes that the reduction in the workforce will not compromise safety and that the development of a private contractor market will reduce maintenance costs on Norway’s rail network. In connection with this last point, there is a great deal of nervous excitement.

Skills disappearing from the railway

So far in 2005, the Norwegian National Rail Administration has reduced its workforce by around 350 people within the field of production-related activities. (In addition, as mentioned above, BaneService has been hived off as a limited-liability company.) In line with internal objectives, this process has been achieved without resorting to forced redundancies; instead voluntary schemes have been offered (including severance pay and grants designed to help employees start their own businesses). A total of 250 people have left employment of the Norwegian National Rail Administration, while the remainder have found other positions within the enterprise, e.g. the administration department that will be responsible for carrying out inspections and procuring services. To what extent have people left the Norwegian National Rail Administration for jobs in railway-related operations? Recent figures show that less than 20 per cent have transferred to newly established railway companies or to existing service providers. At the same time, the reduction in the number of employees has led to a rise in the average age of the remaining workforce employed in production-related activities, which means that we face considerable challenges with regard to recruitment – particularly in areas such as catenary, where a great number of people have left. The sum of these factors gives cause for concern, since the railway of the future will be entirely dependent on private suppliers of railway-related services attending to the need for new recruitment and skills development.

Railway-related service providers

In accordance with the Ministry of Transport and Communications’ plan for competitive tendering, the Norwegian National Rail Administration will outsource maintenance projects worth a total of NOK 340 million in 2005. This represents an increase of NOK 150 million compared with previous years. Tasks open to competitive tendering can be divided into the following categories:

• Extensive renewal projects
• Major regional renewal projects
• Smaller-scale regional projects

These tasks constitute 22 projects in all and so far we have learned the following as regards to the bids received from prospective service providers:

• Whilst 14 of the projects have received three bids or fewer, three projects have received only one bid. With one exception, there were no more than four bidders for any of the projects. This exception concerned a project involving the clearing of vegetation alongside tracks. In this instance, 10 bids were submitted. However, the need for railway-related skills in connection with this type of work is limited.

The bids we have received show that there are financial gains to be made from outsourcing. It must be stressed, however, that we are currently basing these assessments on bids thus far received and not on activities completed. The Norwegian National Rail Administration has also received bids that are considerably higher than one would expect, based on previous experiences. Significant variations in price in connection with some of the bids may also partly be due to insufficiently detailed tender documents on the part of the Norwegian National Rail Administration. This in turn tells us that it will take time to develop the necessary ordering skills in our own organisation.

The Norwegian National Rail Administration is of the clear opinion that the number of bidders competing for railway-specific projects is currently too low. In other words, the market is, in the opinion of the Norwegian National Rail Administration, not sufficiently well-developed at present to produce the desired financial effects of competitive tendering.

Our recommendations

The Norwegian Storting’s decision stipulates that the maintenance of all railway lines in Norway shall be opened for competitive tendering during the period 2007-2009. In a proposal submitted to the Government in July this year, the Norwegian National Rail Administration stated that this development should extend for a longer period of time and that it is important to glean sufficient experience before leaving the maintenance of all railway lines to what is currently an incomplete market. This is especially important since the Norwegian National Rail Administration’s own production-related activities will be discontinued in parallel with the outsourcing of work on Norway’s railway lines. This provides few opportunities to reverse the process if the market fails to develop at the pace and in the direction anticipated in the Storting’s decision. The Norwegian National Rail Administration wishes to gather necessary experience by initially exposing three lines to competition beginning in 2007. Following a two-year trial period, a review should be conducted before opening the remaining lines to competitive tendering in stages during the period 2010-2012.

With regard to the continued reduction of its workforce in the field of production activities, the Norwegian National Rail Administration recommends that this should only occur in certain geographical areas and within specific disciplines. In addition, the Norwegian National Rail Administration recommends that one should not actively reduce the workforce in 2006, since there is a need to secure necessary competencies and a contingency force in a transitional period until 2007. Nevertheless, the workforce will be reduced owing to natural wastage during this period, at the same time as it is our experience that many of our employees will leave the Norwegian National Rail Administration to take up other types of work.

Not only figures

The process of reducing the workforce also has other unquantifiable costs. Norwegian Railways and the Norwegian National Rail Administration have always been proud of their highly-skilled production apparatus with strong ownership and loyalty to the enterprise in which they have been a part. One of the greatest challenges facing the Norwegian National Rail Administration is to include this sense of ownership and pride in the work ahead of us. For the time being, our own production unit will remain responsible for a number of maintenance tasks. In all honesty, this is not an easy situation when several hundred people at the Norwegian National Rail Administration are essentially working out their period of notice. A lot of resources, therefore, have been channelled into management training and developing a support system to take care of those managers and employees who have been affected. This work will be continued in the years ahead. Irrespective of its organisation, present framework conditions and future challenges, the Norwegian National Rail Administration’s objective is to develop the railway network in Norway into a modern and socially profitable transportation system for the new century.