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Hitachi and Alstom have warned that the future of two plants due to build trains for the High Speed 2 line from London to Birmingham is in doubt as a lack of further orders could see them close before work begins.
Ministers told Hitachi this week that they would not submit a new order for conventional trains that would have kept the Newton Aycliffe plant in north-east England running until construction of HS2 begins in 18 months, according to people familiar with the matter.
Meanwhile, French company Alstom told the Financial Times that time was “almost running out” to secure the future of its plant in Derby as it also faces a production gap.
Train companies are technically responsible for placing carriage orders, but their budgets for doing so are set by the government.
Hitachi and Alstom in 2021 won a contract worth up to £2.8bn to build 54 trains for the HS2 railway line.
But Prime Minister Rishi Sunak last year canceled the northern leg of the HS2 project from Birmingham in the Midlands to Manchester to rein in spiraling costs on what was Europe's most expensive infrastructure scheme.
HS2 will still need specially designed trains, but they will run on existing lines north of Birmingham.
The initial stages of body assembly and preparation will be carried out at Hitachi's factory in Newton Aycliffe, while the second stage of preparation and testing will be carried out at Alstom's factory in Derby.
The Hitachi plant, which employs 700 people, opened in 2015 and manufactures its final trains for the Avanti West Coast & East Midlands Railway.
Ministers told Hitachi this week they had no plans to order more trains to run on the West Coast Main Line. This demand was seen as the only viable way to fill the production gap. One of the people said the decision increased the risk of massive layoffs, or even closure of the plant, although no final decisions have been made.
Doubts about the future of the Newton Aycliffe plant have led some industry executives to suggest that HS2 trains could end up being at least partly built in factories outside the UK.
Hitachi said in a statement that it was reviewing its options
“We have been engaged in discussions at all levels of UK Government for two years, trying to find a solution to the production gap at our Newton Aycliffe manufacturing facility.
“It is disappointing that these discussions did not result in a positive solution,” the statement said. “We are now reviewing all remaining options available to us in order to keep our manufacturing teams building 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 ending March 2023, as it cited a production gap coupled with supply chain pressures and rising inflation.
In Derby, Nick Crossfield, Alstom's UK managing director, warned that the plant was about to stop production.
He told the BBC this week: “Between now and May and June, we will see very limited activity, or no activity at all, at one of the group’s largest facilities around the world.”
“We continue to work constructively with the government to secure a sustainable future for Derby-Lychurch Lane, but after 10 months of discussions, we have run out of time, and we need to save a lot,” Alstom said in a statement on Saturday. Need certainty for Derby staff and our supply chain.
The Ministry of Transport said: “The government is committed to supporting the entire sector and is working with all rolling stock manufacturers, including Hitachi, to line up future orders which we expect to remain strong in the coming years.”
