Yahoo Finance HS2 contractor braces for UK job cuts
HS2 contractor Hitachi Rail is drawing up plans for job cuts at its UK plant after ministers’ decision not to sign off on new train orders left the manufacturer facing a six-month drought of work.
Hitachi, whose UK factory employs 700 people and supports a further 1,400 jobs in the supply chain, suffered a body blow last week after the Department for Transport declined to approve an order of new trains for Avanti West Coast after two years of discussions.
Labour has indicated that it will go ahead with the contract should it win power, but a general election is unlikely before the autumn.
Executives at the Japanese company have therefore concluded that the site in County Durham is all but certain to face a six-month gap in train manufacturing. It has forced Hitachi to begin evaluating all options, according to sources close to the company.
Train building at the plant in Newton Aycliffe is expected to peak over the summer before declining from October following the completion of existing contracts for Avanti and East Midlands Railway.
The typical 12-month lag between signing deals with suppliers and the start of parts shipments means assembly work will almost certainly need to be paused even if Hitachi gets the go ahead for the next tranche of the Avanti contract later this year.
It leaves hundreds of highly skilled manufacturing jobs vulnerable. Remaining work, mostly in testing, will take other employees through only to next spring.
Any consultation on redundancies would be extensive and Hitachi would seek to find alternative activities within the plant for as many staff as possible, the source said. Nothing has been finalised and it’s possible that the Government could change its mind on the Avanti order in the coming months, which would minimise the time that assembly lines will stand idle.
Hitachi said it was “reviewing all remaining options available to us in order to keep our manufacturing teams building rolling stock to support the UK rail industry” following the Government decision not to trigger the follow-on order for Avanti, which is already funded. A spokesman declined to comment further.
Hitachi opened its Newton Aycliffe factory in 2015 after winning a deal to supply trains for the East Coast and Great Western main lines as part of the Government’s £5.7bn Intercity Express Programme to replace ageing rolling stock.
While further UK orders were received, HItachi struggled to win the export deals that would have helped smooth out the peaks and troughs in demand. The company wrote down the value of the site by almost £64m last year as work began to dry up.
Britain’s biggest train factory in Derby, operated by rival manufacturer Alstom, faces an even more uncertain future, warning that work is set to run out in May or June.
The 180-year-old Litchurch Lane site will have to close with the loss of all 3,000 jobs if new orders aren’t secured soon, UK managing director Nick Crossfield said last week. The plant is one of Alstom’s largest worldwide, having been acquired by the French firm through its takeover of Canada’s Bombardier in 2021.
Both Hitachi and Alstom have new business on the horizon if they can survive the next few years, having won a £2.8bn joint order to build a fleet of trains for HS2. Work is scheduled to begin in 18 months, though assembly activity won’t start until some time after that.
Hitachi is expected to build the vehicle bodies, with Alstom fitting them out and undertaking testing. The cancellation of the HS2 network beyond Birmingham shouldn’t affect the requirement for the 54 trains, since northern cities will still be served using the existing track. It’s not clear what will happen to the contract if either of the pair collapses.
A Department for Transport spokesman said that the government is working with rolling-stock manufacturers including Hitachi on a pipeline of orders that should “remain strong in the coming years.”
