The $127.97 million rebuild of Dunedin’s Hillside Railway Workshops has reopened, marking a major boost for local jobs and New Zealand’s rail industry.

Rail Minister Winston Peters and Regional Development Minister Shane Jones officially opened the site on Friday, championing it as a symbol of industrial renewal and regional investment.

Hillside Railway Workshops has played an important role in New Zealand’s rail journey since 1875, at its peak providing 1200 jobs, but was largely mothballed by the mid-2010s.

The rebuild of Hillside was funded with almost $20m from the Government’s Provincial Growth Fund in 2019, $85m from Budget 2021 to upgrade the facilities and fund wagon assembly, and $23m from a wider Government investment in replacing KiwiRail’s ageing locomotives and wagons.

As the two New Zealand First ministers arrived separately at the site on Friday, both were met by protesters from various groups, including Climate Liberation Aotearoa, Restore Passenger Rail and Dunedin for Justice in Palestine.

Protesters from several groups chanted "shame" as the ministers arrived. Photo / Ben Tomsett

While Peters momentarily stopped to observe the protesters, Jones rolled up a sheet of paper to resemble a telescope and peered at them before entering the site.

Inside the workshop, Peters described the project as the culmination of years of effort to restore local employment and engineering capability.

“Our decisions and our advocacy saved the Hillside Workshops,” Peters said.

Peters and Jones were in Dunedin on Friday to officially reopen the Hillside Workshops. Photo / Ben Tomsett

“Dozens of people, almost entirely from Otago, have been employed - mechanical engineering skills, put to use right here, right now.”

He said that he was “slightly alarmed” by the number of former and present Labour Party members, and jokingly added: “I refute any allegation that I’m running for leadership of the Labour Party.”

The Hillside redevelopment includes the assembly of 1350 new rail wagons for KiwiRail, part of a broader Government push to revitalise rail infrastructure nationwide.

“The new, high-quality wagons being built at Hillside are part of our strategy for rail,” Peters said.

Regional Development Minister Shane Jones with ex-workers of the old Hillside workshops. Photo / Ben Tomsett

“They will improve service reliability and help KiwiRail better serve its existing freight customers. In turn, that will attract new customers and grow freight volumes.”

Meanwhile, Jones spoke on the need to rebuild domestic manufacturing capacity and to move away from over-reliance on international supply chains.

Acknowledging the presence of former Labour Finance Minister Grant Robertson, Jones said: “We need to spend money in this part of New Zealand to recover the skills, the legacy, and the aptitude to make things, manufacture things, and fix things.”

Regional Development Minister Shane Jones. Photo / Ben Tomsett

“This comes after the disaster of relying on Chinese manufacturing for critical components in KiwiRail. That reliance represented a gross undermining, a gross level of insolence, toward the proud traditions of this institution.”

Addressing the workers at the site, Jones said: “To the men and women learning these skills today, and to those of my vintage who have never given up on Dunedin’s proud history as a site of engineering, manufacturing and production, we salute you.”

Jones said the success of the workshops now rested with KiwiRail’s leadership.

“To the leadership of KiwiRail, the responsibility is on you, at the executive level, to deliver at a pace that allows us to defend, to the public, the significant injection of taxpayer money into institutions such as this.”

The project has also freed up land for further industrial development, which Peters championed as bringing the chance for investment and jobs to the region.

“You know, it’s often said that politicians shake your hand before the election and your confidence after it. But the moral of this story is: we don’t just start the job, we finish it.”

Speaking to media, former Dunedin South MP Clare Curran said she turned her back on Peters during his speech.

“I appreciate their support for rail, but please don’t rewrite history."

Dunedin Labour MP Ingrid Leary also welcomed the reopening of Hillside, but raised concerns about the Government’s long-term commitment.

“Look, this is a really great day for Dunedin, but I think the proof will be in the pudding when it comes to what is the Government’s real commitment to rail,” she said.

“We have the Aratere [ferry] being retired this year. We don’t have any certainty over rail-enabled ferries. And I don’t see any National Party Cabinet ministers here today.

“I’m feeling really excited about the Hillside Workshops — but a little bit concerned to know will the support be there from this Government to make sure that they’re not setting up Hillside to fail?”

Protesters converged on Deputy Prime Minister Winston Peters as he left the workshops. Photo / Ben Tomsett

Speaking to media after the opening, Peters dismissed protesters outside the event as a “sideshow”.

When asked about Curran turning her back during his speech, he accused her of attempting to rewrite history and claiming credit for funding initiatives championed by NZ First.

“That’s why she’s not in Parliament,” he said.

After the opening, multiple protesters swarmed Peters’ car but were held back by police.

On leaving the building, Jones stepped forward to address the protesters but gave up when he couldn’t be heard over them, waving his hand and walking away.

In a statement, KiwiRail chief executive Peter Reidy said the upgraded site supported safe, reliable freight services across New Zealand and included heavy maintenance for the South Island, wagon assembly that began in March 2024 with 401 wagons completed so far and up to 1500 expected, and the first-time co-location of Dunedin’s track teams.

The workshops employ about 100 staff and feature a 5500-square-metre multi-purpose building with 21 workstations, cranes and jacks lifting up to 120 tonnes, and a 130-tonne traverser.

An original 1870s building has been preserved and strengthened for parts storage, while a redesigned rail yard with fully electric shunt engines supports KiwiRail’s goal to be carbon-neutral by 2050, alongside new shared office space for mechanical and infrastructure teams.