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New Workshops. In the North Island a site has been procured at Otahuhu, near Auckland, for the new car and wagon shops. All heavy repairs to cars and wagons in the North Island will be performed at these shops when completed, and all new car and wagon stock will be built there. The complete plans for these shops have been completed, and tenders for the erection of all buildings close on the 30th September, 1926. At Petone, in the new industrial area close to the Waiwetu Stream, a site has been procured for the centralized locomotive-repair shops for heavy repairs for the North Island. Complete plans have been made, and tenders for the erection of these shops close on the 31st August, 1926. In the South Island the plans have also been completed for the remodelled car and wagon shops at Addington, and for the locomotive shops at Dunedin. Tenders for these shops have been called, and close on the Ist November, .1926. The complete erection will take, it is estimated, about fourteen months from the date tenders are accepted, after which the installation of machinery and equipment will be proceeded with. Since it is recognized that the economies on which the scheme of improvement is based will not be obtained in their fullest measure till the works are completed, every effort is being made to complete them in the three years as planned. Further investigation into the maintenance of wagon stock has shown that the existing workshops have been handling a considerable volume of work on minor breakdown jobs, which logically should be done at the terminals themselves, as is the general railway practice. In order to do this and other light work, such as Westinghouse-brake cleaning, the facilities at Auckland, Christchurch, and Dunedin yards are being increased so that vehicles requiring these light repairs may be repaired and put into service with the utmost possible despatch. The increased efficiency in this connection will reduce the " out of service " problem so far as rolling-stock is concerned, and assist the Traffic Branch when the demand for wagons is heavy. East Town Workshops. It has been decided that the manufacture of points and crossings shall be transferred from Addington to East Town. Examination shows that the major requirements for this product are in the North Island, and the existing shop at East Town is well suited for the purposes. It has also been arranged to concentrate all tarpaulin work for the North Island at East Town. Car work hitherto done at East Town will be transferred to Newmarket, and the tarpaulin department from Newmarket transferred to East Town. Light repairs fco engines and wagon stock will be continued at East Town ; the heavy work to locomotives will later on be transferred to the new workshops at Petone. Copies of the plans of the lay-outs at Otahuhu, Petone, Addington, and Hillside are appended hereto. Workshops Machinery. Considerable progress has been made towards the modernizing of the workshops machinery. The state of obsolescence reported on last year has been dealt with by a three-year programme of replacement. The machinery being ordered during the first and second year consists only of that which can be profitably utilized in existing workshops pending the erection of the new workshops ; that included in the third year will be the heavier machinery which will be placed directly into the new Avorkshops. In order to facilitate repairs to locomotives, plans for grouping machinery according to the organization of the work have been made and put into execution at each of the four main workshops. The new layouts provide better access around the shop, and lessen the amount of material-handling. Provision was made in these new layouts for the new machinery and for the electrification of drives. One hundred and three machinery specifications were drawn up and issued, covering the replacement and additional machinery required to modernize our shops, this being the first year's quota. A Machinery Committee was set up to make a

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