Vince Cable's department 'guided' Bombardier in winning bid
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.
Friday 07 February 2014
Vince Cable's Department for Business gave the Canadian trainbuilder Bombardier advice on how to lodge its successful bid for the £1bn Crossrail contract after its politically disastrous failure to win the Thameslink contract, it emerged last night.
Bombardier's victory was trumpeted by ministers as securing the future of the company's 174-year-old plant in Derby, but was met with disappointment from other bidders, namely Japanese bullet-train maker Hitachi and Spain's CAF. Hitachi had planned to build the 65 trains at a new £85m plant it is building in County Durham.
A spokesman for the Department of Business Innovation and Skills said Bombardier, whose UK trainbuilding operation is run from a German headquarters, had been advised on how to put up the best bid it could after it lost the Thameslink contract to Siemens.
The department denied the help represented any kind of preferential treatment, adding that any bidder could have had the same guidance, had they asked. It stressed that the information was general.
Andrew Wolstenholme, Crossrail's chief executive, said the procurement had been conducted "in a fair, objective and transparent manner... in full compliance with the regulatory framework".
Analysts said it was crucial to the Government that Bombardier won the contract, as the threat of closure would have played extremely badly at the polls next May. The Chancellor, George Osborne, has made great claims that the Government is creating a balanced economy, with manufacturing playing a greater part than in recent years.
Observers said Bombardier was also helped by the fact that, unlike the Thameslink contract, bidders did not have to fund their own orders under the private finance initiative. Siemens was seen as being advantaged under the previous deal, because its superior size and financial strength meant it could secure loans at lower interest rates.
Francis Paonessa, the managing director of Bombardier Transportation UK, admitted that the financing structure had been a key factor.
Describing the Crossrail victory, he said: "It has certainly been one of our better days. It was fantastic standing up in front of the workforce this morning and telling them the news."
He added that as well as safeguarding the jobs of the existing workforce of 3,400, the deal would mean hiring a further 350 people. Bombardier's UK division pays an annual charge up to its Canadian parent company out of its revenues, which in 2012 were just shy of £1bn. Operating profits were £136m.
The parent company is stock market quoted but still controlled by the founding Beaudoin family, who began it more than 70 years ago, making snowmobiles in Quebec.
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