Montreal-based Bombardier Transportation plans to lay off 1,429 employees at its British railway manufacturing plant after losing a contract to German rival Siemens.
The cuts announced Tuesday will amount to nearly half the workforce at its Derby plant in central England. Ninety-day notices have been given to 446 permanent staff and 983 temporary workers.
Bombardier lost out last month in bidding for the contract to build new passenger trains for service between Brighton, on England's southern coast, and Bedford, 80 kilometres north of London.
"The loss of the Thameslink contract has forced us to conduct a U.K.-wide review of our operations," said Colin Walton, chairman of Bombardier Transportation in the U.K.
The British government has set up a task force to ease the effects of the job losses. It has said Siemens will be hiring about 650 people in Britain to build the trains.
Unions fault government
Trade unions have accused the government of reneging on a promise to support U.K. manufacturing by awarding Thameslink to the German firm even though European Union procurement rules prohibit nationality to influence contract awards.
The layoffs will also threaten jobs at Bombardier's suppliers in Britain and there are fears that the remaining 1,600 jobs at the Derby plant could be threatened once the last remaining contract ends by 2014.
The firm said it would conduct a "complete review" of its Derby operations over the next month.
"Everything is open," spokesman Marc Laforge said in an interview. "We are considering any type of scenarios that may occur on the line."
The plant is currently producing 1,300 subway cars for London's Underground system, trains for National Express East Anglia and turbostars for Chiltern and London Midland.
Four out of five existing contracts in Derby end in September. The remaining contract, for the Underground, is due to be filled by 2014.
Steve Hansen of Raymond James said the layoffs weren't surprising given the Thameslink contract loss, but said it's premature to speculate on the fate of Bombardier's U.K. activities.
"There are still a number of prospects for Bombardier's transportation platform in the region," he said from Vancouver.
"We still think very highly of the transportation portfolio ... particularly in the emerging markets where there's new assets being built but also in the European existing markets where the replacement demand is very strong."
The Derby plant has been making trains since the 1840s and was among the world's largest rail manufacturing sites. Bombardier purchased the facility from Daimler Chrysler in 2001.
On the Toronto Stock Exchange, Bombardier shares closed down 10 cents to $6.81.