Interview with Paul Brown, General Manager – ISAF
The railway system has been affected by the economic downturn as all the other economic sectors, but the studies carried out by different companies or institutions in the sector show that the railway industry is stable and will start developing by 2017. Worldwide, the railway industry has increased 3.2% year on year, a promising figure considering that public subsidies have constantly shrunk since the beginning of the economic crisis.
According to UNIFE’s Report “World Rail Market Study” (2012 issue forecasting the railway market until 2017), a constant increase of the world railway market is expected by 2017. Middle East, Russia and CIS, as well as Latin America are among the regions which experience a strong increase of the railway market. For these regions, the railway market of railway product suppliers is estimated to increase by 2.6% per year with volumes of EUR 170 Billion. For now, the railway market remains stable despite the economic recession and its effects.
Due to the positive answer of railway transport to mobility requirements, environmental impact, and the need for an environmentally-sound transport system, railway transport remains in the attention of the authorities who launch policies and programmes to encourage this transport mode. These activities favour the railway industry. To find out more about the effects of the financial crisis over investment programmes, the need to implement projects to ensure a sustainable long-term growth, we have interviewed Mr Paul Brown, General Manager – ISAF.
ISAF is a company specialized in the field of manufacturing and mounting of railway installations and equipment: automation, signalling, telecommunications, radiocommunications and high voltage installations for electrified railway and urban transport. ISAF is member of the Colas Group, which in turn is a member of the French multinational company Bouygues. With over 60 years of experience in Romania and over 10 years in Greece and Bulgaria, the company has secured its position as a traditional regional specialist in railway constructions. 5 years ago, ISAF was taken over by Colas Rail, and this period was one with positive changes regarding the company’s consolidation in the Romanian market. As of 2011, ISAF focused on adopting radical changes, of organisation and company culture. One of the important measures has been the use of the available financial resources for investments in the modernisation of equipment and of the production facility. ISAF benefits from the existing know-how of Colas Rail, including the Safety sector where improvements have been made. These improvements have allowed “the perfect management of the Safety Record in 2013 with zero accidents”. Recently, ISAF has reviewed its opportunities of getting involved in the Colas Businesses in Europe with the probability of developing works in Great Britain.
One of the strategic objectives of ISAF is to expand its activity in the urban transport, to begin new projects, with new technologies that could generate a competitive advantage for the company. Regarding the extension to different markets, ISAF will continue to consolidate its position in Romania, to vary its activities and to exploit new opportunities in Greece, Great Britain, Central and South-East Europe.
Railway PRO: How do you see the situation of the railway industry in Romania and in Central and Eastern Europe, after the financial crisis which affected all economic sectors?
Paul Brown: The financial crisis pointed out the importance of investing in the rail network infrastructure with long term economic benefits and creating jobs in the short-term. Due to the current financial situation and the lack of private financing, a number of railway infrastructure projects have already been delayed, this postpones the modernisation of the rail infrastructure. Being in line with the European institutions concern regarding the growth of the green transport, I consider that this trend should not only drive economic growth, but also increase the long-term horizon, this policy will outweigh the negative short-term effects produced by this deep crisis. In this context, I would like observe for the Romanian railway industry, i.e. that it is essential to not only focus on the increasing absorption rate of EU Funds, but also needs to be preoccupied on a long term investment in Maintenance, which is required to sustain the upkeep of the Romanian Railway infrastructure.
Railway PRO: What do you think about the European railway industry considering that the European institutions plan to significantly develop railway transport over the next decades?
Paul Brown: As the European Commission explicitly deems the expansion of high speed rail as a priority within the Trans-European networks, allocating an important part of the community funds for its development, I think this will contribute to an increase of the market share within rail transport. Among other advantages, like time savings, increase in reliability, comfort and safety, it also brings a release of capacity in the conventional network, which can be used for the freight transport. There is no doubt that in some European countries, like Romania, the over polluting road transport sector has become overwhelmingly dominant over the rail freight, mostly because of the fast and growing economic changes in the country. Of course, for the reduction of the environmental damage caused by the road freight transport, we are all aware that the solution is a sustainable freight transport sector, so it is necessary also to increase the share of railways on the freight transport market. I would like to make a special mention regarding the construction of a high speed rail line between Budapest and Bucharest, which would be a part of a larger transportation corridor Paris-Vienna-Budapest-Bucharest-Constanţa and which will bring benefits for both countries and also increasing the economic exchanges at European level.
Railway PRO: 2014 is an important year for the railway sector, especially in the European countries, keeping in mind that the new EU measures encourage railway transport, including rail urban transport. This means new projects and approaches, but also innovation in this segment. How do you see these considerations and what is the impact of new policies over the railway industry in general and your company in particular?
Paul Brown: One of the strategic objectives for ISAF is expanding its activity on the urban transport, so for us it is essential to be focussed on the new projects and also on the new technological means that will create a competitive advantage for ISAF.
Railway PRO: Can you tell us what have these past five years of transition since the takeover of ISAF’s shares by Colas Rail meant for ISAF?
Paul Brown: This was a period of positive change for ISAF, consolidating our image on the Romanian market with a solid partner that has a strong client orientation. In the first two years we were focused on the consolidation of the company, and since 2011 we have been more concentrated on the radical changes – organization, local team empowerment, company culture. On top of that, we used the available financial resources to invest into the modernization of our equipment and our production plant. I would like to make reference to ISAF’s benefit of using the existing knowledge within the Colas Group including the Safety sector and we are very proud to declare many improvements in this area that has contributed to us managing a perfect Safety Record for 2013, with zero accidents. Recently, we have also been able to explore the opportunities for ISAF to support other parts of the Colas Businesses throughout Europe, with the probability of securing some works within the UK Market.
Railway PRO: What are ISAF’s projects underway and what projects do you think you will implement in 2014-2016?
Paul Brown: ISAF is currently involved in Romania in the finalization of the ex-ISPA projects, like Campina-Predeal, Lot 3 and Lot 4, Baneasa-Fundulea, and the rehabilitation of railway stations (Pitesti, Braila). ISAF is also engaged on the Corridor 4th projects, including the Atel-Sighisoara and Atel–Micasasa sections and also on the Pilot ETCS / ERTMS level 2, Buftea-Crivina. In Greece, ISAF is working on the rehabilitation of the electrification system of the section Inoi–Tithorea. ISAF is currently seeking to be involved either as main contractor or subcontractor in the major signalling projects and new sections on the Corridor 4th that are currently being tendered in Romania, and we are very optimistic that our presence on the Greek and Bulgarian markets will strengthen over the future years.
Railway PRO: Outside Romania, ISAF has developed projects in Morocco, Bulgaria, Hungary and Greece. In your opinion, what are the methods to be approached in implementing the projects of these countries and what are the main differences?
Paul Brown: Of course, every country is different, with different rules, regulations and laws. Within each country the rules, regulations and laws for that country apply and we have done our best to respect laws. Every nation and every country has its own customs and traditions that we also try to understand and respect. Last but not least, once we have acknowledged our client’s requirements, we use all our know-how and management skills to achieve and exceed their expectation.
Railway PRO: What is the company’s development/extension strategy not only in Romania, but also abroad?
Paul Brown: ISAF is already a strong partner, creditable and reliable, both as a subcontractor (Electrification, Signalling & Telecommunications), as well as a supplier (Production) of products that are manufactured to the highest quality. We are continuously striving to strengthen ISAF’s position on the Romanian Market, and to diversify the company’s activities (mainly Production & Tramway) and to investigate new market opportunities in Greece, UK, and Central &S-E Europe.
Railway PRO: What are the challenges you meet in developing projects?
Paul Brown: A special mention will be for the inability to secure payments for the works ISAF has already performed, which is penalizing us in further investments and development. Now, just to name some other challenges, I will remark but a few, i.e. low financial power of the state, that has the pottential to block the start of new projects or indeed the performance of the existing ones, the labour market has a shortage of a specialized workforce, unstable market of important raw materials (copper, siliceous sheet-metal, steel etc), inflation and variable Exchange Rate (Euro). Also, ISAF was confronted with issues in locating railway construction equipment easily, quickly and at a competitive price. To tackle this problem, ISAF has launched a web page specialized in this market segment, i.e. www.inchirieri-utilaje-feroviare.ro, the first web site of its kind in Romania for leasing Railway machines, that can be used by any other company from the railway sector. This site is a platform of communication and identification of available vehicles. What is important is that any company that wants to provide vehicle leasing services may use this web page. We invite all the other market players interested in this segment to access our website and to join us, as partners.
Railway PRO: The European railway network is confronted with different technical barriers and needs investments to eliminate or reduce them. How can the countries and the industry remove investment problems and what is the role of the railway industry?
Paul Brown: As previously mentioned, one of the main issues that any contractor has on the railway market is to be paid on time. If the money is moving fast in the industry, then we can always explore research and development, in order to eliminate technical barriers from different European countries and to invest in order to ensure that we are in line with the technologies used in other countries. Nevertheless, if the state budgets are not sufficient enough to allow for new investments in the railway industry, then the answer will be economic reforms designed to improve the operational and financial performance of the national railways and private investments in the railway infrastructure facilities and train services. This will contribute to increasing the competitiveness within the transport sector and to ensure that the railway industry will provide a sustainable long term development strategy.
Railway PRO: More and more European companies focus on Central Asia and the CSI. Are these markets new challenges for you or they are not yet included on your extension strategy?
Paul Brown: Every market is a new challenge. As you know, Colas Rail Group is already very active in these markets and ISAF has the capability to assist them, should the opportunity arise.
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