Increasing competition in the rail industry will actually entrench the positions of the leading rail services companies, according to Mr Geoff Ashton, the chairman of takeover target Clyde Industries Ltd.

Clyde - subject to a hostile cash-and-scrip bid from Brisbane-based engineer Evans Deakin Industries Ltd - predicts the deregulation of the rail industry will create up to $1.5 billion in manufacturing and maintenance contracts in the next two years.