From the TUC

The end of the line for UK rail production?

16 Jun 2011, by in Economics

“We want the words ‘Made in Britain,’ ‘Created in Britain,’ ‘Designed in Britain,’ ‘Invented in Britain,’ to drive our nation forward. A Britain carried aloft by the march of the makers. That is how we will create jobs and support families” – George Osborne, Budget Statement, March 2011

Bombardier Transportation, part of the French-Canadian global manufacturing group, is the last remaining train manufacturer in the UK and the heart of a rail engineering and production supply chain which constitutes one of the largest manufacturing clusters in Europe.  It employs 2,600 workers at its main plant in Derby, and more in its production centres in Crewe and Plymouth.  It builds trains for London Underground, UK rail and overseas markets.  It has formed groundbreaking learning agreements with its unions.

You would think that this is exactly the sort of company that will spearhead the government’s drive to rebalance the economy towards production industries and export-led growth. Well, think again.

Today Teresa Villiers announced that the £6bn contract to build new trains for Thameslink would be awarded to the rival bidders from Germany, Siemens.  The government stressed the benefits to commuters and taxpayers, as well as pointing to hundreds of new construction and maintenance jobs arising from Siemens depots in the UK.

What they didn’t mention was that this has dealt a damaging body blow to rail manufacturing in the UK.  This contract would have plugged a gap in Bombardier’s order books, securing the future of this industry in Derby and providing a platform the company to grow and bid for future work, not least for Crossrail.

This decision has thrown the company’s UK future into doubt.  The maintenance jobs created by Siemens will be dwarfed by the potential job losses at Bombardier and its suppliers around the Derby area.  Not just that but once again we will be losing vital skills and experience from our manufacturing sector.

While manufacturing is clawing its way back in recent months, our economic recovery still depends on companies like Bombardier winning crucial contracts such as this.  So it is astonishing that the government would turn its back on UK manufacturing in this way, at a time when growth is weak and unemployment remains high. The Chancellor’s warm words in his budget statement sound hollow today.

The TUC has long campaigned for the government to adopt a more proactive approach in ensuring that UK businesses benefit from public contracts for goods and services. While recognising that the UK must maintain its commitment to open competition and EU regulations, the TUC has argued that more can be done by government to level the playing field and work with businesses to build their capacity to put in effective bids for contracts.

Using public procurement in this way should form an essential component of our industrial strategy, just as it does in Europe and elsewhere.

And this isn’t about gifts from the taxpayer to failing industries.  Bombardier is a successful business producing high quality products.  It supports high quality an engineering supply chain.  When Teresa Villiers talks of “best value for the taxpayer”, has she factored in the long term damage inflicted on a key part of our manufacturing sector by this decision? Has she factored in the detrimental impacts of job losses and business closures?

Real value to the UK taxpayer would be to work in partnership with the likes of Bombardier to make sure they have the very best opportunity to win those contracts, creating employment and supporting the kind of industries that will boost the recovery.

7 Responses to The end of the line for UK rail production?

  1. john b
    Jun 16th 2011, 3:43 pm

    I don’t want to sound all UKIP, because that really isn’t how I roll. But in this case it really doesn’t sound like the government had much choice – EU (sorry) procurement rules force an objective evaluation of contracts, in a way that frequently benefits British businesses tendering for work in the rest of Europe.

    It’s a bloody shame Bombardier couldn’t put the best bid together – even aside from the impact on Derby and the domestic supply chain, they’ve also got the lightest trains (becoming increasingly important as environmental concerns mount) and the best recent UK track record. But the fact that Bombardier lost the contract suggests that either Siemens massively underbid because they were aware that otherwise they’d be out of the UK market for a generation (in which case, at least the taxpayer’s getting a good deal), that Bombardier were too complacent about Siemens’s ability to compete (in which case, at least the taxpayer’s not getting screwed by a perceived monopoly supplier), or both.

    What the government *really* needs to do is junk the now-invalid Hitachi contract for the IEP high-speed train replacement (spec varied so much from the original that there’s no way the contract’s enforceable), and hope that Bombardier puts together a bid that reflects its need for UK orders.

  2. Matt Dykes

    Matt
    Jun 16th 2011, 5:07 pm

    John, I’m glad you don’t roll with UKIP, me neither.

    We don’t suggest that the UK government rides roughshod over EU procurement rules. We do, however, think more could have been done in partnership with the company to build their capacity to put the right bid in. And to level the playing surface with non-UK competitors, who benefit from government support for their tenders.

    There are also ways in which tender specs can be drawn up to obtain the maximum benefit for locally based economies, something that is beginning to take hold across parts of the public sector. Not the DFT it seems.

    I’d disagree with the principle that a Siemen’s loss leading bid would be for the benefit of UK taxpayers, for the full cost benefit reasons stated above. I’m not suggested Siemens did do this, by the way. And Bombardier were very far from being complacent.

    It is an unnecessary mess and its UK workers and businesses who will bear the brunt.

  3. Frank Adam
    Jun 17th 2011, 2:57 pm

    There is plenty of scope to develop the railways in the United Kingdom. Articles and rolling stock ought to be “Made in The United Kingdom.” Certainly the Westminster Government ought to have power representing the British people to decide what is appropriate for the citizens of the United Kingdom.

    The destruction of British Rail by breaking up the track from trains may be a lawyers paradise but it hinders the economy and is leeching taxpayers money and fares rises confirm blind ideology being utterly wrong.

  4. MikeB
    Jun 17th 2011, 5:22 pm

    People are getting rather paranoid about the new Thameslink trains being built in Germany rather than the UK. For many years, Siemens have been building excellent Desiro trains at their Dusseldorf site for use by British train operators. I feel sure that Bombardier’s Derby plant will survive this set-back and will win further orders in due course.

  5. Fed up Mum of Derby
    Jun 20th 2011, 5:41 pm

    I work in public sector procurement and I agree that it sounds like the tender spec was at fault. It is great in terms of evaluation time to go for one large contract but it undermines the plurality of providers when everybody closes operations when they lose out – gradually genuine competition is eroded. I just cannot believe the comments Theresa Villiers made when Geoff Hoon awarded the IEP contract to Hitachi – what a hypocrit!

    I was hoping my son could work at Bombardier because he is train mad and loves the idea of being a hands-on engineer. Please hang in there Bombardier. (Not that we can afford to send my son to university anymore thank you Msrs Clameron).

    Where is the sense of 200 jobs being created in the North-East and about 3,000 + being lost in Derby! Senseless. How will these jobs be replaced – they’ll probably build houses on the site with a cinema and MacDonalds. Such a genuine loss to the economy.

    Let’s hope that there is a re-evaluation of the Hitachi contract – which should have been challenged in the courts as breaching EU rules. Where is the openness and transparency when trade delegations were hounding the UK government. We throw tenderers out for canvassing! The lawyers should be poring over that one.

    Why did the people of Derby and Derbyshire rush to vote Conservative? We have been well and truly punished! There’s loyalty for you!

  6. Jack
    Jul 3rd 2011, 2:17 pm

    It also should be noted that Siemens who recently won the Thameslink contract (in terms of value for money to the taxpayer criteria), employs over 16,000 people in the UK, with over half these employees working directly in a manufacturing and engineering capacity.

    [url]http://www.industry.siemens.co.uk/mobility/uk/en/AboutUs/news/articles/Pages/SiemensfoundsRailInnovationCentreofCompetenceintheUnitedKingdom.aspx[/url]

    Canadian Company Bombardier employs around 5,000 people in the UK

  7. jason @ motorsport sensors
    Jul 20th 2011, 4:53 pm

    Sadly it’s one thing saying it, and another doing!

    Yes, we’d all like Made In Britan on everything, but it won’t happen. Too many imports, too high UK costs, too many foreign owners and too much indecision over the economy. THe car industry goes the same way.

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