$2.2 billion UK train contract to Siemens, not Bombardier

Part of the UK's Thameslink rail system to be upgraded in $2.2 billion contract for new rail carriages awarded to Bombardier rival Siemens 

Britain's coalition government under Prime Minister David Cameron is sticking to its plan to award a lucrative $2.2-billion (£1.4bn) train contract to the German manufacturer Siemens, rather than to rival Bombardier. The contract is for 1,200 train carriages for the London Thameslink.

Cameron has said he would neither reverse the government's decision, nor meet with a delegation from the town of Derby, where the Bombardier factory is located, to discuss the issue. The lost contract will cost the Derby factory 1,400 jobs and will possibly lead to the closing of the plant altogether, trade union leaders fear. This will result in a further loss of 1,600 jobs for the town.

Cameron stated in a letter to the town that Bombardier will have "significant" opportunities to win other contracts, but that the Thameslink contract is a done deal. The Siemens bid, according to Cameron, gives better value to the British taxpayer.

Meanwhile, a legal expert maintains that the Thameslink contract could easily be aborted and the contract given to the British workers in Derby. Chris Bovis of Hull University argues that the lost jobs at Derby will cost the government $30 million in lost tax revenue plus whatever benefits it has to pay the unemployed workers. Those hidden costs, he argues, have not been taken into account by the government in its quest for the best deal on the trains.

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.