What is the Future for Bombardier in Derby?
The current trials and tribulations of Bombardier in Derby cannot have escaped your notice. A recent order for carriages for the Capital Connect services from Bedford through to South London and Brighton has been awarded to Siemens in Germany, leaving Bombardier desperately short of work. Redundancies have already been announced. Is this the end of the line for Bombardier?
How Has This happened?
The order for the rolling stock was let under the direct control on the Department for Transport, and as such was subject to European competition rules. It can be argued that the German government (and banking system) gives manufacturing industry more support than it would get in the OK, and as a result Siemens could offer a better price. We may wish that things were different, but that is how things are. We have to work with the system, rather than trying to fight against it.
It is clear that HMG is constrained in its procurement by European rules, and all too often the UK seems particularly diligent in applying those rules.
It is possible that, if the procurement were actually done more directly by the train operators and the rolling stock leasing companies, the government could probably influence it more than is the case when the treasury wants to exercise such close control.
However, it could be said that it is too late to change this now - and to try to do so would clearly be open to European challenge.
What Can Be Done Now?
Is there a way in which this could be an opportunity to turn the situation to the nation's benefit? Anyone who travels at all regularly by train will tell you stories of overcrowded trains struggling to provide a service. The rolling stock is owned by stock leasing companies who hire it to the train operators that the customer sees. The total amount of stock available, and the types of that stock, are dictated by the Department for Transport and the Treasury, who also control the prices that the leasing companies can charge. At the same time, the DfT prohibits the train operators from acquiring any other stock outside this system. It is a government-backed monopoly for the benefit of the banks.
It seems that this offers a way to bring demand to Bombardier to the benefit of the UK travelling public. The rolling stock owning companies (all subsidiaries of banks) should be instructed to place orders with Bombardier for the extra rolling stock that the railway system desperately needs in order to meet the demand from the travelling public. This stock should then be leased to the train operators at a beneficial rate as part of the banks' penance. The Banks' debt to the nation could be reduced by a small amount in recognition of their investment. The cost to HMG would be virtually nil, as it would be borne by the banks.
A further step, that should be made available to the train operating companies as quickly as possible, is to give them the right to obtain stock - or further stock - from "any willing provider", at commercially negotiated rates, providing that stock met necessary conditions of safety and reliability, and the leasing contracts were for a period that the regulator deemed acceptable.
The views in this article are those of the author, Stewart Rotherham, and are not a statement of policy by the Liberal Democrats either locally or nationally.
Steve Coltman writes
We have been having a discussion about Bombardier among the Lib Dem Engineers & Scientists trying to see what can be done.
Stewart's idea sounds an excellent one. Assuming the Siemens order cannot be reversed the next priority must be to ensure that the Derby site does not close completely, that they retain enough core skills and capability to regenerate in the future, and for that they need new orders. This may not be a good time to ask for money, either from the banks or the treasury, but it may be the best bet in the longer term.
The other issue is political damage limitation in Derby. Labour are trying to blame us, we are blaming them for the way they structured the contract leaving Phillip Hammond little choice. The interview on BBC East Midland Today with Bombardier's site manager yesterday was quite interesting. The manager said they had always been able to compete with Siemens before, only on this occasion, when the deal was handled by DfT did they fail to win. The interviewer hinted that the Civil Servants might be to blame, the manager did not disagree. Sounds at least credible to me that the civil servants would have drawn up the contract and a minister with (perhaps) little knowledge of transport or business would have signed whatever they had put in front of him or her. Anyone
know which minister signed off the deal?
One good thing though. Listening to what John Denham, Phillip Hammond and Vince Cable have had to say recently, maybe there is an emerging consensus among the three major parties about the value of manufacturing industry and the importance of government actively supporting it.