Hitachi's UK rail project on hold
Hitachi’s bid for a £7.5bn long-distance rail line project in Britain is part of a global expansion plan, but faces new doubts. Britain’s new spending cuts have been a factor in the deal’s lack of progress.
The situation has become so serious that Japan’s prime minister, Naoto Kan, recently pleaded with his UK counterpart, David Cameron, to intervene and rescue the deal. According to the Financial Times, UK Labour Parliament Member Phil Wilson said that the reason these talks even took place was "because the issue is so important for bilateral relations.”
The FT also reported that the contract was considered "positive and attractive" by former head of the Audit Commission, Sir Andrew Foster. However, he added that a cost saving option for Britain would be refurbishing existing trains and extend the lifespans of current technology.
British unions along with Labour MP's have kept the spotlight on protecting national jobs. Both parties have also been vocal in questioning Japan's recent advances into the UK rail market.
In 2009, Agility Trains, a consortium of Hitachi, said it expected to create 2,500 skilled engineering jobs in the UK. However, when Hitachi confirmed that all trains would be built in Japan, several UK unions called for talks with the government. The amount of work planned within Britain was the dominant concern expressed by representatives from the TSSA, GMB, and Transport unions. (The Independent Article)
Obstructions like these, however, are more commonly faced with expansions heading in the opposite direction. Although Europe is a leader in rail technology, expanding into Japan's rail industry has been a significant challenge.
In a previous Eurobiz article, chairman of the EBC’s Railway Committee, Kai Taylor, said: “Without having firm data, I think it’s fair to say European manufacturers have less than 1% [of Japan's rail equipment market].” Additionally, the European Union estimated that foreign companies as a whole only represented a 2% share.
A final decision has yet to be reached, but if Japan’s Hitachi finalizes the £7.5bn deal in Britain, it would most likely spark the construction of a new factory that could pave the way for additional development and jobs throughout Britain.
Hitachi reportedly plans to double its railway business over the next six years by meeting the increasing rail demands abroad.