From the TUC

Bombardier, Procurement and British Manufacturing

05 Jul 2011, by in Economics

Today’s papers dedicate many column inches to the news that more than 1,400 jobs are to be cut at Bombardier, the UK’s last train manufacturing plant, in Derby. These job losses come after Bombardier lost the £3bn contract to supply 1,200 carriages for the Thameslink route, a contract that was won by Siemens of Germany. The Guardian quotes Bombardier as saying that the loss of the Thameslink contract made a near 50% cut in the workforce “inevitable”.

I could write more about the companies involved, but I would prefer to concentrate on the failures of policy that led to today’s decision, in the hope that next time we will be better prepared. But for the record, Siemens employs about 16,000 people in the UK, many of them trade unionists, and makes an major contribution to the economy. What is written below is in no way a criticism of Siemens or its workers, in the UK, in Germany or anywhere else. This is a systemic failure that neither Labour nor Conservative Governments have tackled, namely a failure to institute policies that allow UK procurement policy to support British industry.

Philip Hammond, the Transport Secretary, had a point this morning, when he highlighted the fact that the specification for this contract was drawn up by the last Labour Government. But he should be careful: his Government introduced a Plan for Growth last October, which failed to address the wider issue. The TUC’s Budget Submission in April 2011, for the umpteenth time, called for action on procurement. For the umpteenth time, we were ignored. So let me repeat our words exactly:

“The TUC’s ideal solution would be for the Department of Transport to buy British trains, not because they were British, but because they were the best. But to ensure that British is best, we need to strengthen our key industries and procurement policy has a role to play in helping us to do that.”

Companies are driven by markets. If the market requires skills, companies will develop skills. If the market wants sustainable solutions, companies will deliver sustainable solutions. But UK procurement policy is too often driven by low cost. Armed with its reckless deficit reduction plan, the Coalition Government’s major focus has been on driving down the costs of procurement.

Trade unions try to raise the role of skills, of sustainability, of employability in procurement contracts, but to no avail. Trade unions make the case for joined up government, so that government departments are not just interested in buying cheaper, but recognise that they can also boost British industry in their purchasing decisions, but we have got nowhere. Perhaps we will now. And just to be clear, this is not only about trains. There is also a case for an NHS procurement policy that supports the UK pharmaceutical and medical equipment sectors, to give just one example.

I have heard a lot of talk today about how “Germany buys German and France buys French”. Is that true? There is certainly a perception that it is. Could the UK Government ask the European Commission to take a closer look at whether open competition in Europe really is open? We need a level playing field. A situation where Germany buys German, France buys French, but the UK buys from anywhere, is clearly not acceptable. But if Germany buys German because German is the best, then we can hardly blame them and the UK Government must redouble its efforts to ensure the UK is competitive. As I’ve blogged before, cutting corporation tax and getting tough on regulation isn’t a serious growth strategy.

What should happen next? I repeat what the TUC called for it its Budget Submission in April. The TUC calls on the Chancellor to announce a task force, comprising of Ministers and officials from BIS, DWP, DECC, the Cabinet Office and the Treasury, to consider a procurement policy that increases the UK’s levels of skills, sustainability and employability, as well as value for money. Employers and trade unions should be asked to give evidence to this task force and it should report in eight months.

Those who refuse to learn from history are condemned to repeat it. Let’s not repeat this story.

One Response to Bombardier, Procurement and British Manufacturing

  1. Keith Croft
    Jul 19th 2011, 10:31 pm

    It seems to me that the only way our government might change their mind, and award the contract to Bombardier, is if it could be shown that Siemens had some unfair advantage, or cheated, to get the Thameslink contract. I have no idea whether they did or not, but with all this phone hacking business distracting attention away from this scandalous decision, it is entirely possible that the German firm may have used other technology to their advantage, especially as they are also engaged in the telephone industry. It would be worth investigating?