Yahoo Finance Germany’s Siemens abandons HS2 contract battle
Siemens has dropped part of a legal challenge against HS2 over a £2.8bn train building contract as it eyes other lucrative work on the new high-speed line.
The German company will no longer seek an injunction to prevent the award, which paved the way for the Government to formally award Hitachi and Alstom with the flagship contract on Thursday.
Grant Shapps, the Transport Secretary, said the announcement “places Britain firmly at the forefront of the high-speed rail revolution with these state-of-the-art trains serving communities right across the country from London to Glasgow”.
Siemens’ decision to drop the injunction marks a victory for HS2 bosses who sought to “relegate” its challenge to a damages claim. It is understood it will be at least a year before this part of the proceeding is brought before judges.
Claims filed with the High Court in November claimed that Hitachi and Alstom’s subsidiary, Bombardier, had failed to meet HS2’s technical requirements such as manufacturing standards, timetable and cost.
Bosses at Siemens, which is building a new £200m plant in Goole, East Yorkshire, are believed to be focusing on other HS2 contracts that will soon be put out to tender.
Siemens is one of four companies to have been shortlisted to deliver electronic signalling across phase 1 and 2a of HS2 - a contract worth more than £500m.
It is understood that the injunction was dropped by Siemens for two reasons. The disagreement could hit its chances of winning other contracts; and it would be liable for legal costs worth hundreds of millions of pounds if the injunction was pursued but judges ruled against the company.
A spokesman for Siemens Mobility said: “We’re obviously very disappointed by the announcement, as we believe we submitted a strong bid to build Britain’s new HS2 trains.”
With billions of pounds worth of contracts to hand out, HS2’s decision-making will be closely scrutinised by rail watchdogs.
The Office of Rail and Road last month ordered Network Rail, which owns the rest of the UK’s tracks and stations, to stop favouring Siemens and Alstom.
The two companies account for 90pc of taxpayers’ spending on upgrading signalling.
Some 26,000 signals need to be upgraded over the next 15 years, meaning the pair are in line to share between £800m and £900m annually from work outside of HS2 unless procurement processes are changed.
John Larkinson, chief executive of the ORR, said: “Network Rail can reduce reliance on the dominant suppliers, and make the market more attractive to potential new suppliers by increasing suppliers’ confidence in the market and reducing costs.”
The inside track on HS2's £2bn fleet modelled on Japan's bullet trains
On a significant day for the much-awaited HS2, Grant Shapps apologised for not venturing to County Durham to brave near-freezing temperatures.
The transport secretary had been scheduled to travel to Hitachi’s train building plant in Newton Aycliffe on Thursday morning and award a £2bn contract to build 54 “state of the art” HS2 trains. Having come into contact with Australian deputy prime minister Barnaby Joyce, who tested positive for Covid, Shapps is now self-isolating.
The HS2 contract will be split between Hitachi and French firm Alstom with work taking place across plants in County Durham, Derby and Crewe. It will create roughly 500 new jobs, to “maintain” 2,500 in total.
Shapps said: “This is another landmark step in the delivery of HS2 which will open up new employment and leisure opportunities for millions of people, levelling up opportunities for generations to come”.
With a top speed of 225mph, the electric trains will lay claim to being the fastest in Europe. The first will roll out in 2027, the Government said - but passengers will have to wait until 2029 before the vessels are in service.
Shapps added that it “places Britain firmly at the forefront of the high-speed rail revolution with these state-of-the-art trains serving communities right across the country from London to Glasgow”.
But the selection of Hitachi raised some eyebrows after cracks were identified on its Azuma fleet earlier this year. It sparked chaos across long-distance express services and forced operators to re-introduce decades-old InterCity 125 locomotives.
The Japanese conglomerate has promised to use “a different type of aluminium” for the undercarriage of the trains, according to one source.
Andrew Barr, Hitachi Rail chief executive, said: “We are excited to be pioneering the next generation of high speed rail in the UK.”
Modelled on Japan’s bullet train, each unit will measure 200m in length. Made up of eight carriages to carry around 550 passengers, they are able to be coupled together to double capacity. Each train will hold eight lavatories, including two disabled.
Only 49 of the fleet are planned to be in service at any one time, with the other five sidelined for maintenance.
First and standard classes will continue to be on offer, although a British Rail-style buffet car will not be brought back. Instead, passengers will be able to choose between a retail kiosk and "cafe-shop" - exactly how these will be configured is yet to be decided.
While interior decor is yet to be decided, the two operators have promised it will not look out of date. They are set to take inspiration from “Futurology studies” carried out by Hitachi’s Centre of Social Innovation, and the ‘human factors’ team at Bombardier - the engineer bought by Alstom in January.
Passengers will mostly sit in a two-by-two format, but some carriages will boast a two-by-one setup. HS2 has claimed this would still allow for 30pc more seats than comparable high-speed vessels in Europe.
And while carrying more passengers, they will be better for the environment. Alstom has said the trains will be 15pc lighter, meaning less electricity is required.
Despite the train maker’s many promises, passenger groups remained sceptical.
“It’s vital that the needs and aspirations of passengers are at the heart of train designs,” said Anthony Smith, chief executive of watchdog Transport Focus.
“Building a brand new railway provides a once-in-a-generation opportunity to create more comfortable and accessible services. This will make train travel a more attractive choice and help contribute to battling climate change.”
The award to Hitachi and Alstom has not been without controversy. German conglomerate Siemens, building a large train plant in Goole, East Yorkshire, had expected to win.
It sued the Government in October, claiming the decision to select Hitachi and Bombardier was “shrouded in mystery”.
According to Siemens, Hitachi and Bombardier failed to meet HS2’s own technical requirements, such as manufacturing standards, timetable and cost. It is understood the case has now been kicked into the grass and will not come before judges for at least another year.
“That ship has sailed,” said a source close to Siemens.
Despite opposition to HS2, its eye-watering cost, disruptions to people’s homes and the environment, Thursday was a day for the project’s supporters.
“This is a huge step forward for Britain’s most important infrastructure project,” said a spokesman for the High Speed Rail Group. “The HS2 trains will offer passengers a world class on-board experience and make a huge difference to how people think about rail travel in this country.”
Nick Crossfield, Alstom's Managing Director, UK & Ireland, added: “HS2 is a once-in-a-generation opportunity to transform Britain by building a sustainable transport system fit for the 21st Century.”
