Assistant Minister for Manufacturing Tim Ayres says the Hunter is ahead of the pack for NSW train manufacturing

On a tour of Varley, one of the country's oldest engineering companies at Carrington on Friday, Mr Ayres told the Newcastle Herald the Hunter's skilled workforce makes it the "best destination" for rail investment.

"The number one thing that the Hunter has got is its engineering capability in the firms that exist here, which do work like Varley in rail, but also in defence," he said.

"They use their engineering capability in a whole lot of different areas, and it's that plus the skills of the local workforce that makes the Hunter Valley the best destination for rail investment."

It comes after NSW Treasurer Daniel Mookhey this week announced that the Hunter will play a "crucial role" when the government replaces the Broadmeadow-built Tangara fleet.

The fleet, which began operating in the late 1980s, has already had its life extended by ten years and is due to be retired by 2027.

Before the March election, Labor promised to replace the state's metropolitan trains with new rolling stock made in NSW, using at least 50 per cent local content resulting in about 1000 jobs.

A decision is expected to be made about the Tangara fleet in the next year or two, in the meantime, the Hunter's manufacturing industry has faced its own challenges.

In September, Molycop announced it would cease steel-making operations at Waratah, leaving 250 workers at the site without jobs.

Molycop produces rail wheels out of Australian-made steel, and at the time, Australian Manufacturing Workers' Union (AMWU) Newcastle lead Brad Pidgeon raised concerns about what that might mean for Australia's sovereign capability and the revival of domestic manufacturing.

On Friday, he told the Herald the Minns government needed to implement stronger procurement practices which will ensure public good benefits and attract greater local investment innovation.

"There also will be added tax revenue for the state and equally important local job creation if transport infrastructure is built here in the Hunter," Mr Pidgeon said.

"The previous government has failed the people of NSW by purchasing off-the-shelf trains, overseas.

"Since 2016, we have seen six major transport infrastructure projects blow out by 40 per cent from original cost estimates."

Mr Pidgeon called on the government to investigate those cost blow outs and the "inefficiencies" of offshore contractors.

"We have done it before and there's no reason why our trains, buses and ferries cannot be built in the Hunter," he said.

Prime Minister Anthony Albanese outlined the government's National Rail Manufacturing Plan (NRMP) at Varley's Carrington workshop in 2020, which Mr Ayres is charged with delivering.

If the states work together, Mr Ayres believes rail projects can be delivered on-time and on budget with better outcomes for the commuter and taxpayer.

"The NRMP is all about us working collaboratively with the states, not looking for an argument or finger-pointing or shoving blame at somebody else, it's about really rolling our sleeves up and working together to deliver an outcome - and the Hunter Valley is at the heart of NSW's rail manufacturing capability," he said.

"The lead time on all of these projects is really long, companies are looking at 10, 20 and 30-year investment horizons and we need to give them certainty that there's going to be work here for Australian rail manufacturing in the long-run.

"That's delivering beyond the political cycle, so we're working with the states to give companies confidence that work is going to be here for decades to come, that's the number one thing we can contribute here."

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