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
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Payments Operations Assistant

£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

Recruitment Genius: Telephone Debt Negotiator

£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

Guru Careers: Communications Exec / PR Exec

£25 - £30K: Guru Careers: We are seeking a highly-motivated and ambitious Comm...

Guru Careers: Pricing Analyst

£30 - 35k: Guru Careers: We are seeking a Pricing Analyst to join a leading e-...

Day In a Page

On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific
In this the person to restore our trust in the banks?

In this the person to restore our trust in the banks?

Dame Colette Bowe - interview
When do the creative juices dry up?

When do the creative juices dry up?

David Lodge thinks he knows
The 'Cher moment' happening across fashion just now

Fashion's Cher moment

Ageing beauty will always be more classy than all that booty
Thousands of teenage girls enduring debilitating illnesses after routine school cancer vaccination

Health fears over school cancer jab

Shock new Freedom of Information figures show how thousands of girls have suffered serious symptoms after routine HPV injection
Fifa President Sepp Blatter warns his opponents: 'I forgive everyone, but I don't forget'

'I forgive everyone, but I don't forget'

Fifa president Sepp Blatter issues defiant warning to opponents
Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report

Weather warning

Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report
LSD: Speaking to volunteer users of the drug as trials get underway to see if it cures depression and addiction

High hopes for LSD

Meet the volunteer users helping to see if it cures depression and addiction
German soldier who died fighting for UK in Battle of Waterloo should be removed from museum display and given dignified funeral, say historians

Saving Private Brandt

A Belgian museum's display of the skeleton of a soldier killed at Waterloo prompts calls for him to be given a dignified funeral