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Cameron closes door on Bombardier's U.K. plant

A worker inspects a Bombardier train at the Derby manufacturing facility in this photo from July 5.

Christopher Furlong/Christopher Furlong/Getty Images

Any hope that the British government would save Bombardier's Derby train factory, Europe's biggest, died this week when prime minister David Cameron refused to reopen the bidding process. The decision means that Bombardier will almost certainly cease being a manufacturing force in Britain, putting it at a severe disadvantage against competitors when any new tenders are put up for bid.

Bombardier leaned early last month that the £1.4-billion ($2.2-billion Canadian) contract to build trains for the Thameslink rail project, which is to run on an east-west axis through London, would go to Germany's Siemens. Since then, train workers in Derby -- the centre of British train building since the mid-1800s -- and local politicians have been lobbying the government to reconsider the Bombardier pitch.

Mr. Cameron refused to budge from his position that the Siemens bid represented better value for taxpayers (though the government's analysis of the competing bids has yet to released publicly). In a letter to Chris Williamson, Labour MP for the Derby North riding, Mr. Cameron wrote that neither he nor the secretary of state for transport can "justify stopping the procurement process to reinvite tenders. This would cause very substantial delays to the program and moreover, would not help Bombardier which, even if it were successful at retender, would still not have enough work for several years."

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The decision means that Derby is doomed. On July 4, Bombardier announced that almost 1,500 Derby jobs, many of them held by highly skilled engineers, would be let go. The fate of the remaining 1,500 Bombardier jobs at Derby is still unclear, but reports suggest there is only enough work to keep a few hundred of them on the job as other contracts wind down.

The Siemens victory is a huge blow to the city and its manufacturing base. The Derby factory supports about 10,000 jobs among local suppliers. Some Derby families have depended on the factory for employment for three or four generations.

Bombardier bought Derby from Adtranz, the former rail division of Germany's DaimlerChrysler, in 2001. The Canadian company used the new subsidiary to boost its effort to emerge as a European rail powerhouse, along with Siemens and France's Alstom. It spent years refurbishing the plant and hiring hundreds of engineers to make it competitive. In the spring, it was pumping out 25 train cars a week -- a Derby record.

While damaging to Bombardier and its future ambitions in Britain, Derby's disappearance would hardly risk Bombardier's place among Europe's top train makers. The train division, based in Berlin, remains a competitive force on the continent and recently snagged a huge order to build high-speed trains for Italy's national railway.

Mr. Cameron's refusal to reopen the bids could come at a political cost. An opinion poll suggested that his Conservative Party could lose the South Derbyshire constituency in the next general election because of local anger over the job losses. Derby employees think the 84-acre site, in the heart of the East Midlands, will become a bland retail and housing project, the fate of so many other clapped-out British manufacturing operations.

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About the Author
European Columnist

Eric Reguly is the European columnist for The Globe and Mail and is based in Rome. Since 2007, when he moved to Europe, he has primarily covered economic and financial stories, ranging from the euro zone crisis and the bank bailouts to the rise and fall of Russia's oligarchs and the merger of Fiat and Chrysler. More

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