Having introduced the world to Kylie Minogue, Jason Donovan, Rick Astley, Steps and a number of other pop music acts who seemed to specialise in infernally catchy (and hugely successful) ditties - and created a multi-million pound empire along the way - there can be no doubting Pete Waterman's business ability. His story could have been very different, were it not for a life-changing episode at the age of 14. He was interested in railways and the nearby branch line that rumbled from Coventry Colliery to the main network was a constant source of fascination. He and his grandfather spent hours standing on a bridge, watching the trains go by. Disaster threatened his young life when he acquired some parts from a shed that was housing locos waiting for the scrapheap. Unable to read or write, that fork in the Waterman road could have led to a downward spiral. Instead, he was lucky, the authorities realising that the illiterate teenager had accidentally found himself way out of his depth. The version of community justice he was `sentenced' to changed a life. Instead of borstal or probation, the boy was sent to work as a Saturday morning junior at Wolverhampton engine sheds. He loved it and he learned a great deal. "The guys I was sent to make the tea for showed me how to do the job," Waterman said. "They showed me how to use a file - they'd say, try filing down that bit of brass, see how you get on. If I got it wrong, they showed me how to do it right. They showed me how to clean the file, how to look after my tools, what the job meant. That's what I learned from them. I adored the railways and I still do." He also learned what goes into making a functioning work unit; the value of skills and trade; pride in work; and the value of teams. The millions he has made from the music business have gone into three operations, of which he is either outright owner or has a big finger in the pie. Power, precision and engineering Just Like The Real Thing makes railway models - not the OO-scale trains familiar to a million garages and bedrooms around the country, but large, 4mm and 7mm kits, and handmade engines, and rolling stock that retail at approaching £400 each. The Waterman Railway Heritage Trust was established to rescue and preserve engines and rolling stock from the mid-1950s, the period that saw him first fall in love with the power, precision and engineering complexity of steam, brass and iron. With all respect, most non-enthusiasts would view those activities as hobbies that may make money, rather than commercial operations. It is the third business that takes up a lot of time and is clearly a major player in the rail industry. "London & NorthWestern Railway (LNWR) is the biggest British-owned provider of maintenance and service to railway rolling stock in the country, and the third-largest overall," said Waterman. Based at Crewe, LNWR looks after the West Coast Voyager and will manage the servicing of the SuperVoyager trains, the fastest diesel locos in the UK. It is not his first venture into mainstream rail, though: Waterman Railways held that honour. "When British Rail was first being privatised, we bought the Special Train Unit. We found that pulling trains is sexy but it wasn't a profitable thing to do. We got rid of the rolling stock and went in for maintenance." The company currently employs 156 people and that number will have to rise to over 200 by December this year, when the upgraded West Coast line through the Trent Valley is opened and the SuperVoyager contract is implemented. And that presents something of a challenge. "Skilled people are very difficult to find. That fact became obvious right from the start," he said. "With privatisation, the older, experienced and skilled people were being let go. We want to employ older people - they have the skills, they have the experience, they know how to work things out. And they're delighted to have a job - at the age of 50 or 55 they thought they were finished. They're doing great things for us, including training the youngsters. They can show them how to do it." Training is a big thing for Waterman, not just because he benefited from it himself but because he has found such a huge skills gap. LNWR has reintroduced five-year apprenticeships, developing a course with South Cheshire College. "We've gone up from four apprentices to 21. On average, we have three new apprentices at a time. In a good year, we take on four or five and we would have more, if we could afford it," he said. None of the apprentices are subsidised, it all comes from the company itself. It is a deliberate decision to focus on the skills the company needs. "We rejected the Modern Apprenticeships. They're a nightmare - they're not what the employers need. We had to make the choice: to either get the subsidy or do it right. We chose to do it right." While this may seem a bold choice to make, Waterman does not see it quite like that. "I was in the House of Lords recently, when the Prime Minister told them that the government was about to offer all 16-year-olds three-year apprenticeships. That's great but they must, they must involve the employers. Going to college isn't what it's all about," he said. "You need to put people on the job with folk who know what they're doing. The thing is. organisations are paid to train people but they come out with no job to go to, and on the other side, we have a huge skills shortage." He recalls that he learned his job on the railways from being unable to read or write. "We don't need people to be educated, in the academic sense, we don't necessarily need them to have GCSEs. I'm interested in taking on people who want to do the job." To that end, Waterman and LNWR are involved in the early stages of establishing an academy, along the lines of the old industry training boards, which were run by and for the industries doing the training. "Several people have said to me that we need this kind of thing, very badly. Network Rail is interested to come in, too. They have this huge problem - there are only about 700 skilled people in the country able to work on the permanent way with, for example, 20,000 volts on the overhead cables," he explained. The health and safety requirements on the railways are among the most exacting in industry. "We must be the only business in the country where you have to give a cleaner six weeks' training before they can go and do their job. They have to be safe, they have to understand where they're working." LNWR has liaised with Bentley in Crewe and it was they who told him that, if he wanted properly trained staff, the company would have to do it itself. There is some light on the problem, from an unexpected source. JCB is cutting back its workforce as the construction industry goes through its struggles and there are several fitters, welders and other tradespeople coming available, and not far away. It is not a simple case of transferring, and starting the day after. Small scale "In the old days, someone would have been doing the job so long as they could look at anything, work it out and do it, because everything was made by British Rail. Now, the stock is made all over the world, and everything's different. The technology has changed - it's all set up with computers and the telemetry is different for different products, depending on who's made it," he explains. "And the British network is different - the British Rail gauge for tunnels is the smallest in the world, so our rolling stock is diminutive. The Primrose Hill station out of Euston - I tell you, I have to shut my eyes going through there at 100 mph. The walls are only two inches away from the driver's window. They get used to it but it scares the life out of me." So the stock made overseas has to be made specially for the UK market. "One area that is booming in this country is engineering. For 40 years, we've been chucking it; now, it's dawned on people that it's better to make things here than bring it in from abroad. We buy from Germany, China, wherever and the stock is all different. We can't retrain people overnight - it will take months." He is not simply beating the Government with a stick. The recently-announced bonuses to Network Rail bosses have drawn a lot of criticism although Waterman is not joining in. With just 700 appropriately-skilled people and a huge workload, the slightest problem has massive repercussions. Shortages at Christmas, with major projects at Liverpool Street and with the four-tracking of the West Coast line through the Trent Valley in the Midlands, meant there simply were not enough hands to go round - and at night, which is when most work is done. "The infrastructure is a national asset and probably shouldn't be private. Only the Government could commit to the massive investment involved in making the railway four-track and I applaud them for that. Crewe railway station is a major bottleneck and the choice is: upgrade the signalling and existing infrastructure, which will cost £300 million, or move it, which will cost £1 billion. Probably a public-private partnership will be involved to do it, either way,' he said. "I had a good relationship with Railtrack, although it wasn't perfect. Network Rail is a completely different kettle of fish and is probably the best it can be in the circumstances. All the train operating companies have an axe to grind - they need to make money. But if you cut through the headlines, there has been spectacular progress. The increase in capacity on the Rugby-Crewe line is amazing and I really didn't expect to see it." He is on record as defending the decision to close Coventry and Rugby stations periodically as the only means of getting the job finished with the resources available. He sees more issues ahead, too. "Crossrail will need 14,000 people, but major projects in Dublin and Dubai, for example, pay very well. Dubai, you get £750 a week, all your health and housing. Anyone will say: where do I sign?" He would rather have these kinds of challenges, in an area where he is passionate, than be scrabbling around for things to fill the long day. "Life is challenges - they're not all good but that's the way it is," said Waterman. "I've got my music, I've got the railways, and I'm being paid to do things I love. I'd rather get up and face challenges than not."