Britain hands £1 billion Crossrail contract to home factory

LONDON Thu Feb 6, 2014 7:23am EST

Workers look on after a tunnelling machine made the breakthrough into the station structure at Canary Wharf, in east London June 11, 2013. REUTERS/Andrew Winning

Workers look on after a tunnelling machine made the breakthrough into the station structure at Canary Wharf, in east London June 11, 2013.

Credit: Reuters/Andrew Winning

LONDON (Reuters) - Britain said it awarded a 1 billion pound ($1.63 billion) train supply contract for London's huge Crossrail project to Bombardier Inc (BBDb.TO), in a move which secures jobs in the UK where the carriages will be built.

Train supply deals in Britain have been politically sensitive in the past. Three years ago, Bombardier, which owns the country's only remaining train manufacturing plant, lost out on a contract to Germany's Siemens AG (SIEGn.DE), resulting in hundreds of job losses in Britain.

The Department for Transport (DfT) said on Thursday that Bombardier would build 65 trains at its plant in Derby, northern England, supporting about 1,000 jobs.

The new trains will run on Crossrail, a 15 billion pound project due to open in 2018 which will connect Heathrow airport in the west of London to the county of Essex in the east through 42 km (26 miles) of new tunnels.

"The manufacture of these new trains will not only revolutionize rail travel in London, they will deliver jobs and economic growth in their birthplace in Derby and across the UK," London Mayor Boris Johnson said in a statement.

Bombardier, headquartered in Montreal, Canada, has owned the historic train manufacturing site in Derby, which dates back as far as the 1840s, for about 13 years.

Its future was thrown into doubt in 2011 when Bombardier lost out on a 1.4 billion pound contract to supply trains for Thameslink, another London rail line.

Bombardier's UK managing director Francis Paonessa said the company had reviewed its UK operations in the wake of missing out on that contract but three subsequent deals had, however, helped secure the plant's future until 2015.

"Crossrail now gives us a workload through to 2018," Paonessa told Reuters.

The deal between the DfT, Transport for London and Bombardier will also involve the firm maintaining the new trains and building a new depot for Crossrail, the largest infrastructure project in Europe.

Japan's Hitachi (6305.T) and Spain's CAF (CAF.MC) were also in the running for the Crossrail trains contract, while Siemens pulled out in July.

(Reporting by Sarah Young and Michael Holden; editing by Stephen Addison)

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