A train carriage is worked on Bombardier's plant in Derby, England, in July. Bombardier cut more than 1,400 jobs at the plant after it failed to win a contract for building Thameslink rail carriages.Rui Vieira/AP
Train making has been part of the lifeblood of Derby, England, for 135 years. But the city's close association with the rail industry now goes far beyond manufacturing, encompassing software, train operators and legal and other services.
The possible loss of Bombardier, which put the future of its plant up for review and laid off 1,400 after losing a contract to build trains for the Thameslink route through London, would be hugely damaging but not fatal.
A decision from the Canadian company, the last train maker left in the UK, is expected by the end of the year.
Almost 20 per cent of Derby's economic output – some £2.6-billion ($4.2-billion) a year – comes from the industry, according to a 2010 report by the city council. It found that 5,010 people were directly employed in the industry, with 3,000 of those at Bombardier.
A survey of its members by the Derby and Derbyshire Rail Forum (DDRF) found that more than 1,000 jobs could be lost in the Bombardier supply chain. Four companies could close.
Michelle Craven, vice-chair of the DDRF and a solicitor with Nelsons, an east Midlands firm, said: "There have been job losses and where there have been plans for expansion, they have been knocked on the head. As this pans out, there will be more of that. It is a difficult time."
She hopes recent "relatively nice noises from government" will prove sufficient to keep the plant open. The government has hinted that there could be contracts to keep the company going until an order for Crossrail carriages for London in 2014, which would be under new procurement rules favouring a U.K.-based bidder.
However, it may be too late. Bombardier has 23 plants in western Europe, more than it needs, because in many countries it is impossible to win a contract without a domestic presence. As one observer says: "If it doesn't need a plant in the U.K. to win orders there, why have one?"
It is not possible to export trains from the U.K. by rail, as continental rolling-stock is built to wider specifications, so there is not enough clearance. They have to be shipped by truck. By contrast, imported trains can be built to the U.K. narrow standard and simply driven through the Channel tunnel.
Nevertheless, Ms. Craven says there are bright spots. "This is the largest rail cluster in the world. We have to recognize there is still an awful lot of domestic business – not just building rolling-stock but a huge amount of infrastructure work in prospect."
Projects such as electrification of lines in the north of the country and sections of new track should provide work, she says.
And Network Rail, the not-for-profit organization that controls infrastructure, has much to do modernizing the system to meet increased demand. There is also the prospect of a high-speed line from London to Birmingham, then on to Manchester, Scotland and Leeds. The DDRF is also working with smaller companies to win export orders.
In November, Network Rail announced plans to establish a depot in Derby, which could create hundreds of jobs.
John McArthur, chief executive officer of Tracsis, a software and consultancy business, agrees that there is potential. The company's flagship program, which manages staff deployment for 13 of the 16 train operators, was created at Leeds University.
But, although Leeds remains its head office, the bulk of its 42 staff are at offices in Derby. "Derby is to trains what Silicon Valley is to software. You have to be here," he says.
Tracsis has four divisions and operates internationally, helping New Zealand run its trains during the Rugby World Cup.
But among its fastest growing operations is MPEC, a provider of "black boxes" that monitor track and signal conditions to detect and pre-empt faults.
Tracsis, which is traded on Aim, the U.K.'s junior stock market, bought Derby-based MPEC for £3.4-million in June, and says the business added £1.07-million to its turnover for the year to July 31, 2011.
This, along with 14-per-cent organic growth, lifted revenue from £2.6-million in 2010 to £4.1-million in 2011. Profit before tax also increased from £584,000 to £1.12-million.
MPEC's framework agreement with Network Rail covers just a fraction of the network and would grow, Mr. McArthur says. "It is astonishing how antiquated a lot of rail operating systems are. There is a lot of room for innovation."
SNC-Lavalin, the Canadian engineering and construction group, also sees potential in rail in Derby. It recently bought Interfleet, the rail technology consultancy group, for an undisclosed sum.
Interfleet specializes in rolling-stock, railway systems, and strategic railway management. Founded in 1996 during U.K. rail privatization, the company has 600 staff across the world.
"There is great growth potential in the rail sector worldwide," says Jim Burke, executive vice-president of SNC-Lavalin Group.
Ms. Craven agrees: "There has to be a future for rail. There is too much going on and too much demand from the public for there not to be."
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