Posted by: davidjmarlow | 05/07/2011

Media don’t get manufacturing…but do government?

The disappointing news this morning (July 5th2011) from Bombardier about job losses at their Derby manufacturing plant has sparked a frenzy of media reporting. Today’s reportage is overwhelmingly of Government being compelled by EU rules to award a contract to German company Siemens for the £3bn Thameslink rolling stock project, thereby compelling cutbacks at Bombardier. There are media and political attractions (for both Coalition and Labour) of this account; but is it either accurate or helpful for the UKs future manufacturing vitality?

Firstly, the Thameslink decision was actually announced on June 16th. Bombardier has made it quite clear that the job losses would have most likely proceeded even if they had been awarded the contract. The relationship between the Thameslink and Bombardier decisions are, therefore, neither straightforward nor direct.

Second, the UK/German argument is also stretched. Siemens is headquartered in Munich; but it has been established in the UK for over 100 years; employs over 16000 people here; and is making major UK investments in a range of new technologies that will support a strong future UK manufacturing footprint (e.g. Offshore Renewables in Humberside; gas turbines and a University School of Engineering in Lincoln; and a major ‘pavilion’ at the Royal Docks Enterprise Zone in London).

Bombardier is Canadian owned, headquartered in Montreal, with around 6000 UK jobs in the rail sector (and a further 5000 in aerospace). Its (rail) transportation business is actually operated out of Berlin, and it collaborates closely with Siemens in the sector – recently (May 2011) announcing a €multi-billion framework agreement with them to supply 130 trains for the German rail system.

High value manufacturing is very much a global market. Siemens and Bombardier are major players operating globally in competition and collaboration; they both have significant UK footprints that are crucial to our future manufacturing success.

Finally, is the EU process biased against ‘British’ firms, and might government have intervened either at the specification phase in 2008 (as the Coalition have implicitly criticised Labour) or over the current decision (as Labour has criticised the coalition) to ensure a better outcome for UK manufacturing? Again the answer is far from clear. If UK trains can only be manufactured in the UK, then Bombardier’s Derby plant is well-placed. However, presumably, this monopoly would not necessarily be good for the UK train user; and might well spark a retaliatory exclusion of UK manufacturers from a range of much larger EU transportation markets.

Derby(shire) remains at the heart of UK transport engineering post-today’s announcement – Rolls Royce, Bombardier, and Toyota being amongst key global manufacturers based there. There will be future UK (and EU) rail (and aerospace) procurements that Bombardier will seek to bid for from its UK operations (including Crossrail). Siemens is also a prominent part of a positive UK manufacturing future.

Nevertheless, today is not a good day for UK manufacturing, and especially not for Derby. Nor, however, is it irrevocably a disaster. With a well-founded approach to advanced manufacturing and engineering growth, the UK and Derby can face the future with optimism and resilience. Whether we do have such a well-founded approach, though, is a topic to which we need to return.

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