Railway Locomotives and Transnet: A Case Study

Abstract

This paper evaluates Transnet’s attempt to engender local manufacturing through the procurement of 1,064 rail locomotives from four international bidders. Research based on interviews with rail industry stakeholders, although undertaken at an early stage of the procurement effort, shows that there are substantial gains to be made by local manufacturers, in particular, those willing to embrace change. It also suggests that management of the procurement over its scheduled four year duration may significantly impact outcomes. Different localisation strategies and behaviours by the contracted original equipment manufacturers (OEMs) influence their supplier’s behaviour and outcomes. The design of local procurement policy and instruments intended to give effect thereto are analysed, shortcomings identified and remedial suggestions made. Observations on the political economy shaping policy and the industrial landscape being shaped by such policy are offered.

JEL Classification: L62, O14, O25