The delay to HS2 and a lack of new government orders has pushed French train manufacturer Alstom into crisis, putting hundreds of jobs in the UK at risk.
The company said it would begin consulting on a “significant reduction” of the workforce at its historic Litchurch Lane works in Derby, which has been producing trains since the Victorian railways boom.
A spokesman for Alstom said the firm had been working with the government for six months to secure a sustainable future for the rolling-stock factory, which has no confirmed workload beyond the first quarter of 2024.
“No committed way forward has yet been found and therefore it is with deep regret that we must now begin to plan for a significant reduction in activity at Derby by entering a period of collective consultation on potential redundancies at Litchurch Lane,” he said.
The announcement comes less than three years after Alstom acquired the business in its €5.5 billion takeover of Bombardier Transportation, and signals potential redundancies for 550 permanent employees and a further 780 agency staff employed at the plant. It leads to uncertainty for another 700 staff employed Litchurch Lane, mainly in Alstom’s global design and engineering facility there.
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The lack of work at Derby will have a knock-on effect to hundreds, if not thousands, of jobs in the Alstom supply chain around Britain. It is understood that a further 4,000 people employed in maintenance, signalling and railway systems around the UK in the wider rail industry, notably at Crewe and at Widnes, currently remain unaffected,
The announcement was made as Alstom in Paris disclosed plans for widespread job losses and asset sales across its global empire as it grapples with a €3.4 billion debt crisis following the acquisition of the Canadian group Bombardier. It is haemorrhaging cash at a rate of up to €60 million a month.
Alstom, the builder of France’s high-speed TGV trains, is the world’s second-largest rail company after the Chinese state corporation CRRC, and employs 80,000 people globally.
At issue in the UK has been the delay and likely curtailing of an order for high-speed trains for HS2, which were due to be built at Derby and at joint venture partner Hitachi’s facility in Co Durham.
The manufacturing of 54 high-speed trains has already been put back until 2026, and the decision by prime minister Rishi Sunak to end the construction of the HS2 line from London at Birmingham indicates that the order could be cut significantly.
With the likely mothballing of Alstom’s Derby plant, it is now uncertain where the HS2 trains will be manufactured.
Litchurch Lane is working on the end of orders for its Aventra rolling stock used on several networks, including the Elizabeth Line in London, and a contract to supply trains to the Cairo monorail.
The train manufacturing industry in the UK, which employs 30,000 people, has had no new orders for rolling stock since before the pandemic. Details of contracts for new trains for Chiltern Railways and Northern Trains are at an early stage and are unlikely to provide work within a year.
Asltom has form in closing British train factories. It shut another historic works at Washwood Heath, Birmingham, 20 years ago after completing a contract to build Pendolino tilting trains.
The depths of the groupwide crisis at Alstom prompted the company to reveal the likely need for a significant cash raising to prop up the company and cut its debt by $2 billion.
That sent shares in Alstom crashing by more than 20 per cent at one stage on the Paris bourse, valuing the company at less than it paid for Bombardier in early 2021.
A Department for Transport spokesperson said: “Rail manufacturing is an important part of the UK economy and we will work closely with Alstom as it continues to deliver its contractual commitments, as we do with all rolling stock manufacturers.
“While this is a commercial matter for the company, we have already set up a dedicated cross-government taskforce to properly support workers at Alstom during what will be a concerning time.”
Behind the story
Since the last time Litchurch Lane nearly closed, in 2011 during the recession that followed the global financial crisis, British train manufacturing has been through something of a renaissance (Robert Lea writes).
The future of what was then the Bombardier factory in Derby was on a knife edge after the Department for Transport decided not to give a £1.4 billion contract to build trains for Thameslink to the one rolling stock manufacturer left in the country, but instead awarded it to Siemens and its factories in Germany.
Litchurch Lane recovered, winning the contract to supply Crossrail and, in time, being selected to co-build the HS2 trains.
In 2015, Hitachi opened a plant in Newton Aycliffe, Co Durham, after winning the contract to assemble the new intercity fleet for the Great Western mainline and the East Coast main line as well as for HS2.
Such was the excitement of a new golden era in British train manufacturing that Siemens pledged to open its first factory in the UK, at Goole, East Yorkshire, to fulfil orders for the London Underground. CAF of Spain opened a plant in south Wales.
Now, with assembly lines lying idle or into their last 12 months of work following no new orders in four years, the Railway Industry Association has been warning that the rolling stock manufacturing sector could implode without a pipeline of work.
The prize, said the trade body in a recent report, was a volume of orders “annually for the supply chain to permanently break out of the historic boom-and-bust cycle”.
The reality, it feared, was that DfT’s “indecision will lead to poorer passenger service and higher costs”.
