1. Contractor´s Position to Procurement and Outsourcing General Meeting Berlin 20.11.2009 Manfred Wacker 20.11.2009 Berlin

2.  The German Railway Construction Market is covered by app. 150 competitors  Nearly all private competitors are midsize companies very often family owned  The largest railway construction group is „Bahnbau-Gruppe“, a 100 % subsidiary of Deutsche Bahn  The „Bahnbau-Gruppe“ is occupying app. 25 % of the German market General Meeting Berlin 20.11.2009 1.Status of Procurement and Outsourcing in Germany

3.  Procurement of railway specific material (sleepers, rails, ballast, turnouts) is mostly done by Deutsche Bahn  Most of logistical activities related to those materials is organized by „Railion“ the freight transport organisation of Deutsche Bahn  The site internal logistic is to be organized by the contractor  The Interface between general transportation and site logistic is a transmission station General Meeting Berlin 20.11.2009

4.  As Bahnbau-Gruppe covers app.. 25 % of the market, Deutsche Bahn has serious control and influence  Deutsche Bahn can keep Know-how in-house  „Bahnbau-Gruppe“ has full influence on the price level by strategic competition  „Bahnbau-Gruppe“ keeps working places and can so fulfil an employment guaranty duty General Meeting Berlin 20.11.2009 2.Advantages of „Bahnbau-Gruppe“ as a Competitor … …from the view of Deutsche Bahn

5.  Deutsche Bahn can optimize material prices by bundling  „Railion“ creates added value in their core business  Quality standards can be influenced by Deutsche Bahn General Meeting Berlin 20.11.2009

6.  „Bahnbau-Gruppe“ shortens the market by 25 %  Strategic competition very often means dumping prices  The productivity of „Bahnbau-Gruppe“ is only 60 % of the private companies  „Bahnbau-Gruppe“ is safe from insolvency General Meeting Berlin 20.11.2009 3. Disadvantages of „Bahnbau-Gruppe“ as a competitor… … from the view of Contractors

7.  Private contractors are often able to realize lower price level than Deutsche Bahn  „Railion“ as logistic performer very often failes delivery in time  In several cases construction sites are delayed or canceled because of logistical failure General Meeting Berlin 20.11.2009

8.  Competition between free Deutsche Bahn construction companies and free market competitors is under extremely unequal conditions  The performance of „Bahnbau-Gruppe“ is substantially lower than that of private contractors  Deutsche Bahn is sponsoring their railway construction companies by investing public money  The unequal competition is endangering the existence of private companies General Meeting Berlin 20.11.2009 4. Conclusions from constructors point of view

9.  Purchase of railway material by Deutsche Bahn is not cheaper than by free competition  Logistical handling by Deutsche Bahn is bad organized and produces additional cost and time delay on both sides  Efficiency of performance will increase by transferring the hole responsibility for railway procurements to private contactors General Meeting Berlin 20.11.2009

10. Thank you for your attention! General Meeting Berlin 20.11.2009