Bombardier gets £188m Southern Railways job
Jim Armitage is the City editor of The Independent and London Evening Standard group of newspapers. He has been a reporter and editor for more than 20 years and was recently shortlisted for the Press Gazette financial journalist of the year and The Society of Editors financial journalist of the year awards. He contributes news, investigative reports and comment to the Independent titles plus a daily column in the Evening Standard.
Thursday 29 December 2011
Britain's last major train-builder, Bombardier, has been thrown a mini-lifeline, winning a £188m deal to build 130 carriages for Southern Railways.
The Government, which was criticised for awarding a £1.4bn Thameslink deal to Germany's Siemens instead of Bombardier this year, will provide Southern with more than £80m towards the contract announced yesterday. Siemens is said to have been among the unsuccessful bidders.
Some industry sources said that given the political heat around Bombardier and the fact that it already runs Southern's existing Electrostar trains, it was inevitable that the likes of Siemens would not have won the contract.
Meanwhile, one analyst said the speed of yesterday's tender process had raised eyebrows in the industry, suggesting political considerations may have played a part.
Bombardier welcomed the win, although it was also unable to say whether the contract would save any of the 1,400 jobs it announced would go after losing out to the Germans. Doubts remain over the viability of its Derby factory.
Bombardier, which is Canadian-owned, insisted that the contract was won after a free and open tender process run by Southern Railways, and industry sources cited annoyance that the Transport Secretary, Justine Greening, appeared to suggest the Government had played a hand. In a triumphant statement describing it as "brilliant news for Bombardier and Derby", Ms Greening said: "This deal, helped along by my department, shows my determination to invest in Britain's railways: our support for Southern will boost capacity while helping British jobs. I can't think of a better outcome."
Ms Greening's department later said it had "absolutely not" interfered with Southern's tender process and would have awarded the £80m whoever won.
Far more important to the Derby factory's future are two bigger projects up for grabs. The first is the contract to build new cars for the CrossCountry routes enabling trains to run on both diesel and electric, in preparation for the partial electrification of the network. Known as Evoyager, the award is hoped for in the first quarter of 2012. Depending on the length of the associated maintenance contract, it could be worth between £200m and £1bn for Derby.
The second is CrossRail, where Bombardier hopes the Government will heed calls from the Transport Select Committee to separate financing of contracts from the actual train-building. It has been claimed that part of the reason Siemens won the Thameslink job was because the German company's better credit rating made it cheaper to finance.
Analysts said yesterday's deal signalled that Bombardier's heavy lobbying of the Government and threats to close Derby were working.
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