Siemens AG (SIE) withdrew from the bidding to supply trains worth 1 billion pounds ($1.5 billion) to London’s Crossrail project, handing a potential lifeline to the last British railcar factory owned by Bombardier Inc. (BBD/B)
Siemens, one of four rolling stock producers shortlisted for the contract in 2012, is standing down because a high level of existing commitments mean bidding “would not be a responsible course of action,” the Munich-based company said in a statement.
“Crossrail is a very large project and, since first undertaking our initial assessment of capacity and deliverability, Siemens has won multiple additional orders,” it said today. “To pursue another project of this scale could impact our ability to deliver our current customer commitments.”
The withdrawal of Siemens opens the way to Montreal-based Bombardier, whose plant in Derby, central England, came under threat of closure when its German rival won a 1.6 billion-pound deal to build 1,200 carriages for Thameslink, whose north-south London service will be completed by Crossrail’s east-west line.
The other bidders for the 60 train, 600-carriage contract are Tokyo-based Hitachi Ltd. (6501) and Construcciones y Auxiliar de Ferrocarriles SA of Spain. Crossrail said a “strong field” of potential contractors remains, adding that “we fully understand” the reasons for Siemens’s withdrawal.
The U.K. government changed its procurement guidelines following a political outcry over the Thameslink award, which will see Siemens build the trains in Krefeld, near Dusseldorf. The new rules dictate that the impact on British jobs and manufacturing expertise should be taken into account --something which might in any case have favored Bombardier.
Hitachi is separately establishing a plant in northern England to produce 90 Intercity Express trains made up of 596 railcars worth 4.5 billion pounds, though body-shells will be shipped from Japan for final assembly.
Bombardier’s Derby plant, known as Litchurch Lane, has cut hundreds of jobs since its Thameslink defeat while remaining in business thanks to contracts including the supply of Tube trains to London Underground and Electrostar models to London Overground and Go-Ahead Group Plc (GOG)’s Southern commuter network.
The current pipeline of work, which supports 1,800 jobs, runs through 2016, about the time the Crossrail units are due. Bombardier declined to comment on the Siemens announcement.
Britain has manufactured trains since it pioneered rail travel 200 years ago. Bombardier’s Derby site was one of several that made up state-owned British Rail Engineering Ltd. until that business was privatized, passing into the ownership of ABB Ltd., Daimler AG (DAI) -- as Adtranz -- and then the Canadian company.
Alstom SA (ALO), the French maker of TGV high-speed trains, shut a 150-year-old plant at Washwood Heath in Birmingham in 2005 after completing a contract to build tilting Pendolino units for Richard Branson’s Virgin Trains. Most London Underground tube trains were built there by onetime owner Metropolitan-Cammell.
Final bids for the Crossrail tender are due next month, with the company subsequently making recommendations to the U.K. Department for Transport and Transport for London. Trains are due to start running through the central tunnel section in 2018.
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