Friday 13 February 2009

Hoon sugars a bitter pill

There were two sweeteners for the losers in yesterday’s trains contract story.

Derby firm Bombardier lost the £7.5bn contract, but the Government decided to announce (unexpectedly I’m told) that it would give them a smaller deal – worth £120m to £150m – on the same day.

The second less-known sweetner could turn out to be much more cynical.

Three sites were named for Hitachi’s UK based facility that will provide the 500 definite jobs to the UK.

Two were in areas in which Hitachi will receive Government grants if it chooses to set up, in the third – Ashby de la Zouch just south of the Derbyshire border – they will get nothing.

If you were Hitachi chief exec would you choose a site where you get free money or one where you don’t?

This question has occurred to industry insiders who are suggesting the Ashby site is only in the short list to keep disgruntled Labour voters in Derbyshire happy.

Derbyshire is of course a Labour heartland and Geoff Hoon’s home county, (though he’s a Notts MP).


Events dear boy, events said...

I have posted a further entry on my blog as Woolmar has now blogged. He provides some commercially confidential information that I was asked not to quote. The technical and risk issues are well known in the rail industry. I did not want to get bogged down with these but they are critical. Bad specs lead to bad contracts as I said earlier.

If the 500 jobs you speak about above is for the long term maintenance then this is the correct figure. I have checked this.

Obviously the placement of the depots will be politically driven up to a point. However it is side issue at the present time, for the reasons Woolmar gives. The contracts will be hard to deliver in their present form.

I have hoped I have helped.

Events dear boy, events said...


I have done some further digging. I can confirm that what Wolmar says is accurate:

1. Both bidders were asked to lower their price. Not just Bombardier;

2. There is not one expert that I have spoken to that says that these trains will be built as the specs wish. It is just too complex;

3. Contract expected to be signed within 3 months;

4. There is no capacity in the UK to manufacture these trains.

5. Obvious point this. Hoon, I understand, took a close interest in the jobs angle once he was told of the winner. Minsters, as you probably know, do not get involved in the tender evaluation. Anyway you are closer to this part of the puzzle then me.

I doubt much more will come out. If it does I will let you know.

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