Chinese buses & coaches cost jobs in the Netherlands

Chinese buses & coaches cost jobs in the Netherlands

20 January 2020

By Wim van der Leegte

The 259 electric buses intended for the outlying areas of Overijssel, Flevoland and Gelderland will be ordered from BYD in China. The previously-announced 156 electric buses, also Chinese, for use in the transport areas of Amstelland-Meerlanden and Haarlem-IJmond, will be delivered by Ebusco, an importer of Chinese buses and coaches.

Naturally, VDL Bus & Coach, the only Dutch bus and coach manufacturer and part of our family business VDL Groep, would have liked to supply these 415 electric buses. For the record we were certainly able to meet all the requested conditions ahead of the final award: concept and on-time delivery, for which extensive guarantees were provided. The Netherlands has around 6,500 local buses. Given a depreciation period of 10 to 15 years, the market for 2020 has largely been filled. So there’s little room for our Dutch buses in the year ahead, despite the home market being crucial for us as a European leader in electrifying heavy transport.

Developing electric buses & coaches represents innovation of the highest order. Significant investment in research and development has enabled VDL to specialise further, from being a bus manufacturer to a system integrator, including supplying charging infrastructure, electricity, maintenance, connectivity and training. As an energy transition specialist, we heartily applaud the welcome prospects of making public transport fully sustainable.

Of course supplying buses & coaches is in our business interests. But as an advocate of maintaining employment in the high-grade Dutch manufacturing industry, we are seriously concerned about the award of these concessions. Ordering Chinese buses will have structural consequences for employment in the Netherlands. Our Buses and Coaches division employs 2,600 people in the Netherlands and Belgium and there are sales support activities in 20 European countries. The 415 new Chinese buses that will operate in our country will represent some 800 man-years of work, excluding outsourced work and research and development among suppliers and knowledge institutes.

China supplies 35 billion euros worth of goods to the Netherlands, with 10 billion euros worth of goods going from the Netherlands to China. So the trade balance is out of kilter and China is eroding our jobs. If we no longer manufacture in the Netherlands we lose that knowledge, followed by the capital and with it our prosperity. A quarter of all jobs in the Netherlands are industrial or related. No less than 70 per cent of our exports depend on industry. Think away Dutch industry and you can imagine the catastrophic consequences for Netherlands Ltd.

First and foremost: we are in favour of as few trade barriers in the world as possible, but also of a level playing field. Apart from economies of scale, cheaper wages and government support which are often provided, it’s also easier for Chinese companies to export to Europe than it is the other way around. The Chinese pay very low import duties for their products in Europe, while Europe faces hefty import tariffs. China also restricts competition in its domestic market, forcing companies to manufacture their products in China and to share their knowledge. All these are facets of an uneven playing field.

In Europe opening the door wide to the import of Chinese products, we put our prosperity at risk by our own hand. Where the emerging market and production of solar energy in Europe was previously flooded by Chinese supply and cheap production, now electric bus transport faces the very same threat. Let us not fall into the same trap; let us call on our government to stand up in Brussels for a common European industrial policy.

In the case of the 259 Chinese buses, unfortunately we could not gain the support of the concession’s coordinator, the province of Overijssel. Yet exactly one year ago, with the acquisition of Siemens Hengelo, we were able to retain some 450 jobs for the Netherlands’ high-grade industry. Our companies in Overijssel employ around a thousand people, and we will invest at least seventy million euros in this region over the next two years. VDL Groep has 104 operating companies with 17,110 employees, of whom 85 per cent (14,421) work in the Netherlands.

What requires extensive discussion is that carriers participate in tenders and then choose a bus supplier. So the bus supplier is dependent on the choice of the carrier, which must focus on the tendering conditions of the party granting the concession. But if that party says “We won’t talk about that,” everything stops.

Achieving what may be a better purchase price by buying buses & coaches made in China pales into insignificance when measured against the effect that an order contributes to Netherlands Ltd. Orders for Dutch buses feed back into the Dutch economy through sustainable employment, through corporation and wage taxes, into innovative ecosystems through cooperation with high-tech partners and knowledge institutions and through local social contributions.

In the China strategy presented this year, the Dutch government states that “China is guilty of trade practices that distort the level playing field and restrict market access, such as undesirable state aid and forced and improper access to technology.” There are also concerns about how China deals with the environment, human rights, labour rights and privacy. In its new strategy the government will explore the extent to which adjustments to parts of the EU competition and state aid framework can lead to a more level playing field.

Yet in the very same year of its China strategy, calling for a more level playing field and strengthening the internal market, 415 electric buses from China are announced for use on our national roads. Anyone who understands this is welcome to explain it. What remains for us is emotion. Emotion that is not about losing orders, but about the future of our employees.

Wim van der Leegte is the owner and supervisory director of VDL Groep.