The boss of Bombardier’s rail division has welcomed a deal which would see rival Alstom take over the business, including its UK train-making site in Derby.
Yesterday, Bombardier Inc and Alstom confirmed that they had reached an agreement, which would see the French rail giant buy Bombardier Transportation for a sum in the region of $8 billion.
Both companies have signed a memorandum of understanding, with the deal expected to go through next year, subject to approval from regulatory authorities.
Bombardier Transportation is headquartered in Berlin and its UK manufacturing site is in Litchurch Lane, Derby, which employs around 2,000 people.
The Unite union has already received reassurances from Bombardier about the future of the Derby site and its workforce. It is now currently waiting to hear the same from Alstom.
In the meantime, Danny Di Perna, president of Bombardier Transportation, has welcomed the deal, believing that there are a number of benefits to joining forces with Alstom.
He said: “We welcome this announcement. We see great geographic and product complementarity with potential to translate into increase capacity to respond to the growing global demand for rail.
“With a shared commitment to the next generation of green and digital rail solutions, a combined company would benefit from economies of scale resulting into improved investment and innovation capabilities, and a streamlined investment pipeline.”
In the short-term, it is unlikely that anything will change at Bombardier’s Derby site, which is currently busy delivering major orders for customers West Midlands Trains, Greater Anglia and South Western Railway.
In the longer term, workers at Litchurch Lane will be anxious to know whether Alstom would look to preserve and invest in Litchurch Lane.
Currently, Alstom does not have a manufacturing facility in the UK - but it does have a presence.
Back in 2017, it opened its Transport and Technology Centre in Widnes, Cheshire. The 13,000 square metre site specialises in revamping and modernising existing rolling stock.
In the past, Alstom has competed against Bombardier for UK rolling stock contracts. However, there have also been instances where the companies have worked together and co-led projects.
In terms of future work, Alstom is among the companies hoping to win the £2.75 billion contract to build trains for HS2. However, a joint venture involving Bombardier and Hitachi, is also bidding for the same work.
Litchurch Lane is the UK’s biggest train manufacturing site. Not only does it build trains, it also has the capability to design and test them, making it unique to Britain.
The key will be whether under Alstom’s ownership, it decides to retain the site.
The company has already said that it intends to capitalise on the UK market, as well as other countries where Bombardier has established a firm foothold, such as Germany, North America and even China.
Speaking yesterday, Henri Poupart-Lafarge, chairman and chief executive at Alstom, said that the deal would improve the firm’s “global reach” bringing a “complementary geographical presence and industrial footprint in growing markets”.
However, a key obstacle could be getting the deal past regulatory authorities.
Last year, a planned tie-up between Alstom and Siemens collapsed due to European regulatory concerns.
European Union competition regulators blocked the Alstom-Siemens deal, fearing the tie-up would hurt competition and lead to higher prices for consumers.
