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Bombardier to cut 1,400 jobs in Britain

By Paul Sandle

LONDON (Reuters) - Canadian train maker Bombardier is cutting more than 1,400 jobs at its plant in Derby, central England, after losing out to German group Siemens in a competition to upgrade rolling stock on the Thameslink cross-London railway.

Bombardier said it would cut 446 permanent jobs and 983 temporary jobs from its 3,000-strong Derby workforce having missed out on the Thameslink contract and completed much of its current workload, which includes supplying London Underground.

"The culmination and successful delivery of these projects and the loss of the Thameslink contract, which would have secured workload at this site, means it is inevitable that we must adjust capacity in line with economic reality," Francis Paonessa, president of the passenger division for the UK, said in a statement on Tuesday.

"We regret this outcome, but without new orders we cannot maintain the current level of employment and activity at Derby."

Bombardier -- the only remaining train builder in Britain -- said all its contracts, except for cars for some London Underground lines, would be complete by the end of September.

In June, Britain awarded a consortium led by Siemens a contract to build and maintain 1,200 train carriages for London's Thameslink commuter overground rail service as part of a 6 billion pound ($9.6 billion) upgrade of the line, which links Brighton on the south coast to commuter towns north of London.

Bombardier's contract loss was "disappointing" but was unlikely to materially hurt the company's earnings, Canaccord Genuity analyst David Tyerman said. Layoff charges would be minimal because most of those let go were temporary workers, he said .

Bombardier's shares were 1 Canadian cent weaker at C$6.90 on the Toronto Stock Exchange on Tuesday morning.

When the government's decision was announced, Siemens, which employs about 16,000 people in the UK, said up to 600 jobs in manufacturing train parts, including up to 300 at its factory in South Tyneside, northeast England, would be created as a direct result of it winning the work.

The Unite union, however, said the vast majority of manufacturing work by the Siemens-led consortium would be done in Germany, and it called on the government to act swiftly and decisively to save Britain's last train manufacturer.

"It is a tragedy because these redundancies would have been needless if the government really cared about British manufacturing and British skills," Unite's general secretary, Len McCluskey, said in a statement.

The GMB metal workers union and the TSSA rail union also criticized the government, which is grappling with big holes in its budget and hoping manufacturing and private sector growth can help offset public sector cutbacks and redundancies.

"We have to maintain the capacity in the UK to make railway equipment," GMB regional officer Tye Nosakhere said.

Business Secretary Vince Cable said he believed Bombardier had planned to cut jobs in the UK regardless of whether it won the contract.

"We can't reopen that whole process (tender)," Cable told BBC Television.

"What we can do is make sure that, in the future, public procurement operates not in a protectionist way -- that's what we don't want -- but in a way that value for money is assessed so that it helps British industry and British suppliers."

($1=$0.96 Canadian)

(Additional reporting by Keith Weir and Olesya Dmitracova, and Nicole Mordant in Vancouver; Editing by Greg Mahlich, David Hulmes and Peter Galloway)

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