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The future of two factories set to build trains for the High Speed 2 line from London to Birmingham is in doubt as a lack of further orders could force them to close before work begins, Hitachi and Alstom have warned.
Ministers this week told Hitachi they would not place a new order for conventional trains that would keep its Newton Aycliffe plant in north-east England running until construction of HS2 begins in 18 months, according to people familiar with the matter.
Meanwhile, France’s Alstom told the Financial Times it had “almost little time left” to secure the future of its Derby plant because it also faces a production gap.
Rail companies are technically in charge of placing orders for rolling stock, but their budgets for these are set by the government.
Hitachi and Alstom in 2021 won a contract worth £2.8 billion to build 54 trains for the HS2 rail line.
But last year Prime Minister Rishi Sunak canceled the northern section of HS2 from Birmingham in the Midlands to Manchester to contain the spiraling costs of what was Europe’s most expensive infrastructure project.
HS2 will still require customized trains, but they will run on existing lines north of Birmingham.
The initial stages of assembly and bodywork of the vehicle will be carried out at the Hitachi factory in Newton Aycliffe, while the second phase of assembly and testing will be carried out at the Alstom factory in Derby.
The Hitachi factory, which employs 700 people, opened in 2015 and is making its latest trains for Avanti West Coast and East Midlands Railway.
Ministers told Hitachi this week they had no plans to order more trains to run on the West Coast Main Line. That order was seen as the only viable way to close the production gap. The decision raised the risk of significant layoffs, or even closure of the plant, although no final decision has been made, one of the people said.
Doubts over the future of the Newton Aycliffe plant have led some industry executives to suggest that HS2 trains could end up, at least in part, built in factories outside the UK.
In a statement, Hitachi said it is reviewing its options
“We have been engaged in discussions at all levels of UK Government for two years in an attempt to find a solution to the production gap at our Newton Aycliffe manufacturing facility.
“Unfortunately these discussions did not lead to a positive solution,” the statement read. “We are now examining all remaining options available to us in order to continue to ensure our manufacturing teams continue to build rolling stock to support the UK rail industry.”
Hitachi took a £64.8m write-down against the value of the plant in its accounts for the year to the end of March 2023, as it flagged the production gap alongside supply chain pressures and increased production. ‘inflation.
In Derby, Nick Crossfield, managing director of Alstom UK, warned that the plant was on the verge of stopping production.
“From now until May and June there will be very little, if any, activity at what is one of the group’s largest facilities globally,” he told the BBC this week.
In a statement on Saturday, Alstom said: “We continue to work constructively with the Government to secure a sustainable future for Derby Litchurch Lane, but after 10 months of discussions we have almost run out of time and must deliver the much-needed certainty for our staff and the Derby supply chain.”
The Department for Transport said: “The Government is committed to supporting the whole sector and is working with all rolling stock manufacturers, including Hitachi, on the future order pipeline which we expect to remain strong over the coming years.”