Alstom Transport and Transmashholding join forces to respond to the needs of Russian railways

Press release: 

The French rail manufacturer Alstom Transport and Russia's leading railway equipment manufacturer Transmashholding (TMH) are joining forces to modernise the biggest railway network in the world. This strategic agreement, backed up by Alstoms acquisition of a holding in the share capital of TMH which will be finalized before the end of 2009, will enable the two partners to jointly develop new rolling stock suited to the requirements of the Russian market and the CIS1 countries. The two companies have already begun working together on modernising TMH's industrial platform and adapting Alstom's products to the specific characteristics of the Russian market.

Russia, the largest railway network in the world
By forging an alliance with TMH, Russia's largest rolling stock manufacturer, Alstom is entering one of the biggest railway markets in the world. With its vast territory, Russia has historically given rail transport a key role in its development.. With its 85,500 km of tracks, the country boasts the largest electrified rail network in the world.

The Russians national rail operator, RZD, employs a workforce of 1.2 million and carries 1.3 billion passengers and 1.3 billion tonnes of freight each year.

Russia's rail sector has embarked on an ambitious modernisation programme between now and 2030. The Russian market poses multiple demands. The first involves freight: producers of oil, minerals and coal, which are primarily transported by rail, are facing a significant need for new locomotives (1,000 per year between now and 2030). But the Russian market, which accounts for 15% to 20% of the world railway market, is also looking at a number of high speed and very high speed projects. The expansion plan for Russia's rail system includes providing services to an additional 21 cities. Specifically, a very high speed line between Moscow and St.Petersburg has been announced for the end of 2009. In addition to anticipating a substantial need for doubledeck passenger cars for the regional rail network (3,500 between now and 2030), RZD will need to replace allrolling stock that has reached the end of its working life by 2015 and adapt its rail network to accommodate the upcoming Sochi Olympic Games in 2014 (by renovating stations, constructing Moscow-Sochi lines, etc.).

In establishing this strategic partnership, AlstomTransport and Transmashholding are uniting their strengths namely superior technological expertise and unparalleled knowledge of the Russian market to best meet RZD's needs, aid in the rapid modernisation of Russia's rail network and jointly assume the leading position in the country's market.

¹ Commonwealth of Independent States whose participating countries are 11 former Soviet Republics.

An alliance of two railway giants
Transmashholding: a major new player in the Russian railway market
Founded in 2002, TMH is Russia's leading rail manufacturer. Thanks to its close relationship with RZD, which holds a 25% stake in the firm, TMH has an excellent understanding of the national operator's needs. The company has a very high production capacity, with 65,000 employees in 12 factories, each of which has been in operation for over a century. TMH manufactures electric and diesel locomotives, converters, freight and passenger cars, suburban and metro cars and diesel engines for locomotives and diesel generators. TMH posted a turnover of 2.7 billion in 2008. The company provides almost 90% of the rolling stock for the CIS countries.

In addition to the strength of its industrial platform, TMH has an unparalleled knowledge of the Russian and CIS markets. This is a considerable asset that the company brings to its partnership with Alstom, since these markets have specific standards. For example, the rail gauge is 1,520 mm in Russia (as well as in Belarus, Ukraine, Central Asia, the Baltic countries and Finland), whereas the standard gauge in Europe is 1,435 mm. Moreover, Russia's railway network adheres to specific signalling standards (GOST R2), and it is essential that products be certified before they enter service.

In addition, Russia is marked by significant climatic and geographical features: temperatures that can drop to - 50°C and unusually long distances (Russia covers 17 million km2 - or 32 times the size of France). Trains must be able to travel in temperatures that can change from +10°C to -50°C in the course of a single journey, and maintenance depots are sometimes separated by several thousand kilometres. So the experience that TMH has gathered over the years about operating trains on the Russian rail network will be all the more invaluable for Alstom.

Alstom Transport: mobilising its renowned technological expertise for the Russian market TMH is joining forces with one of the world leaders in rail transport technologies. Alstom Transport has a longestablished and extensive expertise in high speed and very high speed trains, as well as double-deck trains and locomotives.

Since the launch of the TGV3 in 1982, Alstom Transport has sold 70% of all very high speed trains currently operating worldwide at speeds of 300 km/h or more: these trains have covered some two billion kilometres. In response to French market requests, Alstom Transport has combined its technological mastery of both very high speed trains and double-deck coaches to create a successful product, the TGV Duplex very high speed train.

Alstom and its partners, the French operator SNCF and RFF4 set a new world speed record in April 2007 with a Duplex trainset that achieved 574.8 km/h. In 2008, Alstom introduced the AGV5, already sold to the private Italian operator, NTV. With this new generation of very high speed train, the concept of trains able to reach commercial speeds of 360 km/h and travel 1,000 km in under three hours is now a reality.

Alstom also leads the way in high speed technology (250 km/h). Its Pendolino tilting train has been a major commercial success since its launch in 1988, covering over 200 million kilometres worldwide. The Pendolino is already in operation in ten countries and Russia will join the list in 2010 with the inauguration of the high speed St. Petersburg-Helsinki line. The new trains will make the trip in less than three hours, cutting the current time in half. Their bogies, pantographs and subsystems are specially equipped to withstand temperatures that drop below -40°C.

In addition to its high speed and very high speed expertise, Alstom has been in the double-deck regional trainset market for 25 years. Alstom has designed and built nearly 1,000 of these double-deck trainsets, currently operating successfully in France, Luxembourg, Sweden, Spain and Portugal. Orders have been placed for 260 regional Coradia Duplex trains since they were introduced in 2000. Alstom has benefited from its experience with SNCF, which today operates 180 Coradia Duplexes.

Finally, Alstom boasts important expertise in the international locomotive market. In the past decade, Alstom has manufactured over 1,400 Prima locomotives at its Belfort facility in France. Travelling at a top speed of 200 km/h, these locomotives can be customised to each country's network and are compatible with four different voltages.

² GOST means "norm" in Russian, while the "R" stands for Russia.
³ TGV is a registered trademark of the SNCF.
⁴ Réseau Ferré de France
⁵ Automotrice Grande Vitesse. AGV is a brand name registred by Alstom.

An equal partnership holding promise for the future
Alstom and TMH have complementary skills that offer the basis for a balanced, lasting partnership with the goal of modernising the Russian rail network and enhancing RZD's business performance.
The agreement just signed by the two companies calls for the joint development of new rolling stock adapted exclusively to the needs of the Russian market. These products will be developed by a 50/50 joint venture based in Russia. The first train to be designed will be an electric locomotive that is specially adapted to the needs of the Russian rail network, using the Alstom traction system.
The two companies intend to continue their cooperation in the development and manufacture of double-deck passenger cars. In October 2008, Alstom and TMH participated in a call for tenders launched by RZD for the design and manufacture in Russia of 1,210 double-deck passenger cars, and negotiations are currently underway with RZD to reach a final agreement. Electric multiple units (EMUs) are also in the pipeline.

The two companies are developing products designed to meet the needs of the Russian market and, ultimately, that of the CIS as well. TMH will hold exclusive manufacturing rights in Russia to the new rolling stock for these markets.

A pragmatic approach focused on sharing best practices
The agreement provides for Alstoms support in modernising TMH's production facilities. During the first phase of this technical cooperation, which began in March 2008, an industrial audit was conducted at three TMH plants in Demikhovo, Bryansk and Tsentrovarmash. This pilot phase, now complete, is to be extended to TMH's nine other facilities in Russia.

As part of the pilot project, Alstom proposed a customised, multi-part modernisation programme, including production, for the three TMH facilities. Alstom mobilised a team of experts to work on site with TMH engineers and technicians in deploying the APSYS (Alstom Production SYStem) production methodology. This method is expected to provide the l best possible manufacturing costs while maintaining compliance with delay and quality standards. For its part, TMH has already initiated a number of audits to identify potential suppliers for the purposes of ensuring appropriate, market-tailored solutions and the best possible return on investment.

Technical cooperation between the two firms will rely on a partner system: each of TMH's competence centres will be partnered with the corresponding competence centre at Alstom. This close and ongoing relationship between Alstom Transport and TMH staff will encourage an efficient, coordinated exchange of best practices.

In addition, Alstom will be naming a deputy managing director in charge of internal operations at Transmashholding, to be backed by a dedicated team of some dozen experts from Alstom Transport to ensure the project's success. The team will be up and running within the next few weeks.

Key dates in the Alstom/TMH alliance
13 December 2007 : An agreement is signed to establish joint ventures in Russia.
27 March 2008 : The two firms sign a technical support agreement. This technical cooperation includes the performance of an industrial audit at three TMH plants (Demikhovo, Bryansk and Tsentrovarmash). It will subsequently be extended to TMH's nine other facilities.
30 September 2008 : The two companies sign a strategic partnership agreement.
31 March 2009 : Alstom and TMH are strengthening their cooperation through Alstoms acquisition of a 25% + 1 share holding in the share capital of the Russian rail manufacturers parent company, the closing of which is due before the end of 2009.