UK: Bombardier's Derby staff get reprieve

[John Ashworth]

Bombardier's Derby staff get reprieve

• Plant saved from immediate closure, preserving 1,600 jobs
• Rolls-Royce chief calls for change in UK attitude engineering

Dan Milmo, industrial editor
guardian.co.uk, Thursday 9 February 2012 21.10 GMT

Britain's last train factory has been saved from imminent closure, preserving 1,600 jobs at the Bombardier plant in Derby. The news came as the chief executive of Rolls-Royce warned that society pays excessive attention to investment bankers and should hold engineers in higher regard.

The Canadian group Bombardier told staff at Derby that the facility would stay open for the time being, though its long-term future was still contingent on winning further contracts.

The announcement is too late to save the 1,200 workers that have already lost their jobs since the government decision to select Germany's Siemens over Bombardier as preferred bidder for the £1.4bn Thameslink trains contract.

Diana Holland, assistant general secretary of the Unite trade union, said: "Bombardier's Derby workforce are highly skilled and make fantastic products. They've had a lot to endure over the past 12 months. Now at least there is some breathing space."

The news came as John Rishton, the boss of Rolls-Royce, became the latest captain of industry to warn that UK manufacturing was hobbled by both a cultural as much as an economic deficit.

Rishton said Britain needed more engineering and science heroes akin to Brian Cox and Robert Winston – leading figures in physics and medicine respectively – to help rebalance the economy away from finance to manufacturing. Alluding to the popularity of films such as Oliver Stone's epoch-defining Wall Street and best sellers including Too Big To Fail about the Lehman Brothers crash, Rishton said finance had been sucked into the cult of celebrity, leaving more worthy sectors in its slipstream.

Referring to investment bankers, the Rolls-Royce chief executive said: "We raise their profiles, we make films about them, kids talk about them in the same way we talk about celebrities. Engineers, we talk about them as if they repair cars." However, Rishton acknowledged that banking had recently been attracting more notoriety than adulation, even if it remained a well-paid profession.

Urging the UK to focus on the important work of innovators of engineering, Rishton, an economist by academic background, added: "If you go to China, engineers that are making stuff and doing things are really, really important." Rishton said Germany also held its engineers in higher regard. He added that comments last year made by Lord Sugar that engineers do not make good businesspeople were unhelpful..

Rishton welcomed the government's call for a "march of the makers" to boost manufacturing's share of GDP from 10%, but said the process would be a "long journey" that would require a concerted education strategy and focus on apprenticeships, as well as a cultural shift.

Referring to the emphasis on financial services during the Blair and Brown eras, he added: "When you have been heading in a direction for a long period of time, reversing that direction … is going to take a long period of time. In my view, this is a very long path."

Rishton spoke as the Derby-based Rolls-Royce, whose dominant business is making engines for commercial aircraft operated by the likes of British Airways and Virgin Atlantic, reported a 4% rise in underlying revenues for last year to £11.2bn. Pre-tax profits rose by 21% to £1.1bn. Although civil aerospace is its biggest unit, Rolls-Royce also makes ship turbines, military jet engines and turbines for power stations. Rishton said all parts of the business were performing strongly, leaving the group "blessed and cursed with choice". Its order book is worth £62.5bn.

[John Ashworth]

Design decision raises Bombardier's hopes of winning Crossrail contract

Crossrail carriages will not be identical to Thameslink's, which would have created an advantage for Bombadier's rival Siemens

Dan Milmo, industrial editor
guardian.co.uk, Sunday 12 February 2012 17.09 GMT

Bombardier's hopes of winning the £1bn Crossrail train contract, widely seen as vital for securing the long-term future of its Derby plant, have been raised after it emerged that the carriages would not be carbon copies of the Thameslink vehicles due to be built by German rival Siemens.

It had been widely assumed in industry circles that the winner of the £1.4bn Thameslink deal would be favourite for the Crossrail contest because of similarities between the trains – allowing the Thameslink builder to reap economies of scale and submit a cheaper bid.

A Department for Transport document obtained by the Derby North MP, Chris Williamson, following a Freedom of Information request gives a clear indication that the winner of the Thameslink contract would be favourite for the Crossrail order. Drawn up in January 2008, when the government was drafting the much-criticised Thameslink tender, the document states: "Should the Crossrail project be given the go-ahead, there will be clear similarities between the rolling stock requirements for the two schemes."

However, it is understood that there are enough differences between the carriage specifications to give other manufacturers a strong chance of securing the contract.

The Derby factory's long-term future is still in question despite the announcement last week by the Canadian group Bombardier that it will not shut the plant, saving around 1,600 jobs but coming too late for the 1,200 workers who have left the plant since the Thameslink decision. The Crossrail contract is viewed by observers as vital for securing the factory's longevity.

The Crossrail contest, to build 60 trains for a 16bn rail route running from Heathrow to Canary Wharf, will launch in earnest imminently, with the invitation to tender due to be published by the Department for Transport (DfT) over the next few weeks. It is understood that the tender will not contain an overt "Made in Britain" clause despite a government review of procurement processes in the wake of the decision to select Siemens as preferred bidder for Thameslink. Such a clause is illegal under European Union procurement rules, but the tender document is believed to attempt to create a level playing field between the Derby factory and non-UK bidders that had been called for by ministers in the wake of the Thameslink move.

The design differences between the carriages also boosts Bombardier's chances, especially after the 2008 document pledged to "fully exploit" synergies between the Thameslink and Crossrail procurements. Williamson said: "The information I obtained from the DfT clearly indicated that the Crossrail contract would be easy pickings for whoever secured the deal to build the Thameslink vehicles. Awarding the contract to build the Thameslink carriages in Germany therefore makes the decision about the design of the Crossrail trains absolutely critical." He added: "Unless ministers ensure that Bombardier is able to compete for Crossrail on a level playing field, the long-term future for British train manufacturing could be terminal."

Bombardier and Siemens are shortlisted for the Crossrail contract, along with Spain's CAF and Hitachi of Japan. According to a government announcement last year, the winner of the contract will be declared in 2014.

Despite last-minute lobbying of the Treasury by Transport for London, the London mayor's transport body and co-sponsor of the project, the carriages will be 70% financed by a Private Finance Initiative, with the rest paid for by TfL borrowing. It means that the Crossrail contract will closely resemble the Thameslink contest – a factor that critics have claimed will enhance Siemens' chances of winning Crossrail. The Thameslink contract will be financed by a Siemens-led consortium that will put equity into a specially created business and then raise the debt to pay for manufacturing the trains. Those trains will then be leased back to the train operator, which will pay a regular fee to Siemens and its partners.