KiwiRail has 4000 wagons, all more than 30 years old and in need of upgrading, and chief executive Jim Quinn told Radio New Zealand yesterday he did not believe the company's workshops in Dunedin and Lower Hutt had the ability to build the wagons at competitive prices.
As well as the 300 wagons already bought from China, a small number had been built in the company's workshops, Mr Quinn said.
The company needed to buy up to 500 wagons a year for the next few years to replace its ageing stock, he said.
A $29 million deal was signed in December last year to buy 300 Chinese wagons. The new deal is expected to be worth more than $100 million.
New Zealand Rail and Maritime Transport Union Hillside branch secretary Les Ingram said he had heard nothing from KiwiRail chief executive Jim Quinn and hoped it was "just the rumour mill" going around.
However, if the rumour proved to be true, the workshop would be "absolutely devastated", he said.
"I don't know, I really don't know, if we will survive without this contract."
He said Hillside had not even had an opportunity to put in a tender for the $100 million contract.
"We had been promised by Jim Quinn that we would be allowed to tender for it. But now it seems we're not even allowed to tender."
Hillside Workshops were overlooked last year for the $500 million contract to build 38 three-car electric trains for the Auckland railway network. The contract was given to China CNR Corporation.
The workshops also missed out on the contract to build 300 wagons last year because its bid was 25% higher than a Chinese rival.
Mr Ingram said the workshop was building 35 wagons, which were due to be completed next month.
Otago Chamber of Commerce chief executive John Christie said he could not see any logic in awarding the tender to China.
"It would not be good for Dunedin; it would not be good for New Zealand; and it would not be good for the Government's ability to generate revenue."
Mr Ingram agreed. He believed at a time of high unemployment and recession, the company should be backing New Zealand industry and jobs.
"Even if it is dearer to build them here, the positive side is we pay taxes on the income we make from building them, and it stimulates the economy because we spend that extra money in the local shops.
"It's borrowed money the Government is using to buy the wagons. Surely it would be better to spend it here?" he said.
"The economic benefit to New Zealand has obviously not been taken into consideration."
