Local Content Rules as a Tool of Technology Transfer in the Turkish Rolling Stock Manufacturing Industry: Tulomsas Experience

Abstract

In Turkey, passengers and goods are transported mainly by road reflect a very low share of railways in total freight (5%) and passenger transport (3%). A main reason for this fact is low railway density (length of railways per square kilometer of territory) in the country. It is clear that over time the rise in transport demand due to the increase in population and economic growth cannot be possibly be met by the existing road network. Therefore, the share of railways in total transport market is likely to increase. Changes in government policy since 2003, as reflected by the “Transportation Master Plan Strategy” (2005) and the “Transportation Infrastructure Need Assessment Study (TINA),” will assist that process.

Appendices

Annex-I: Excerpts of the Letter from Area Manager/Locomotive Sales, GM-EMD addressed to CEO of TULOMSAS Dated July 17, 2003

Contract Maintenance

I know from our meeting, facility upgrade is one area of primary interest. As with all aspects of our programs, the facility upgrades required and provided, have varied widely depending on the requirements. Anywhere from mere tooling refreshes to extensive facility overhaul or even construction of new facilities. The actual amount for each program depends on detailed facilities assessments and investigations for which EMD has specialists on staff.

The most common areas of improvement are:

• Lighting

• Drainage systems/oil recovery

• Compressed air, water, lube oil access

• Overhead cranes

• Wheel true machines

• Drop table or jack stands

• Warehousing

• Locomotive wash stations

As a preliminary step prior to an actual visit to Eskisehir, TULOMSAS could assist EMD-GM by providing a detailed analysis of TULOMSAS’ facilities and any other general requirements. Some of the areas/items we are interested in are as follows:

• Locomotive Duty cycle?

• Hours of operation – 5 day operation or 7 day 24 h operation?

• Miles or kilometers per month?

• Typical reliability measurements used?

• Typical availability measurement used (calculation)?

• Total number and location of shops to be used for maintenance?

• Equipment at each shop (cranes, drop tables, special tooling)?

• Load test facilities?

• Inspection pits?

• Is the workforce unionized?

• What is the skill level of the assigned workforce?

• Describe the warehouse facilities as to size, security, availability?

To further facilitate this we have attached a “Questionnaire which TULOMSAS can complete and return to EMD/GM.”

Offsets

“I have not completed my full review into this area. I do not have the specifics at this time but as part of my discussion with our material procurement coordinator, I discussed the history of our attempts in the past to have TULOMSAS become our supplier. In addition, I will continue my review, and I am sure there will be other possibilities which we can include for future discussions.”

Locomotive Exports

This is a very interesting and valuable area of cooperation for all parties. In addition to countries like as, neighbor countries where we have already cooperated, there are many more in the Middle East, Africa, and Asia which will be in need of reliable and economical locomotives in the future. Probably one of the biggest potentials is in [IRAK]. TULOMSAS’ demonstrated capabilities with, and the performance of, both the GT26CW-2 locomotives now being manufactured for the TCDD, along with the diesel hydraulic shunters you have designed, manufactured, and supplied for the IRR, will influence their future decision(s).

There is no doubt there is a large potential market here. With the proper mutual cooperation there should be a way to get TULOMSAS manufactured EMD locomotives into these markets.

Annex-II: Protocol Between TULOMSAS and GM-EMD dated May 8, 2002 Specifying the Local Content Rule

With reference to the Contract no.03/0.56-1 dated 08.05.2002 signed between TCDD General Directorate (TCDD) and General Motors Corporation-Electro Motive Division (GM-EMD) for the procurement of 53 each Model GT26CW-2 Diesel Electric Mainline Locomotive CKD kits for local manufacture by TÛLOMSAŞ General Directorate (TULOMSAŞ) under the existing license agrément, in order to increase the scope of the local content defined in Enclosure-1 and already achieved by TULOMSAS in the manufacture of 6 each locomotives of the same model for TCDD, it has been agreed by both parties that the local content of TÛLOMSAŞ will be increased to 51 % by the localization of the additional main components, works and processes stated in Enclosure-2.

Within the scope of this protocol, all the manufacturing drawings and technical specifications for the said main components, works and processes have been delivered by GM-EMD to TULOMSAS free of charge under the existing license agrément and technical support and training will be similarly provided free of charge during the manufacture of the locomotives under the terms of the above contract.

The licensor GM-EMD has furthermore stated that due to the current expiry date (31.12.2003) of the Canadian Government’s Export Agency’s (EDC) credit offer submitted on 08 May 2002 for the financing of this project, the affectivity of this protocol will be conditional to the initiation of the loan agrément negotiations between the creditors and the Turkish Republic's Undersecretariat of Treasury prior to 31.12.2003.

Enclosure 1

• 1. Underframe Manufacture and Machining.

• 2. Car body and Driver's Cab Manufacture.

• 3. Equipping, Piping and Cabling of the Underframe, Cab and Carbody.

• 4. Fabrication of Main Air Reservoir.

• 5. Fabrication of Battery Box.

• 6. Fuel Tank Fabrication.

• 7. Assembly of Control Desk.

• 8. Assembly and Testing of Brake System.

• 9. Fabrication and Assembly of Engine Equipment Rack.

• 10. Manufacture of Buffers, Drawgear and Automatic Couplings.

• 11. Final Assembly of Locomotive.

• 12. Painting of the Locomotive.

• 13. Final Testing of the Locomotive.

Enclosure 2

• 1. Fabrication, Equipping, Wiring and Production Test of the High Voltage Cabinet.

• 2. Manufacture of Bogie Components like Axles, Wheels, Rubber Elements, Bearing Adaptors and Brake Rigging.

• 3. Casting of the Bogie.

• 4. Machining of the Bogie Frame Casting.

• 5. Assembly and Test of the Bogie Subassemblies and Bogie.

• 6. Fabrication of Equipment Rack Components like Auxiliary Control Cabinet (AC Cabinet).

• 7. Equipping and Testing of the AC Cabinet.

• 8. Fabrication of the Water Tank.

• 9. Fabrication or Manufacture of the Traction Motor Blower Housing, Dust Bin Blower Housing, Auxiliary Generator Mounting Brackets, Compressor Drive Shaft and Auxiliary Generator Drive Shaft.

• 10. Assembly and/or Partial Manufacture and Testing of the Traction Motors.

• 11. Traction Motor and Generator Power Cables.

• 12. Driver's Cab Interior and Exterior Design Modification with Engineering Support from GM-EMD and Fabrication and Equipping and Cabling of the Driver's Cab.

The protocol has been approved by the TCDD Board Directors in August 2004.

Definitions: Technology Transfer

“The Technical Information ‘’ shall mean drawings, specifications and other documentary technical information furnished to TULOMSAS-TCDD by EMD-GM under License Agreement.

Main Diesel Locomotives’ shall mean vehicles, designed for operation on rails are powered by GM Model 645 Series diesel Engines with and AR10/D18 main Generators and current model D78B traction motors designed by EMD primarily for use in Diesel Locomotives and intended primarily for propulsion.”

Product in Technology Transfer

Main Characteristic of Diesel Electric Locomotive that have been subjected to Technology Transfer Agreement in Table 11.3 below:

Table 11.3 Main characteristics of the product

The Issues for Implementing the Technology Transfer

Although it was mentioned earlier that TULOMSAS and EMD-GM joint locomotive production has a history going back to 1987, TULOMSAS has to improve and develop its capability of manufacturing the new product.

The Electro-Motive has an ongoing development program focused on the continuous development and implementation of new manufacturing strategies and processes. This program utilizes the latest technologies, process development and statistical analysis to optimize locomotive maintenance. Their overriding philosophy is to use a combination of techniques, including condition-based maintenance, on-board testing, remote monitoring, statistical analysis, process development and others to meet the objectives.

In order to focus on continuous improvement, there are a few underlying goals that drive the development activities. Both parties have agreed to follow up the following issues;

• Quality Issues

• Technical Issues

• Localization Issues-Bogies

• Commercial Issues-Offset

Quality Issues

• Supplier Quality Questionnaire Assessment.

• Who should fill the application (EMD or TULOMSAS)?

• Product/Process Warranty.

• First article Inspection – full dimensional and welding check for the first two under frames.

• The first two under frame units shall be built under supervision of EMD and will be checked for 100%.

• Process Flow Diagram – completed has casting and underframe production flow chart (TULOMSAS will send casting flow diagram).

• Inspection and Test Plan – Control and Welding Plan.

• Functional/Performance – This one will cover welding process – training, WPS, WI.

• Material Test Results – The approval of the substitutions for material requirements.

• When completed, the list of all the approved substitutions should be compiled (with EMD approvals) and attached to SPAP documentation.

• Will supply vendor certificates.

• Will 100% test for the two under frame, remainder will provide samples results.

• Process Capability – I did not discuss as I was not sure (still not as I have not seen drawings yet) if the KPC (key product characteristics) have been defined on the drawings.

• EMD will provide the KPC’s to TULOMSAS.

Technical Issues

• The final drawings of the under frame are handed over to TULOMSAS on CD format. In case of a revision to these drawings EMD will send the revised drawings to TULOMSAS. The list of drawings not included on the CD are outlined and given to EMD.

• Approximately 60% of the flat patterns are provided to TULOMSAS on soft format. A dimensioning is necessary to be performed on these drawings.

• Cable brackets were initially not included in non-checked drawings but this job is required to be accomplished by TULOMSAS. Some additional labor and material cost should be added.

• TULOMSAS asked for approval to use EDC 3244 steel quality instead of EDC 3241.

• Technical specifications of pipes are sent to EMD by e-mail.

• St44-2 steel quality is offered for Walkway plate material by TULOMSAS. (Related standards DIN59220, BS EN 10051, ASTM A-786)

• St44-2 steel quality is offered for U-Sections and Angels.

• Mr. Grzybowski has been informed about the TULOMSAS request related to the production changes of hand brake chain part, air duct flange and of the part with number 8084360.

• TULOMSAS asked for EMD approval to use diamond shape steel sheets for step floor.

• Design Change Process-Discussion on the design change requirements as they come up during the manufacturing process.

• In case any design change is needed, Requirement of Design Change form will be used. If EMD makes any changes in drawings, EMD will inform TULOMSAS about the changes. EMD will provide training on ECR/MCR process 2–3 weeks prior to manufacturing.

Localization Issues-Bogies

EMD and TULOMSAS have performed a corporate work for the manufacturing of DE 33000 type locomotives with a local content of 51 %. It has been decided to manufacture the bogies and the bolsters locally, so as to reach the 51% local content. Furthermore:

• As EMD, we have been supplying these bogies from the companies in US or foreign countries. This bogie is not a new design bogie. It has been assembled in thousands of locomotives and they are approved. We did not encounter any problems.

• All kinds of documents such as drawings, technical specifications had been given to TULOMSAS by EMD to be able to manufacture the bogies. TULOMSAS made ASÇELİK manufacture the bogies according to a/m documents provided by EMD. There will be no problem in case the bogie manufactured and tested according to the mentioned documents.

• The bogies manufactured in Turkey do not need to be tested by any additional inspection company/organization or do not need to be tested/tried for many kilometers.

• However, TULOMSAS has made the İTÜ (Istanbul Technical University) perform static and dynamic tests. The test report which the ITU prepared is appropriate.

• Besides, TULOMSAS has the capacity to perform metallurgical, chemical and dimensional tests.

Briefly, since these bogies which are manufactured and tested according to the EMD documents have been tested for many years, they do not need to be tested by a company or on the railroad any more.

Commercial Issues-Offset

• Regarding some steel castings, the specifics will be discussed and decided by both sides’ material procurement coordinators.

• There were attempts in the past by EMD-GM’s to have TÜLOMSAS as its supplier. As a result, it was promised to have TULOMSAS included on the list of distribution for these new RFQ’s.

• In addition, it will be continued to review, and there will be other possibilities which the parties can include for future discussions.

• TULOMSAS will manufacture locomotive underframes for EMD as part of a large project in South Africa. This venture will continue to add new levels to the depth and synergy of our mutual cooperation.

• This is to certify and put in effect the reciprocal understanding of both parties for the manufacture and exportation of 50 units GT 26-MC locomotive underframe by TULOMSAS in Eskişehir Turkey.

• EMD will inform all the contact information of the shipper and the South African company.

• EMD will finish the opening of the Letter of Credit (L/C).

• EMD will provide information about how to load the under frames on to the ship