Train manufacturing giant shows its faith in regional supply chain

Hitachi and Millfield Composites

Mark Lane looks at the impact of Hitachi Rail in the North East and finds out about its relationship with fellow Chamber member Millfield Composites on a supply contract for products relating to its intercity and commuter trains

The North East has a long and proud association with the rail sector, and there was a definite sense of an industry coming home in 2015 with the announcement of the opening of Hitachi’s £82m County Durham train manufacturing plant. At the time, George Osborne, the UK’s then chancellor, described the investment (Hitachi’s first rail plant in Europe) as “a huge boost to confidence for British manufacturing and particularly the rail industry”.

Since that time, Hitachi’s production site, which is based in Newton Aycliffe, has gone from strength to strength. Hitachi Rail chose this region to make a new investment into the latest generation of trains for the UK’s Intercity Express Programme. That initial £82m investment has now gone beyond £100m and hundreds of new jobs have been created in the process.

The Japanese giant’s rail vehicle manufacturing facility will in total be building 122 high speed trains for the £5.7bn InterCity Express Project for the East Coast and Great Western mainlines. Yet there could be other work to follow. Indeed, Hitachi has recently submitted a joint bid to build trains for the HS2 high speed rail link in a move that could provide a further boost to the Newton Aycliffe plant in terms of orders and associated job creation. Hitachi has joined up with fellow rail manufacturer Bombardier for the HS2 bid, in the process revealing the first picture of its Great British train which the company is hoping will be the first to run on HS2.

As good news stories go, this is one of the most positive to come out of the North East in recent years, particularly given the ongoing trials and tribulations of our manufacturing sector, many of which have been made worse by uncertainty over Brexit.

One of the most satisfying aspects of this story has been the impact Hitachi has had on the local supply chain. Despite being Japanese-owned, Hitachi has made a point of showing a major commitment to the North East since it commenced production here. Where possible the company has utilised the local supply base and local labour force. Indeed, these were two of the primary reasons why the company opted to locate here.

I recently caught up with Luke Davies, a commodity manager for car body and interior, stationed at Hitachi’s Newton Aycliffe plant. Among Luke’s tasks has been developing relationships with the local supply base, one of which is Millfield Composites – of which more later.

Luke says: “The factory is currently building pioneering intercity trains for LNER for the East Coast Mainline and is supporting companies across the region through a strong use of local suppliers.”

He adds: “Hitachi Rail has a strong belief in sustainability and the socio-economic value to the local community. For instance, we are a co-founder of South Durham UTC – the North East’s first University Technical College for young people aged between 14 and 18.”

Luke Davies (left) and Millfield Composites engineering manager, Simon Cook

Since 2013 Hitachi has spent over £1bn with UK suppliers and prioritised both domestic and local suppliers wherever possible, creating a supply chain of over 1,400 suppliers. In fact, a key focus of the procurement team has been the localisation of the supply chain.

Explains Luke: “We are now at a point where 70 per cent of parts by volume come from within 40 miles of the Newton Aycliffe site. We are incredibly proud of the positive impact we’re having in the local area. Our supplier selection process is extremely robust and covers areas such as accreditations, quality, technical competence, financial health, social responsibility and value.”

Such a process was how Millfield Composites came to be supplying Hitachi Rail with side window panels and door post covers for its intercity and commuter trains.

Luke has high praise for the business, a fellow North East England Chamber of Commerce member, with which it has established a solid working relationship of mutual benefit. He says: “Millfield has shown an ability to regularly deliver good quality products to us in the required quantities enabling us to keep an optimum amount of stock. They have been flexible and have adapted well to our increasing build rate.

“We have worked closely together to build a positive relationship through regular business reviews either on site at Hitachi Rail or at Millfield’s site in Newcastle. We continue to work collaboratively on areas like quality, new product introduction, parts protection and packaging requirements.

“We have been building intercity trains for Great Western Main Line and East Coast Main Line and Millfield also supplied the parts for the Class 385 commuter trains that have recently been introduced on the Edinburgh-Glasgow route.”

To find out more about the relationship between Millfield Composites and Hitachi Rail I also caught up with John Doyle, director with the business.

Millfield Composites Group is a collection of SME businesses based in the North East supplying composite products and services to a range of global OEM customers and market areas. The business has around 120 employees including apprentices. With a turnover of around £12m, it has regional facilities in both Newcastle and Hartlepool plus a recently opened facility in the North West.

As suppliers to Hitachi Rail, the business has supplied painted products for intercity and commuter trains. “We have supplied predominantly to Newton Aycliffe but also Doncaster, London, Italy and Japan,” says John.

Explaining how the business relationship started, John says: “We received our first formal RFQs in 2015 though we had been to various supplier events before the factory was built to understand their supply chain requirements. We had also been audited by their QA teams in 2014.

“Hitachi Rail is now one of our major customers and we are very proud to supply them. Their work has allowed us to grow and employ local people at our group and also amongst our local suppliers too.

“Our businesses work very closely together on design, development, production and aftermarket. We collaborate on global and European projects and are keen to continue to be of help and support to Hitachi Group.”

John makes the point that while Hitachi Rail does source locally, its suppliers have to be able to cut the mustard to be selected. He says: “Hitachi are a large company seeking to buy, where possible, locally from the North East – provided suppliers are globally capable and competitive.”

He concludes: “Their teams are friendly and respectful, in our experience, and we have found the relationship and projects to be technically challenging yet rewarding.”