8,600 UK jobs at risk in power generation merger

ALSTOM AND ABB joined forces yesterday to create the world's biggest power generation company in a move which leaves a question mark hanging over 8,600 UK jobs.

The two European engineering giants are to merge their power generation businesses into a 50:50 joint venture, ABB Alstom Power, which will have sales of $11bn and an estimated 25 per cent share of the world market.

As part of the deal, Alstom will pay $1.5bn in compensation to ABB, which is contributing the bigger business to the joint venture.

But Alstom will recoup $900m of this by selling its heavy duty gas turbine business to General Electric. GE currently provides the technology for Alstom heavy duty gas turbines.

Alstom and ABB said that the merger would produce savings of $450m a year within three to four years. They are putting aside about $670m to cover restructuring costs and job reductions among the 54,000-strong workforce.

Neither company would say how many jobs were at risk but Goran Lidhal, ABB's chief executive, said: "In our extremely competitive industry we need permanently to improve efficiency."

ABB Alstom Power's 8,600 UK employees are spread across four locations - Lincoln, Rugby, Stafford and Knutsford. The two main manufacturing sites - Lincoln, which produces gas turbines, and Rugby, which makes steam turbines - are both owned by Alstom.

The merged business will leapfrog both GE and Siemens into number one place in the world league table of power station suppliers.

However, neither Alstom nor ABB said they expected to face any problems with competition authorities since a rationalisation of Europe's power generation equipment industry was long overdue.

The creation of ABB Alstom Power is in part a response to Siemens' acquisition last year of Westinghouse's non-nuclear power generation interests, a deal which pushed Alstom down to fifth place in the world league.

Pierre Bilger, the Alstom chairman, said that its smaller size had begun to prove a handicap, putting it in a "worrying position" in the European market.

According to an analysis by Datamonitor Industrial, ABB and Alstom respectively captured just 8 per cent and 7 per cent of the world power generation equipment market last year, compared with 39 per cent for GE and 15 per cent for Westinghouse.

Although yesterday's merger was instigated by Alstom, Mr Bilger said it had no plans to put its other two businesses, transportation and electrical transmission and distribution, into joint ventures.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Executive / Foreign Exchange Dealer - OTE £40,000+

£16000 - £40000 per annum: Recruitment Genius: A Foreign Exchange Dealer is re...

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

Day In a Page

Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones