Just over a year ago, I wrote on Lib Dem Voice that the future for the Bombardier train building plant at Derby looked precarious. At that time, my fears were around the deep spending cuts that we were being forewarned of. Happily those cuts have not so far seriously affected transport spending. But last week, the same Derby Litchurch Lane Bombardier plant suffered a severe blow when the Department for Transport announced that the order for new trains to work the Thameslink service in London is likely to go to Siemens in Germany. Siemens builds fine trains (although, as Scotrail has learned, they don’t always arrive on time). But one has to ask some questions about this order because on the face of it, some things don’t add up.
Siemens has said that the order will create 2000 new jobs in the UK. But Derby supports 3000 jobs. So the net loss is 1000 jobs. Has the Department for Transport told the DWP about the extra costs it’s going to have to pick up? And has the extra cost of social welfare payments been factored into the decision?
In PM questions this week, David Cameron told Jessica Lee MP that he wanted to see “growth in manufacturing and production in Britain”. Yet he spends £1.4bn on building trains in Germany. How does that square up?
Conservative councillor Philip Hickson described the government’s decision as a “devastating blow” for the city. He’s right. So I hope his calls to the Department make some people there look at this again. After all, in Germany, Siemens is the lead train builder, in France it’s Alsthom. It does seem odd, and reminiscent of Tory policies from the 80s, that we want to destroy skills and knowledge built up over decades. Skills that will never be seen again and at the same time add to our balance of trade deficit instead.
I’m not saying that Derby is a special case or that the tendering process objective to obtain best value for the taxpayer should be turned on its head. But overall, this can’t be the best outcome for the country.
I urge all Lib Dem members in the East Midlands to write to their MP and call for this tender to be examined and for a full disclosure of the factors that went into the decision to be made public. If the Derby plant disappears, that’s it. We’ll forever more have to spend abroad when we want to buy new trains. That doesn’t feel like the right approach for a strong UK economy that the country needs.
Andrew Cook first joined the Scottish Liberals in 1976 and has been a supporter since then. He has a lifelong interest in public transport around the world, both from a development and enthusiast point of view.
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10 Comments
See http://niklassmith.wordpress.com/2011/06/16/why-is-julian-glover-so-miserable-about-imported-trains/
Uh huh. But of course, if we keep subsidising domestic industry merely for the sake of it, that will surely be the best outcome for our country in the long run. Yes. Let’s always buy British, folks.
Obviously it’s sad that Bombardier didn’t get the contract but I’m not sure it’s the governments fault. If Bombardier wasn’t the best option then should it really be getting the contract simply because it’s British? It’s not the government’s job to close contracts to foreigners and only award them to British companies. If we done that then how could we expect other countries to give our businesses a fair chance?
JustAnotherVoter – If Labour hadn’t have done that then we wouldn’t have had the job losses in the 80s. It was very cruel of Labour to encourage hundreds of thousands of people over decades to get skilled up in dying industries believing they would have a job for life.
What’s surprising about this decision is that they could not find some compromise for the Bombardier group and the Siemens group to work together.
The two companies often share contracts and will do so, for instance, on future high speed rail contracts in California.
Since Bombardier is now among the biggest job producers in Canada and extremely important to its home province of Quebec, one wonders if something Machiavellian is going on here, related to LME bid for TSX, which is opposed by many Canadians.
When you came to the conclusion that choosing Siemens over Bombardier results in the net loss of 1000 jobs, did you consider factoring in the likely job losses at Siemens if Bombardier were chosen over them?
Thanks for the comments so far. I’d like to answer them if I may.
I didn’t suggest that we should subsidise the factory at Derby. What I am suggesting is that if the total impact of closing the factory is considered to include the subsequent welfare payments that the British government will need to make to Bombardier workers and those of its UK suppliers, together with the lower income generated for the local economy including local government taxes, then the outcome may look different. I suspect that the decision has been made purely by comparing the two tenders and if that is the case, then the taxpayer may not be getting best value for money as the Department for Transport has claimed. I think some open-ness is required.
I don’t think that we should not buy products from abroad. But we should have a level playing field and I’d like to have the option of having a competitive market which includes an option which is made in the UK for future train orders.
Finally, it’s unlikely that job losses at Siemens in the UK would come anywhere near the 1000 number as they don’t build trains here. The Siemens factories in Germany export worldwide and have a far better chance of picking up other orders whereas the Bombardier plant in Derby supplies only the UK market and so struggles to compete. Bombardier has other plants in continental Europe which supply mainland Europe.
You can’t take welfare payments into account like that under EU law. Nor can the Germans. It is a level playing field…
http://kevinjowen-madeinbritain.blogspot.com/ Please look at my blog for my comment thanks
I would love Derby to have won this contract simply to make sure that people keep their jobs and that the city continues to manufacture trains. But the decision would have been more than just about price and jobs, it’s about how good the product is and for all we know that may be where their bid fell down. There could also be a whole host of other factors too which we are not aware of and could have been the final nail in the coffin regardless of how many jobs it creates.
Whilst Bombardier have built some decent long-distance trains, there has been quite a bit of criticism over the years of the quality of their commuter trains. Whilst it is a few years now since I worked in the rail industry, it wouldn’t surprise me if that was a factor.