Wednesday, December 15, 2010

Kiwirail just doesn't get it


Paying cheap today will cost dearly tomorrow. I know that's not quite a proverb (well at least it wasn't until a minute ago) but it applies to the way Kiwirail is dealing in regard to building 300 new flat-deck wagons. They're going to get the Chinese to build them, (in China, of course) because they claim that the price the Chinese offer is 70% below the NZ tenders. When you read more carefully you find that the 70% may apply to the highest tenderer, but it doesn't appear to apply to Hillside Workshop's tender.

"Hillside's was third-best of nine tenders but it was still 25% more expensive than the tender prepared" by China CNR Corporation.

So what did I mean by my opening proverb? What will cost dearly tomorrow? Well, for starters, if you insist on employing overseas workers (and the Americans have found this to their cost already in their insistence on outsourcing) you eventually find you have a heap of unemployed people on your hands. And how do you keep them from death's door? Oh, yes, you pay them welfare. Um, doesn't that cost you in the long run?

Okay, Kiwirail, let's make it really simple. Say that in my family I have a plumber - an excellent plumber too. I have a plumbing job. He could do it, but so could someone from Christchurch, who just happens to be staying in Dunedin at the moment. The big bonus, I seem to think, is that the guy from Christchurch is going to cost me half the price of my family member. So I go for him. The job gets done. I notice that it's not entirely satisfactory, but the plumber has already returned to Christchurch, and I can't seem to contact him - and anyway, he told me before he left that if there were any problems he'd have to charge me to come back from Christchurch to fix the problems up.

Whoops. Now I have an unsatisfactory job and no cheap way of getting the plumber back to fix it. Shamefacedly, I go to the plumber in my family. He'll fix up the other plumber's less than satisfactory work, but it will not only cost me more, it also leaves me with egg on my face.

Maybe this analogy is too obscure for Kiwirail. Let me make it simpler still: if you don't look after the workers in your own country, eventually you'll have no workers - they'll either be on the dole, or will have gone to Australia. It's a bit like the way we treat fruit consumers in New Zealand: we send all our best stuff overseas and leave the shoddy goods for those at home.

What does it say about how Government and Big Business think about the local people?
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