Full steam ahead: Alstom's rosy view of LatAm’s rail sector

Rail development in Latin America has made important strides over the past few years. As cities such as Santiago and São Paulo continue to expand their subway networks, others such as Bogotá are taking their first steps into the field.

At the same time, more governments are taking action to expand medium-distance rail services and, in Brazil’s case, strengthen the freight rail network.

All of this is good news for French rolling stock manufacturer Alstom, whose operations in Latin America include production plants in Brazil and Mexico.

But the market has changed in recent years. Chinese firms such as CRRC are also competing and, in some cases, winning significant rolling stock contracts in Latin America, while there are concerns about the potential effects of a fiercer trade war between the United States and China once Donald Trump moves back into the White House.

To learn more about Alstom’s role in the region, BNamericas speaks with Bernard Peille, the firm’s managing director in Latin America since September.

BNamericas: Did your arrival mean a change of direction for Alstom in Latin America or are you focused on continuing your predecessor’s course in the region?

Peille: The market in Latin America is positioned to grow over the next three to five years. It’s a market driven by huge markets such as Brazil and Mexico, and to a lesser extent Chile. We’re doing our best to increase our share in this market.

BNamericas: Which projects in Latin America is Alstom currently involved in?

Peille: We have a bit of a presence everywhere in the region. We’re in Chile, Mexico, Panama, Brazil and the Dominican Republic, to mention a few.

In terms of specific projects we’re part of, we presented the first models for the trains of line No. 7 of Santiago’s metro in the past couple of weeks. We’re also part of the Maya train in the Yucatán peninsula [in Mexico] that started a new service earlier this year, and we’re also part of a monorail project in the Dominican Republic.

We plan to continue with our deliveries in Brazil and now also with the trains for line No. 6 of São Paulo’s metro. In addition, we have important signaling and services projects in all of Latin America. There are more than 6,000km of signaled lines. And around 780 trains or locomotives in maintenance in the region.

BNamericas: Which countries in Latin America do you believe will lead rail development in the coming years?

Peille: I don’t know who will be leading the way. What I know is that each country has specific needs. Chile will likely continue to expand, Brazil has many rail concession projects, so while there’s a lot that has been done, there’s still a long way to go in terms of market.

The Mexican government has recently announced plans to extend the rail network and Panama will likely expand line No. 2 of its capital’s metro and advance with an extension of the third line. Santo Domingo, in the Dominican Republic, and Bogotá, in Colombia, will likely build new metro lines as well.

With the exception of Mexico, Latin America is a relatively young market but it's gaining steam in terms of projects.

BNamericas: What industry trends do you expect to see in the coming years?

Peille: Rail development will go towards more and more automatization in the future. We also expect new developments in rail signaling systems, with some early developments taking place in Brazil.

The trend in technology is always to be safer and as green as possible, but in that field, I believe we’ve reached a good level when it comes to green mobility.

BNamericas: One trend of the past 10 years is the entrance of Chinese firms, not only in rail line construction, but rolling stock as well. Do you believe that competition in Latin America is more intense as a result?

Peille: The good news is that you now have Alstom, Chinese firms and other firms. It’s a sign that the market is growing and attracting more interest from high profile manufacturers. 

It’s certain that competition doesn’t sleep. Competition is where we are and there will be more and more, not just in Latin America. Our drive is to compete and to win through our abilities.

BNamericas: How has Alstom been affected by the rise in costs seen after the COVID-19 pandemic?

Peille: We live in a world of long-term contracts, which are meant to be fully delivered in three to six years, or even longer depending on the case. 

After the pandemic, what we’re seeing is that our clients are reaching a normal level of passenger traffic again, so the demand for new train models is still there. So I think the post-pandemic risk in terms of mobility demand is over.

The only question remaining is how financing is done, as after the pandemic countries have less fiscal space and new avenues have to be found. 

BNamericas: Do you believe that Alstom could be affected by an eventual tariff war between the United States and China?

Peille: I don’t have a crystal ball for eventual economic conflicts. The only thing I can tell you is that we have a policy of being as close as possible to our customers, and the last decade has enabled us to look more into possibilities to strengthen our supply chains, which has helped a lot in terms of logistics, especially in cases where we have manufacturing plants in specific markets such as Brazil and Mexico.

Of course, we don’t know how the future will be, but the highly localized supply chain in Latin America helps us through difficult times with the global economy.