The government has thrown a possible lifeline to Derby company Bombardier despite a £3 billion contract to produce the next generation of Thameslink train carriages being awarded to competitor Siemens.
The contract, which is part of the £6 billion upgrade of the Bedford to Brighton line through London, will see 1,200 new carriages built, a doubling of the peak time capacity of the Thameslink rail network, and an increase in new commercial property along the line with 150 stations instead of the current 50. The carriage-building aspect of the contract was awarded to Siemens earlier in the year, with Derby firm Bombardier losing out.
The government defended the award to Siemens in the face of strong criticism from the industry, trade unions and the Labour Party, arguing that, despite going abroad, the contract would nevertheless bring in some 2,000 jobs to the UK, with 600 new jobs involved in component manufacturing, 650 to build new commercial property in the form of maintenance depots and a further 750 to maintain the new trains and operate the new commercial property; 1,500 jobs building the carriages will be stationed in Germany.
John Forkin, Marketing Derby’s managing director says: ‘At risk are 3,000 jobs in Derby and up to 15,000 jobs across the Midlands and beyond.’
As a result of the contract being award abroad, Canadian company Bombardier have indicated they may need to slim down their UK operation, including reducing the commercial property sites they hold in Derby among other places. Currently they have 15,500 staff working on UK trains and an aerospace division which employs approximately 5,000 workers at commercial property sites in Belfast. They have already announced plans to lay off 446 staff and 983 contractors as a result of losing the Thameslink contract.
The effects on the regional economy and the prospects for commercial property and industrial investment in Derby are compounded even further with just under half (40.59%) of businesses in Bombardier’s supply chain planning to cut staff as a result, and less than 1% expecting to benefit from the Siemens award.
However, the government has indicated that it wants to retain the manufacturing capability and commercial property space at the Derby site and there is a possibility that Bombardier could win the £120 million contract to upgrade diesel trains on the CrossCountry Penzance to Aberdeen line to use a new hydro-electrical power system. That in itself would give the Derby firm some breathing space.
Colin Walton, chairman of Bombardier Transportation UK, said: ‘We very much welcome that the Department for Transport is looking at a proposal to add electric power cars to the Voyager fleets and Bombardier will be pleased to participate in the development of a business case for this project.’
Government sources have indicated that Bombardier’s poor credit rating with Standard & Poor of BB+ – six points below its competitor – puts it at a chronic disadvantage compared to Siemens’ A+ rating as it increases the cost of financing any contract awarded in the future.
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