Member Article

Government defends Bombardier decision - despite wider job loss fears

New fears have emerged that the government’s decision to award a £1.5 billion Thameslink order to Siemens over Derby-based Bombardier could now cause wider job losses than previously anticipated.

According to reports in Railnews, the troubled rail manufacturer had already indicated to the government that it would be forced to make around 1,200 redundancies even if it had won the Thameslink contract, as all other contracts are due to end by 2014.

However, new information indicates that a further 18,000 jobs could now be at risk in the East Midlands if work at the Bombardier site does not pick up.

Now almost 1,450 jobs are set to go in Derby and plans for the creation of up to 2,000 supply chain jobs in the North East have also been cancelled.

While Siemens say that the new contract will create 2,000 jobs in the UK, only 300 of these will be directly in manufacturing. These jobs will be based at the Siemens plant in Hebburn, South Tyneside.

Transport secretary Philip Hammond defended his decision to give the contract to the German company to the BBC, saying that there was no alternative but to go ahead with the Siemens order. The terms of the procurement were set by the previous government, and cancelling it would bring about an unacceptable delay of the contract by a further four to five years.

Awarding the deal to Siemens brings to light the issue of EU procurement rules, which do not allow where companies are based to be taken into account when a contract is made. Phillip Hammond and the Business Secretary Vince Cable have since written to David Cameron to suggest that the UK reconsider its approach to European legislation.

Speaking to the BBC, Hammond said “The way some of our continental partners approach these things is to look more strategically at the domestic supply chain.

“It is clear that it is possible to structure the contracts such that, even within the constraints of the European procurement directive…there are much greater chances of the domestic supply chain succeeding.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .