Transition from NZRC to NZ Rail Ltd and preparing for privatisation

Following the establishment of the NZ Railways Corporation in 1982, and many years of restructuring, the next phase for railways in New Zealand was its reform into a fully-fledged State Owned Enterprise, in the model of other such entities set up after 1985, such as NZ Post, TVNZ and (subsequently privatised) Telecom NZ, Postbank and many others.  NZ Rail Ltd was formed in 1990. 

The first article is reporting the loss for the first half-year of the 1989 financial year, which is put down mainly to the financing costs of the NZRC's $1.1 billion of debt, all of which had been incurred since 1982, and was in part for the capital costs of the North Island Main Trunk electrification and the costs of redundancies and restructuring of the NZRC to remain a viable business after deregulation of land transport. 

The second article following on from the restructuring into NZ Rail Ltd saw the Government take over $1.3b of debt from NZRC to put it on a sounder footing.  The Chair of NZ Rail Ltd  and Managing Director were reported saying it "wanted" to be privatised as it was one of the most efficient freight railways in the world. It expected freight traffic to grow by 20% in the next three years.  It was noted that in the following five years (through to 1996) NZ Rail Ltd would need two replacement Cook Strait ferries.

The third article notes the privatisation of Intercity for $5.1m in 1991, with 60 coaches sold with all of its routes, to a consortium of Guthreys and Ritchie's Transport Holdings. It was noted that Intercity had lost $6m in each of the 1988 and 1989 years, and only $3m in 1990, with the provisional loss in 1991 down to $2m.  NZRC had already sold the Speedlink NZR Road Services freight/parcels business to NZ Post (essentially a transfer between government owned businesses).  The report concluded that the Government was unwilling to inject capital to expand the Intercity business and there was no further scope to restructure. It was also noted that rivals Newmans/Mount Cook (which had recently merged) had chosen not to buy the business (and that there was likely no other buyer than Guthreys/Ritchies).  The privatisation of Intercity was followed by the sale of the suburban bus business - Cityline - to the corporatised Wellington City Transport, which was subsequently privatised by Wellington City Council to Stagecoach.

The fourth article notes in 1991 then State Owned Enterprise Minister, Doug Kidd, reporting that NZ Rail Ltd would likely be sold within the next two years.  He said that it would be a good business and government was not the right owner. He said it was best to sell before it needed new capital for locomotives and ferries. He claimed government could not run railways as a competitive business.  It was noted as the last government transport and communications enterprise, as Air New Zealand, the NZ Line and Telecom had already been privatised. He noted that the rail corridor land would not be sold. It was noted NZ Rail Ltd made a profit of $32m in its first 8 months.

The fifth article from 1992 reports on NZ Rail Ltd's first full year financial results with a profit of $40.2m, which was a 33% improvement (annualised) on the previous year (which was a blend of NZ Rail Ltd and NZRC results). It noted that a scoping study on privatisation was being carried out. Staff were expected to be around 5297.  Sales had been $496m of which 69.5% had come from rail freight, 13.3% the Interislander and 11.4% passenger services (including both long-distance and commuter services, including subsidies for commuter services). It was noted that freight rates had dropped 2.72% and NZ Rail Ltd's fuel costs were only 6% of total costs, compared to 18-20% for competitors. Freight carried was 2.47b net tonne kilometres.  15% of freight was coal, 15-20% log and timber traffic. Passenger services averaged 50-60% full, but the Tranz Alpine was achieving 70-100%. $55m of capex would be funded from profits and debt.

The sixth article from 1992 reports on NZ Rail Ltd threatening to build its own ferry terminal at Lake Grassmere as it negotiates rent with the Port of Marlborough at Picton. It noted it bought land at Lake Grassmere to preserve the option of building its own port.  It noted that NZ Rail Ltd would save an hour on the ferry crossing, and trucks would save an hour of road travel time (and trains 90 minutes for travel towards Christchurch).  Grassmere port was to cost between $50m and $80m at the time, with a new Wellington terminal only $12m-$15m (NZ Rail was also negotiating with Centreport).  

The seventh article from 1991 further noted the earlier articles on NZ Rail Ltd wanting to be privatised, but noting the company was looking to make another 500 redundancies. Managing Director Dr Francis Small said as a private company NZ Rail Ltd could respond faster to major commercial deals.

NZRC General Manager optimistic in 1989, and NZ Rail Chair and CEO want it to be privatised 05/06/91

Sale of Intercity in 1991 - 17 July 1991

NZ Rail Ltd getting ready for privatisation 20/09/1991

NZ Rail first year profit of $40m 27/08/1992

NZ Rail may build its own ferry terminal 27/08/1992

NZ Rail to make 500 further redundancies 06/11/91

New Zealand Railways Corporation Annual Report 1984

In 1984, the New Zealand Railways Corporation (NZRC) completed its second year of operation, and its last profitable year before six hard years of restructuring before it was reformed into a fully-fledged State Owned Enterprise in 1990 (NZ Rail Limited). This highly pictorial annual report contains details of notable parts of the operations of NZRC over the 1984 financial year and some images reflecting some highlights.  At the time, the Chair was Mr Lyndsay Papps and the General Manager was Gordon Purdy.

The 1984 Annual Report saw it report a drop in rail freight tonnage, increase in ferry freight tonnage, but around the same net tonne kms of rail freight hauled in total. As it was the first full year of NZRC faces a fully competitive road freight market (with removal of the 150km limit of road competition with rail), it means NZRC was losing short to medium haul freight traffic, but retaining sufficient long haul freight and operating longer distance trains, to hold steady in total freight hauled. The locomotive and wagon fleet both reduced, reflecting greater efficiencies in operation.

On the passenger side both long distance and suburban rail patronage increased, but NZR Road Services lost patronage.  It is worth noting that at the time, NZRC received direct subsidies from central Government (Social Services Payments) to subsidise long distance and suburban rail services, as well as some freight branch lines and NZR Road Services routes. This arrangement continued until 1987 with restructuring of funding of urban transport that saw regional councils required to share the cost of subsidising urban passenger transport.

The 1984 financial year was also the year that the Booz Allen Hamilton (BAH) report on restructuring NZRC had been received, and so the impacts of that report are not reflected in that year.  It was noted that the North Island Main Trunk (NIMT) electrification project had been approved and was forecast to cost NZ$200m at the time (it would end up cost over 50% more). 

Subsequent years would prove more challenging for NZRC as it started to more clearly identify elements of the freight market that it was commercially viable for it to service.  It would also transition from being input focused (structured around supply of locomotives, rolling stock, right of way and buildings) to selling services to customers. 

Key statistics include:

• Net profit of $23.9m compared to $24.2m in 1983
• Reductions in revenue of around $30m compared to 1983.
• A reduction in staff numbers from 20 865 to 19 148.
• Wages comprised 55.6% of expenditure.
• Average rail freight haul distance was 298km, up from 285km in the 1983 financial year (this is a low average by today's standard).
• 1877 Cook Strait ferry round trips were worked compared with 2153 the previous year. 3.5% of sailings were stopped due to weather, urgent repairs and industrial action.
• 160km of new rail were installed and 16 rail bridges were reconstructed and strengthened.
• 471 locomotives in the fleet down from 504 the previous year

Highlighted changes to infrastructure and services include:

• Introduction of new overnight freight liner express goods services between Auckland-Wellington, Picton-Christchurch and Christchurch-Invercargill.  Train space sold on a "slot" basis to customers including freight forwarders.
• Introduction of the "Doorrail" door-to-door general goods service in partnership with road operators at 28 key stations.
• 69 new goods wagons entered service and 191 wagons were modified to handle specialised traffic.
• Patronage increased on the Silverfern (Wellington-Auckland), Southerner (Christchurch-Invercargill), Wellington-Gisborne and Picton-Christchurch Expresses.  At the time the increasingly worn-out Ac "Grass Grubs" had been replaced with refurbished 56ft cars with new seating, with the Grass Grubs placed on the Wellington-Gisborne route to replace 56ft cars with old-fashioned bench style 2nd class seats.
• The electrification between Paekakariki and Paraparaumu went live in May 1983
• 18 new long distance coaches entered service for Road Service and a programme to re-engine 45 coaches with more powerful engines was nearly complete.  Noted new coaches with air conditioning ( a first for NZR Road Services) and some with sheepskin seat covers
• 25% off peak saver discount for midweek and Saturday long distance rail services was introduced
• Ferry Aramoana was withdrawn from service in March 1983, but returned to service briefly to clear a backlog of traffic due to weather delays. 
• Its replacement, the Arahura was delivered in December 1983.  Arahura had capacity for 1000 passengers, 60 four-wheeled wagons or 130 cars on the rail deck, 100 cars on vehicle deck.
• Contracts awarded for Stage 1 of NIMT electrification
• New travel centres for Road Services opened in Wanganui and Opotiki
• New freight offices opened in Tauranga and Morrinsville
• New administration building and apprentice school opened in Wanganui
• New signals and apprentice school at Woburn
• Installation of radio communications in locomotives and trackside was completed for Wellington-Auckland and Christchurch-Picton
• Completion of the DC/DBR programme
• Contract awarded for the NIMT electric locomotives to Brush Electrical Machines Ltd of the UK
• Prototype DSJ locomotive entered service and work commenced on building four more at Addington Workshops
• Two of out three Silverfern railcars had been refurbished
• Makohine Tunnel daylighting on the NIMT (pictured)
• Refurbishment of English Electric EMUs at East Town workshops (these were the 1950s series stock that remained after the Ganz Mavag units replaced the 1930s and 1940s stock).

NZRC Annual report 1984 At a Glance

1984 NZRC Annual Report Chairman's Commentary

1984 NZRC Annual Report Chairman's Commentary including new Volvo B-10M coach

1984 NZRC Annual Report Chief Executive's Review of Operations

1984 NZRC Annual Report Chief Executive's Review of Operations

1984 NZRC Annual Report Chief Executive's Review of Operations

1984 NZRC Annual Report Chief Executive's Review of Operations

1984 NZRC Annual Report highlighting Freightliner trains

1984 NZRC Annual Report highlighting new rail ferry Arahura

1984 NZRC Annual Report highlighting rail infrastructure construction work on the North Island Main Trunk line

1984 NZRC Annual report highlighting new long-distance road coaches and refurbishment to the Silver Fern railcars

1984 NZRC Annual Report highlighting refurbishment of Wellington DM/D class electric multiple units and a train of fibrolite pipes

1984 NZRC Annual Report highlighting work on electrifying the North Island Main Trunk

1984 NZRC Annual Report highlighting new Railways Road Services passenger depots in Wanganui and Opotiki

1984 NZRC Annual Report highlighting main sources of revenue

1984 NZRC Annual Report highlighting main items of expenditure

1984 NZRC Annual Report including print ads for rail freight

1984 NZRC Annual Report back cover

Launch of Wellington railway electrification

Today's article is from the Dominion Post believed to be in 2008 as a flashback to the introduction of electric multiple units (EMUs) in the Wellington region in 1938. These were the first EMUs in New Zealand and until 1982 the only one, and until 2014 only the Wellington region had EMUs operating passenger rail services.  Most of the article highlights the reports of the day opening the EMU service to Johnsonville. 

The English Electric EMUs were revolutionary for the development of the Wellington region, essentially opening up both Lower Hutt and Upper Hutt, as well as Tawa, Porirua and ultimately Kapiti Coast as commuter suburbs. The article below highlights the introduction of the then blue and silver EMUs on the Johnsonville line in 1938.  Unfortunately the blue and silver livery w replaced with red in 1949 as an economy measure.

This was only one-year after the North Island Main Trunk (NIMT) had been relocated from the Johnsonville line route to the Tawa Flat Deviation, and so formally converted the Johnsonville line to a modern commuter railway.  The electrification also included introduction of fully automatic signalling.  The Tawa Flat Deviation and NIMT electrification as far as Paekakariki was not completed until 1940, but by 1938 "Ed" Class electric locomotives were regularly hauling passenger and freight trains through the long Tawa Flat tunnels as far as Porirua, although additional EMUs were not supplied until the late 1940s to enable them to be introduced on the Paekakariki section in 1949. 

The article notes that Wellington City Council was relieved that NZR had electrified the Johnsonville line, as it provided infrastructure to support the growth of housing in its northern suburbs, as it saved the Council from expensively extending its tram network north of Thorndon, or bus services (which in the 1930s were almost entirely feeders for tram services, with no major bus routes being operated by WCC). Additional stations on the line would be opened in the subsequent 25 years or so, at Raroa, Box Hill and Crofton Downs, to respond to growth in housing.

There were ultimately three sets of English Electric EMUs introduced in Wellington (the D/DM class) between 1938 and 1954:

• 1938 set (for the Johnsonville line) known as the "36 stock"
• 1946 set (for the Paekakariki line) known as the "42 stock" 
• 1949-1954 set (for the Hutt lines) known as the "46 stock".

The original 1938 set were all phased out by April 1983 with arrival of the Ganz Mavag Hungarian-built (EM/ET class) EMUs in 1981.