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Bombardier’s UK train factory thrown a lifeline

Tags: Bombardier

Bombardier's Derby train factory, Europe's largest, has been thrown a lifeline and may survive, if only just.

In July, when the Canadian transportation giant lost a £1.4-billion train-building deal to Germany's Siemens, the company announced that about 1,400 employees - almost half the workforce -- would be let go in the autumn. Bombardier management assumed the enormous factory, located in central England, would eventually close as existing contracts wind down.

Since then, the political outcry from local and national politicians over the gutting of Britain's last train factory has been so intense that the Department of Transportation has been working overtime to speed up the award of contracts that might keep Derby ticking over.

Two look promising. The first would see Bombardier build 57 electric-powered carriages for the passenger fleets used on the CrossCountry franchise, which extends from Scotland to England's southwest. The contract would be worth perhaps £120-million and Bombardier (BBD.B-T) is already involved in the feasibility study.

"If we win, it could save hundreds of employees," Bombardier spokesman Neil Harvey said Monday. "We built the original [CrossCountry] trains so we have an advantage here."

The second would see Bombardier build 130 carriages for the Southern Railways franchise. Bombardier is the clear favourite to win the contract since it built the Electrostar trains used on the Southern's London-to-Brighton route.

The Southern contract, which might be worth £200-million, offers the prospect of almost immediate work because Southern wants new trains in service by the end of 2013.

While neither the Southern nor CrossCountry contracts, if won by Bombardier, would be enough to preserve all of the jobs at Derby, they would be enough to guarantee many of the 400 or so skilled engineering jobs at the site. Bombardier fears that the engineers, once let go, would either leave the industry or migrate to competitors.

The hope of the British government, and Bombardier, is that the contracts would tide the company over until the next big train deal - the £1-billion Crossrail contract - is awarded in 2012. If Derby were to lose all its engineers before then, Bombardier probably would not be able to bid for the contract.

The award in July of the Thameslink rail project, which will run on an east-west axis through London, to Siemens was a serious blow to both Bombardier and Britain's industrial ambitions. If the related services work is included, the value of the contract would have been worth more than £3-billion and secured Derby's future for many years.

The government said delivering the contract to Siemens represented better value for the taxpayer and has refused to reopen the bidding.

Derby has been the centre of Britain's rail industry since the middle of the 19th Century and became a symbol the country's industrial might. The Germans used Zeppelin airships to bomb the city in the First World War. In the Second World War, Derby once again was targeted by German bombers

The 84-acre site currently supports 3,000 direct full- and part-temporary jobs and about 10,000 jobs among the 100 suppliers in the region. Bombardier is to announce in early October the precise number of Derby employees that will be let go, and when, because of the lost Thameslink project.

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