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Bombardier to announce 'substantial' job losses

Fears 1,500 jobs at risk at Derby train factory after company loses £3bn Thameslink contract to Siemens of Germany

* Dan Milmo, industrial editor
* guardian.co.uk, Monday 4 July 2011 20.23 BST

Bombardier, the Canadian engineering group, will announce major job losses at its Derby train factory on Tuesday, amid fears that 1,500 workers are at risk after the business lost a £3bn government contract to a European rival.

The company told trade union officials to expect "substantial" redundancies. Significant reductions appear to be inevitable after Bombardier warned the government privately in May that 1,200 posts were already at risk among the 3,000-strong workforce. It is thought that up to 350 more engineering jobs are under threat.

In a blow to the government's plans for Britain to manufacture its way out of recession, Bombardier has placed its UK operations under review after the Department for Transport awarded a contract to make carriages on London's Thameslink rail route to Siemens of Germany, bypassing Britain's last remaining train factory. The company has called an 8am press briefing on Tuesday morning at its Derby headquarters. Senior shop stewards will be briefed on job losses in time for the end of the night shift at 6am.

It comes after Lloyds Banking Group said last week that it would cut 15,000 jobs and experts warned of up to 10,000 job losses on the high street as a succession of retailers including Carpetright, Thorntons, TJ Hughes and Habitat said they would close stores.

In a recent letter to the transport secretary, Philip Hammond, Bombardier warned that 1,200 jobs could be at risk at Derby even if it won the Thameslink contract. However, it had hoped that winning a deal for more than 1,000 carriages on the rail route would allow the company to retain many of the jobs. If it lost the Thameslink deal, it said, more jobs could go by the end of the year, amid doubts over the 350-strong engineering unit.

The head of Bombardier's works committee, John Pearson, said the company hoped the announcement would force the government to review the decision, with protests from local politicians and the Labour party and even expressions of concern from two cabinet ministers.

"The company is going to use it as a political lever to try to get the government to change its mind about Thameslink," said Pearson, 63, a member of the Unite trade union, who has worked at the Derby plant for 26 years. "We are the last train maker in this country. How can we let those skills go? If we want trains in the future they will have to come from abroad."

However, the government cannot review the decision.

It is understood that about 700 agency workers employed at Derby are most at risk, with the heaviest cuts expected to come from manufacturing staff. In a letter to David Cameron, Labour has claimed that up to 20,000 jobs could be hit by the Thameslink decision and looming cuts at Bombardier. Bombardier's manufacturing lines will grind to a halt in 2014 when it finishes a contract for London Underground trains. Future orders for the as-yet unbuilt Crossrail and High Speed Two projects are years from being tendered.

Unite has written to two cabinet ministers in an effort to have the Thameslink decision reversed. Diana Holland, assistant general secretary of the UK's largest trade union, said the move could be the "last straw" for Bombardier in the UK.

In a letter to Hammond and Vince Cable, the business secretary, she said: "It is Unite's belief that insufficient, if any, consideration was given to the social and economic implications of your department's decision," she said. "Similarly, we are confident that the business case for Bombardier is a strong one and, coupled with the need to safeguard national manufacturing, ought to have seen it awarded the contract."

The RMT trade union, which also represents workers at Derby, said the effect of the Siemens decision would be "devastating." Bob Crow, RMT general secretary, said: "This act of political sabotage to a key element of the remaining UK manufacturing base could leave the nation that gave the world the railways building nothing but a few basic components."

The government believes its hands were tied over the Thameslink decision by European Union procurement rules, which state that any EU state must not allow a company's location or nationality to influence contract awards. Nonetheless, Unite has pointed out that Germany's state-owned rail operator, Deutsche Bahn, recently handed a €6bn (£5.4bn) high-speed train contract to Siemens. Cable and Hammond made pointed references to the perceived bias of contracts awards elsewhere in Europe in a recent letter to the prime minister.

Siemens, which employs 16,000 people in the UK, claims the contract will create up to 2,000 jobs in the UK supply chain. However, even though some components will be made in the UK the trains will be built in Germany.

2,000 train firm jobs 'facing axe'

* Press Association, Tuesday July 5 2011

Britain's last remaining train-making company is expected to announce around 2,000 job losses at its UK plant.

The bad news from Bombardier follows its losing out to Germany on a lucrative contract to build 1,200 new rail carriages at its plant in Derby as part of the £6 billion Thameslink rail upgrade.

Tuesday's announcement, if as bad as feared, will cut the workforce by two thirds at Derby, whose railway history dates back to 1840.

A consortium led by Bombardier had been competing with a consortium led by Siemens of Germany for a contract for 1,200 new carriages as part of a £5 million upgrade of the Thameslink rail route. Last month the Government announced that Siemens would be the preferred bidder for the contract for Thameslink, which runs from Bedford to Brighton.

Announcing the winner, Rail Minister Theresa Villiers said the bid by Siemens, who will build the new carriages in Germany, represented the "best value for money for taxpayers" and stressed that the contract would create up to 2,000 new UK jobs.

But it was vital for Bombardier's future that it won the Thameslink contract as most of its other contracts are due to finish in September this year. Bombardier does have a Tube train contract that will go on until 2014 but this will only support a few hundred of the jobs at Derby.

Bob Crow, general secretary of the RMT union, said, "No-one should underestimate the devastating consequences of the Government sending the Thameslink fleet contract to Germany. Thousands of skilled workers are now under threat of ending up on the dole as a result of this grievous hammer blow to train-building in the UK."

Unite union co-ordinating officer Mark Young said: "The country that invented the railways is at risk of losing its ability to manufacture trains unless the Government urgently rethinks its decision to award preferred bidder status to Siemens instead of Bombardier.

"The Government can reverse this decision and get UK train manufacturing back on track. It is simply unsustainable for the Government to claim to support UK manufacturing with one hand and then with the other hand take decisions which potentially wipe out an entire manufacturing sector."

Bombardier: 1,400 Derby jobs are gone four months after PM's pledge to help

Last remaining train maker in UK halves its workforce and calls on government for rethink after losing £3bn contract

* Dan Milmo, industrial editor
* guardian.co.uk, Tuesday 5 July 2011 19.28 BST

Four months ago David Cameron brought his "march of the makers" to Derby in a morale-boosting exercise for Britain's blue-collar sector. Now more than 1,400 manufacturing jobs have walked out of the city as Bombardier, the last remaining train maker in the UK, announced plans to cut nearly half its workforce in the wake of the government's decision last month to select Siemens of Germany for a £3bn contract.

Trade union leaders and local politicians rounded on the prime minister, who had brought his cabinet to Derby amid talk of weaning the economy off financial services and pledging to "do everything we can" to help local businesses create jobs.

The criticism was particularly stinging from Bombardier employees and executives, who are cutting 1,429 staff, comprised of 446 full-time workers and 983 agency employees.

The Canadian engineering group said it needed the £3bn Thameslink contract to have a hope of retaining the bulk of its 3,000-strong workforce at the former British Rail factory in central Derby, which survived a zeppelin bombing in 1916 but according to the government has fallen foul of a new continental menace: European Union procurement rules. Ministers believe their hands were tied by Brussels guidelines that forbid favourable treatment of domestic manufacturers.

Standing in front of freshly minted commuter trains at the 172 year-old plant, one Bombardier executive was scornful of the cabinet visit and its immediate legacy.

"What makes it most inexplicable for me is David Cameron being in Derby of all places a few months ago talking about hi-tech manufacturing and moving the UK away from financial services in London," said Francis Paonessa, head of Bombardier's UK passenger division.

"This would have been the perfect opportunity to put some actions behind those words. As a taxpayer I find it very difficult to see how this decision makes any economic sense for the UK."

Paonessa added that the Department for Business, Innovation and Skills had invited Bombardier to a conference on transferring hi-tech jobs at risk in the wake of the defence budget cuts to other sectors such as car and train manufacturing. "We are now adding to the problem," said Paonessa. Asked if he still plans to attend the BIS seminar he said: "Funnily enough, I will not."

Bombardier's UK chairman, Colin Walton, said the jobs announcement was "the worst day in my entire career." Walton started out on the railways as a 15-year-old but last week closed the door on youngsters seeking to emulate him when he was forced to cancel Bombardier's annual apprenticeship intake.

Despite government claims that Siemens could not be unseated as preferred bidder for the Thameslink contract, the executive said there was still hope for Bombardier as the second choice. "The department could bring us back to the table and that would in no way infringe on European laws." Labour's shadow business secretary, John Denham, also urged the government to break off with Siemens and install Bombardier as preferred bidder. The transport secretary, Philip Hammond, said his department had no choice but to select Siemens in a tender drawn up by the previous government.

Vince Cable, the business secretary, set up an "economic response task force" on Tuesday to mitigate the impact of the job cuts in Derby, as the government hit back against Bombardier's claim that the cuts were directly linked to the Thameslink contract.

They pointed to a recent letter to Hammond in which Bombardier warned that 1,200 jobs were at risk even if the company did not win the order. Industry sources said the company would have had to scale back as orders began to deplete. From September four of Bombardier's five production lines, still thrumming with activity, will be idle. Bombardier said that it would not have axed permanent staff, while securing the £3bn deal would have put the business in pole position to make rolling stock for the £16bn Crossrail route.

The talk among shell-shocked staff in Derby was of a full plant closure. Bombardier is reviewing its UK operations in the wake of the Thameslink decision and it has not ruled out closing Derby by 2014, when its last contract ends.

Paul Stead, 49, a Derby resident who oversees production of nearly 1,400 tube carriages, said: "This is the last of the train manufacturing sites in the UK and it will probably be dissolved. There are no orders. The whole principle of Thameslink is it would have lasted us until Crossrail. A place of this size needs a big order." He added: "We are prepared to take the skills into another country and pay them to do it instead of doing it here. Our apprentices and trades people will be obsolete."

Siemens has confirmed that the carriages will be made in Germany, but has claimed that 2,000 jobs will be created in the UK.

Asked what will become of the Derby plant, Stead said: "Most likely they will put houses on it," adding that the Royal Ordnance Factory site in Derby where he used to work is now a B&Q store.

Others spoke glumly of re-employment prospects. The head of the factory's works committee, John Pearson, said Derby's flagship industrial player, Rolls Royce, would struggle to absorb more than 1,000 jobless workers, while internet bank Egg is preparing to cut 650 posts in the City.

"Derby has had a bad time lately. There is Royce's but it will not be able to take everybody."

Jane Moss, a 35 year-old agency worker who has been doing fitting work at the plant, said: "It is a bit frightening because there is not much in industry in England anyway. It is just dwindling away."

Critics insist UK government to blame over Bombardier job losses, not the EU

French or Germans would not have allowed a foreign bidder to beat them to a major engineering contract

* Ian Traynor in Brussels, Angelique Chrisafis in Paris and John Hooper in Rome
* guardian.co.uk, Wednesday 6 July 2011 20.51 BST

With the last rites being read for 170 years of British railway manufacturing in Derby and Brussels being blamed for another "made in Germany" triumph in the Thameslink bidding war, the EU's single market referee has dismissed claims that Britain is getting a raw deal.

"It's too easy to say that the job losses in Derby are the EU's fault and that it's because of EU rules that Bombardier lost out," said Chantal Hughes, European commission spokeswoman for the single market, of the victory for Germany's Siemens over Bombardier Transportation for 1,200 carriages on the key London rail route.

Legal experts, trade unionists and economic analysts in Britain and across Europe suggested that a major reason for Derby's plight was the government's choice, over the past 30 years of Tory and Labour administrations, to fail to focus on an industrial policy and to leave British manufacturing to be picked over by foreign firms in a way inconceivable in Germany, France or Italy.

"The UK decided quite a while ago that it would have a competition policy and no other considerations," said Stephen Kinsella, head of European competition law at the Sidley Austin law firm.

British officials conceded that the issue of the UK's industrial base and its erosion over recent decades was a factor in the Derby contract loss. There is a feeling that Britain's failure to focus on industrial policy, unlike the French, the Germans or even the Italians, contributed to the government's difficulties in Derby, which saw more than 1,400 job losses announced by Bombardier this week in the wake of failing to secure the Thameslink deal, which was worth £3bn.

Britain seemed to be seeking scapegoats in Brussels, Germany and France, in a system allegedly rigged by wily continentals to thwart the UK. "All the nationalistic huff and puff is overblown. But the UK needs to work much harder to insure its industrial base," said Andrew Watt, a British economics analyst at the European Trade Union Confederation in Brussels.

Even British officials admit that the government complaints over Siemens and Derby and the operation of EU procurement rules betray a whiff of the populist, pandering to the "British jobs for British workers" sentiment following three decades of embracing open markets, globalisation and foreign takeovers of UK manufacturing and engineering. "There's a sense that we play by the rules and others don't. It's a popular misconception," said one official.

But there was some sympathy for the views voiced by coalition ministers that Britain was less adept at manipulating EU single market rules to favour domestic manufacturers than its big continental rivals and partners. "While the French talk of national champions, it's probably true that the UK has always been convinced that rigorous procurement brings more cost-effective results, so it does not build in the kind of flexibility that others might," said Kinsella.

"In Britain, there are lower barriers to entry [than elsewhere in the EU]," agreed Francesco Grillo, a Rome-based consultant who has studied how different EU countries deal with the European public contracts regime.

And some European experts agreed with Philip Hammond, the transport secretary, and Vince Cable, the business secretary, that the Derby drama was unlikely to be repeated in the big economies of continental Europe. "In Italy, the bidders need to meet very high requirements. In many cases, they must have carried out identical work in the same geographical area, with the result that you get very few tenders and those you do get come either from Italian companies or the Italian subsidiaries of multinationals," said Grillo.

"In France, something like this would go down very badly," said Alexander Law, chief economist at analysts Xerfi Global. "Cameron was elected on an argument to cut costs and make sure the taxpayer gets better value for money. That's not the case in France, quite the opposite."

Officials in Germany, which secures the most public procurement tenders in the European single market, insist they won fair and square over Bombardier and that their market was also wide open. The very symbol of the new Germany is the stunning glass dome on the Reichstag in Berlin, the seat of German democracy. Was that built by a German architect? No, by Britain's Sir Norman Foster, following a European public tender, a German government official noted.

The European commission pointed out that when it comes to bidding for public contracts elsewhere in the EU, the British are unusually successful, winning 17%, second only to the Germans. "It's too easy to say that the French choose only French suppliers, the Germans choose German suppliers and only the UK is naive enough to choose non-UK suppliers, thus putting themselves at a disadvantage," said Hughes.

But EU competition lawyers said that the public procurement regime was far from a level playing field, echoing the complaints by Cable and Hammond. Within the French and Italian governments there were protectionist forces at work arguing the case for "economic patriotism" and seeking to fend off foreign takeovers, foiling the sale of Alitalia to Air France in 2008, for example.

But they do not always, or even often, win. President Nicolas Sarkozy talks of French national champions for domestic consumption. With elections coming up next year, he is likely to do much more of this. Does it work? In some high-profile cases, no. Alstom, the French engineering group, lost its bid to build 10 new Eurostar trains – also to Germany's Siemens – despite Sarkozy's "national championing". Bombardier also beat Alstom to a trams contract in France in 2006.

The British, having made their choices and re-ordered their priorities over recent decades, have opted for more open markets in the belief that in the end they are the better system, and have concentrated their energies on leading the field in financial and legal services, not manufacturing.

When it comes to the vast lucrative game of EU public procurement contracts, the playing field may be dirty, but it is reasonably level.

Bombardier row could cost Conservatives South Derbyshire seat

Poll shows depth of anger at decision to award Thameslink contract to Siemens of Germany

Dan Milmo industrial editor
The Guardian, Monday 22 August 2011

The Conservative party will pay a political price for the Bombardier trains row and will lose a seat if it does not reverse a decision to select Siemens of Germany for a £1.4bn contract, according to a poll.

Labour would win the nearby South Derbyshire constituency back from the Tories with a substantial swing because voters are angered by the looming loss of 1,400 jobs at the Bombardier factory in the centre of the city.

According to a poll by Survation, the Tories' share of the vote in South Derbyshire would slump from 45.5% a year ago to 31.9%, with Labour claiming the seat by shooting up to 45.9%. In Derby North, a Labour marginal, the incumbent would race ahead of the Tories in a general election and raise Labour's share of the vote to 51.1% compared with 33% in 2010. The Tories' share in that seat would fall from more than 31% to 23%. The Liberal Democrats would suffer heavy losses in both seats.

"The clear message from this survey is that the people of Derby North and South Derbyshire are in agreement over their belief that the Bombardier bid could/should be reviewed and that the government's apparent lack of positive intervention in this issue is a view held across the majority of supporters of all parties," said Damian Lyons Lowe, chief executive of Survation, which carried out the poll on behalf of the Daily Mirror and Progressive Polling.

According to the poll of 550 voters, more than eight out of 10 of those interviewed believed the government had not acted in the best interests of the UK by choosing the cheapest bid, from Siemens, over Bombardier. Following the loss, Bombardier has announced plans to cut 1,400 jobs and union leaders have warned that the Derby plant could be shut down, shedding a further 1,600 jobs. More than 40% of Tory voters in the poll said the Bombardier decision would affect the way they voted in the next election if the government did not change its mind.

Tony Tinley, Unite trade union regional officer, said: "This poll confirms what Unite, local politicians and most importantly the community have been saying. If you don't change the decision, the city of Derby will pay with jobs. We will make the Conservative party do the same at the polls locally and nationally."

The Conservative MP for South Derbyshire, Heather Wheeler, who won the seat from Labour last May, has acknowledged the political consequences of the Bombardier decision by urging the prime minister to deselect Siemens as the preferred bidder for the contract to build 1,200 carriages for the London Thameslink route. In a letter to David Cameron last month she said: "I strongly urge you to investigate this issue, rethink the government's position, put matters right by excluding Siemens and award the contract to Bombardier."

A Department for Transport spokesperson said: "The Thameslink procurement was set up and designed by the previous government and we've been clear that we are legally bound by the criteria set out at the beginning of that process."

Bombardier jobs at risk despite £120m lifeline

Hundreds of jobs at the Bombardier train factory in Derby are still at risk despite Government efforts to provide a £120m stop-gap order to save the plant.

By Roland Gribben
The Telegraph 7:21PM BST 11 Sep 201151

Bombardier announced 1,400 jobs would go when it lost a £1.4bn contract to build Thameslink trains to Siemens, the German engineering group.

The new contract for Bombardier, proposed amid a furore over the job losses, would be sufficient only to keep the train plant ticking over. However, the Government's priority is to keep the company's train design team intact until the flow of orders improves.

Philip Hammond, Transport Secretary, has been pressured into finding ways to save the Derby operation by Downing Street and the strength of the well-orchestrated campaign to safeguard Britain's only remaining train making centre.

Mr Hammond has asked the industry to accelerate proposals for upgrading the existing fleet of trains on the Cross Country Penzance-Aberdeen line from diesel to electric and steer the work to Derby, if it could show the project offered value for money and the Bombardier bid was competitive.

If the order is finalised it will "safeguard jobs at the Bombardier works, including their design team and with the supply chain, said the Department of Transport.

The Government is anxious to avoid suggestions it is bailing out the plant, but the decision to intervene to keep Derby in business will provide a fillip for unions.

Mr Hammond is expected to come under fire at the TUC conference on Monday and news about his intervention is being seen in some quarters as an attempt to counter the criticism. Unions are still pressing him to overturn the Siemens order.

The Government has also ordered a review of Britain's train making capacity to cope with the country's "unique" system to avoid dependence on imports.