Trains manufacturer Hitachi says the Government holds the key to securing the future of its vast Newton Aycliffe plant and 700 staff - after a shock £64million announcement.
Hitachi has announced that the North East factory is now worth more than £60million LESS after what it described as "a combination of direct and in-direct economic factors continued to affect businesses and manufacturers in the UK, including supply chain pressures, a production gap and rising global inflation".
Despite local concerns, The Northern Echo understands that the move is not a reaction to the Government's U-turn on HS2, where Hitachi has a contract with Alstom. Hitachi is still making 54 units with them for Phase One of HS2 - and while the company would have been fighting for more work as the project grew, this is all about wider issues.
So plans to redirect Newton Aycliffe's resources to fill that production hiatus will already be in place - and although this will be a private sector route, it still needs the Government to step in and approve Hitachi's plan before it can be fully rolled out.
An Hitachi Rail spokesperson said today: “Hitachi Rail is proud to play a significant role in supporting the UK railways and its wider supply chain. We are busy delivering next generation intercity trains for passengers, while investing in battery technology and digital transport solutions.
“We continue work with industry stakeholders and the UK government on opportunities surrounding new rolling stock orders such that we can continue to support and further enhance our investments here in the UK.”
Shadow Transport Secretary, Louise Haigh MP told The Northern Echo today: "It beggars belief that Conservative ministers are failing to act, while the future of rail manufacturing in the UK is in doubt.
"The UK's world-class rail manufacturing industry must not have the rug pulled under them as a result of Conservative dither and delay.
"Possible solutions are on the table, and ministers must now provide urgent clarity on the short-term rolling stock pipeline, and the thousands of jobs that depend on it.
"After 13 years, communities are counting the cost of Conservative chaos and indecision."
Only a couple of weeks ago Alan Strickland, Labour Parliamentary Candidate for Newton Aycliffe and Spennymoor said "dithering and delay" on HS2 and other rail projects has created "major uncertainty for our proud rail industry".
In a letter to Mark Harper, Secretary of State for Transport Department for Transport, he said: "Please can I ask that you take a swift decision about future rolling stock needs so companies like Hitachi can plan for the future before current orders run out. And can your department provide clarity on how you will support the rail industry through the damaging gaps in production the industry now faces."
And today former MP Phil Wilson, who was backed by The Northern Echo as he fought to bring the plant here in the first place, said he was worried about the situation - but said the ball was in the Government's court.
"Any challenge to the plant's future would have a massive impact, but there is an easy resolution if the Government approve Hitachi's plans," he said.
The writedown reduced Hitachi's profits from £274,309,000 in the financial year ended March 31, 2022 to £104,982,000 in the financial year ended March 31, 2023, but the company insisted it was not the start of closure plans at Newton Aycliffe.
It said: " During the year ending March 31, 2023, a combination of direct and in-direct economic factors continued to affect businesses and manufacturers in the UK, including supply chain pressures, a production gap and rising global inflation.
"These factors have all significantly changed the business environment, resulting in a situation where the company has been obligated to commission an impairment review of Newton Aycliffe manufacturing facility.
"This impairment review led to a reassessment of the carrying value of the Newton Aycliffe Plant and a resulting write-down of £64,800,000. This impairment should not be interpreted that Newton Aycliffc is entering into a period of cessation, instead it should be viewed as an illustration of the current challenges within the industry and will not have any operational impact on its ability to deliver current or future orders.
"The company has been working extensively with the UK Government and industry over the past 18 months to identify private sector solutions and gain clarity on the rolling stock market in order to secure future orders for the manufacturing facility."
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