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Derby’s demise another step in U.K.’s fall from industrialized ranks

Kevin Thomas, a 46-year-old engineer on Bombardier Inc.'s subway car assembly line, came to work at 6 a.m. Tuesday and was herded into a meeting hall at Britain's oldest train factory. He and his colleagues all knew what was coming, but the news – the elimination of almost 1,500 of the factory's 3,000 jobs – still hurt.

"I was gutted," he said.

With amazing good grace, they all went back to work, barely speaking to one another as they contemplated lost careers in a flat-growth economy that has been pummelled by the recession. In a month or so, when Bombardier completes a review of all of its British rail operations, they will learn which of them will joining the dole lines in the autumn, as well as the fate of the other 1,500 workers at the Derby factory.

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While Bombardier is officially keeping the options open for Derby, not one line worker or manager interviewed expects the factory – still Europe's largest train-making centre – to survive.

"It's a disaster for all of us," said Paul Stead, Bombardier's manager in Britain for subway cars. "This is the last train manufacturing site in the U.K. and at some point it will be dissolved. There are no more orders."

Tuesday's jobs announcement was a direct result of Bombardier's loss, to Germany's Siemens, of the £1.4-billion ($2.2-billion) contract to build trains for the £6-billion Thameslink rail project that will run on an east-west axis through London. If the related services work is included, the value of the contract would have been worth more than £3-billion.

While Bombardier's enormous, multinational train-making arm will survive Siemens's win, Derby's role as the epicentre of British train industry since the middle of the 19th century almost certainly will not. Derby's downfall would be more bearable to the British economy if it were an isolated case, but it is yet more proof that Britain's deindustrialization stumbles on.

In the decades since the Second World War, Britain has sacrificed strong positions or outright leadership in the production of textiles, ships, cars and aircraft – a Titanic run unequalled in any modern Western economy.

Almost no shipbuilding remains in Britain. While cars are still built in great volumes, the plants are foreign-owned save for a few niche brands. The country that first produced passenger jets – the de Havilland Comet flew in 1949 – long ago surrendered its aviation lead to Boeing and Airbus (though Rolls Royce PLC is a global leader in jet engines).

There were times early in the last century when manufacturing accounted for 40 per cent to 50 per cent of British gross domestic product. The sector is now worth about 12 per cent of GDP, less than half its level in the late 1970s. As manufacturing fell, so did Britain's share of world exports. In 2000, the figure was 4.4 per cent. In 2009, it was 2.8 per cent, according to Chris Huhne, a Liberal Democrat cabinet minister in the government of Prime Minister David Cameron.

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Of course, other industries – notably financial services – have filled part of the gap left by manufacturing. The costly bank bailouts and nationalizations triggered by the financial crisis convinced Mr. Cameron's government that the economy needed to be rebalanced. Derby, about 200 kilometres north of London, was held out as the model.

Mr. Cameron held a Cabinet meeting there in March. George Osborne, chancellor of the exchequer (finance minister), said "Derby is a great example of what Britain's economy should be in the future, and a strong endorsement of the importance of manufacturing industry."

Three months later, the government awarded the contract to build the Thameslink trains to Siemens because, it said, the German bid represented better value for the taxpayer (the government's analysis of the bids has yet to be released). The downside is that Britain's last train factory is probably doomed, ending two centuries of manufacturing and innovation prowess for the country that invented rail transportation and exported the technology to the empire.

Bombardiers' Derby factory, covering 84 acres, has a grip on the local population like no other industry in the East Midlands. The factory supports about 10,000 jobs among 100 suppliers in the region.

Employees talk about their fathers and grandfathers working at Derby or at companies whose existence depended on the site. "We have four or more generations of men who have worked in rail here," said Colin Walton, 60, chairman of Bombardier's British rail division and a 45-year rail veteran. "My father worked for the rail industry and my daughter works for Bombardier."

Derby in effect owes its existence to George Stephenson, the English steam-train pioneer who built the Stockton and Darlington Railway, in England's northeast, in 1825. It was the world's first public steam-driven rail service and his rail gauge of 1,435 mm (the distance between the inner edges of the steel tracks) is still the world's standard. His locomotive could pull six coal wagons and 21 passenger coaches at about 15 kilometres per hour.

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His effort spawned an industry and Derby emerged as Britain's rail centre. The site started as the workshops for the Derby Midland Railway workshops. In the 1870s, it became the Derby Carriage and Wagon Works. As train building surged, it became the world's largest rail manufacturing centre.

Derby became a symbol of Britain's industrial might. The Germans used lumbering Zeppelin airships to bomb the city in the First World War. A simple plaque attached to the side of a brick, Victorian-era train engineering shed reads "Zeppelin bomb fell here Feb. 1st 1916." In the Second World War, Derby once again was targeted by German bombers.

The bombs failed to stop Derby. In 2001, Bombardier bought Derby from Adtranz, the former rail division of Germany's DaimlerChrysler. The Canadian company used the new subsidiary as part of its effort to emerge as a European rail powerhouse, along with Siemens and France's Alstom.

Bombardier 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. By the summer, Derby was a ghost factory in the making.

While Bombardier is mulling Derby's future, almost no one has any hope it will avoid the fate of so many other British manufacturers. "They'll most likely put housing on it," said Mr. Stead.

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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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