September 2011 Supportability : The Difference between Profit and Loss in the Rail Industry Keith Jordan – Hitachi Rail Europe

September 11 Agenda Supportability: The Difference between Profit and Loss in the Rail Industry Introduction to Hitachi Rail The UK rail industry – how does it work? Where does your ticket money go? The Intercity Express Programme Providing a service linked to passenger requirements Supportability – so what? Summary

September 11 Hitachi Supportability: The Difference between Profit and Loss in the Rail Industry Hitachi GroupHitachi Group –350,000 employees worldwide –$90B Turnover Hitachi RailHitachi Rail –1500 employees Japan –40 employees London (4 supportability) –110 employees Ashford Kent Hitachi Rail UK Track RecordHitachi Rail UK Track Record –First contract win 2005 (£500M) –Invested £60M in new maintenance depot –First train delivered to UK 2007 –Delivered first UK high speed service to Kent in 2009 –Selected as preferred bidder for the Intercity Express Programme in 2009

September 11 How does the UK rail industry work? Supportability: The Difference between Profit and Loss in the Rail Industry

September 11 Who runs the railways Supportability: The Difference between Profit and Loss in the Rail Industry

September 11 Where does your ticket money go? Supportability: The Difference between Profit and Loss in the Rail Industry

September 11 The Railway money go round Supportability: The Difference between Profit and Loss in the Rail Industry

September 11 The Intercity Express Programme Supportability: The Difference between Profit and Loss in the Rail Industry

September 11 What does the customer want? Supportability: The Difference between Profit and Loss in the Rail Industry East Coast 50+ services Daily GWML - 56 services daily

September 11 Good value or Compensation culture? Supportability: The Difference between Profit and Loss in the Rail Industry Business Driver People buy tickets to travel More people take the train if it is punctual Ticket price refund for major delay Customer satisfaction is high when all facilities working (eg Toilets) Revenue is enhanced through catering/shop Incentive Paid daily payment per train (one charge includes lease (65%) and maintenance (35%) Penalty for technical delay Major penalty for train breakdown Penalty for functional failure Bonus payable on average KPI

September 11 Obsessively well engineered trains Supportability: The Difference between Profit and Loss in the Rail Industry Excellent quality product Evolution of existing proven technology Minimise maintenance cost Designers fully briefed on maintenance 6 month design window Cost based design trade off Design guarantee to Maintenance Manufacturer pays 50% of penalties until MDBF target met Bonus paid by maintenance for achievement

September 11 Boeing 777 Evac system 100% compliance with regulations Vandal proof Communication system – Customers – Maintainers Who cares about toilets? Supportability: The Difference between Profit and Loss in the Rail Industry We have already spent 10,000 hours on the toilet

September 11 We have rehearsed 30 years of maintenance Supportability: The Difference between Profit and Loss in the Rail Industry Train by trainProven operational robustness

September 11 Supportability so what? Supportability: The Difference between Profit and Loss in the Rail Industry Brake pads 32 per coach x 1000 coaches = 32,000 pads 32,000 pads x £50 x 10 replacements per year = £1.6M / /year (£56M over the life) Electric brake down to 5mph - £15M investment 32,000 pads x £50 x 2 replacements / year = £0.3M / year (£11M over the life) Total saving £56M – (£15M + £11M) = £30M

September 11 Wheel life extended by 6months Stock control fully automated Major equipment change in 1 hr Minimise spend on maintenance Supportability: The Difference between Profit and Loss in the Rail Industry 1 hr equipment exchange

September 11 Using technology to save money Supportability: The Difference between Profit and Loss in the Rail Industry Auto inspection –key systems measured daily Brake systems Power systems –Automatic maintenance instruction sent to shift manager. Train health data sent via wifi upon incident trigger –Remote access of train management system to diagnose –Automatic spares allocation –Automatic maintenance instruction sent to shift manager.

September 11 Information supports decision making on performance Supportability: The Difference between Profit and Loss in the Rail Industry Automatic Inspection Train management System Data Electronic Job cards Inventory Control Staff and Attendance Dashboard Reporting

September 11 Summary Supportability: The Difference between Profit and Loss in the Rail Industry

September 11Supportability: The Difference between Profit and Loss in the Rail Industry The UK rail market is commercially very complex Our customers will not accept poor performance Our income is linked to our performance We are striving to eliminate maintenance cost Cost effective, through life support is the difference between profit and loss