Unpicking Bombardier’s job losses

The news that 1,400 jobs are to be shorn from Bombardier’s train manufacturing plant in Derby has sent the worlds of business and politics into collision. Ostensibly, these job losses are the result of the Department of Transport’s decision to award the Thameslink renewal contract to German company Siemens. And unions warn that the 12,000 jobs that depend on supplying Bombardier are now threatened. This has led some on the left to criticise the government’s “incoherent plan for growth”.

Elsewhere, both right and left blame European competition law, and there is consensus that the government should intervene to preserve British jobs. Philip Hammond has written to Vince Cable insisting that ‘procurement processes have a sharper focus on domestic supply lines’ in future. Meanwhile, Unite’s Assistant General Secretary for Manufacturing, Tony Burke, acknowledged that European competition law is complicated, but not insoluble. He added, “The government can’t go on playing Micawber on manufacturing, waiting for something to turn up. It must be more pro-active.”

The government’s saintly adherence to EU competition law is certainly one dimension; but the fate of Bombardier’s workers is also further evidence that British heavy industry is losing its competitive edge. Bombardier is in good health globally: its transport arm, based in Berlin, has secured nearly $2 billion in new contracts in the last three months. Yet little of this work will be done in Derby, where an established and world renowned plant already exists.

There are a number of reasons for this, but chief among them is the cost of manufacturing in Britain, particularly for energy intensive users. Britain is a world leader on taxing energy consumption, even when it is clean and efficient; and this is costing skilled industrial jobs, essential to sustaining economic strength. The UK railway sector has already been hit in 2011, when Japanese giant Hitachi won the Intercity Express Programme in March. Hitachi originally promised that 2,500 UK jobs would be created, but now concedes that the actual figure will be closer to 500 because its primary UK operation will be to assemble rolling stock built abroad. It remains to be seen if Siemens will deliver on its pledge to create 2,000 jobs when upgrading the Thameslink fleet.