French engineering firm Alstom has said it plans to stop making trains at its Birmingham factory, in a move that could cost up to 1,000 jobs.
Alstom is a major player in the transport market
The company said on Friday it would mothball its train production facility at Washwood Heath after its current contract to manufacture tilting 'Pendolino' trains for Virgin ends next year.
The news comes one day after Alstom said it had won a £100m contract to build new trains for the London Underground.
There was no word on how many jobs would go in Birmingham, but union leaders said they feared up to 1,000 staff could face the axe.
The plant at Washwood Heath, which currently employs 1,900 workers, has been building trains for 100 years.
It will focus on maintaining and servicing trains, with a slimmed-down workforce, once the Virgin contract has been completed.
"Our decision regarding assembly at Washwood Heath is obviously very regrettable but, given the depressed UK rolling stock market, we have no other option," said Paul Barron, Vice President of Alstom Transport UK.
"We intend to remain a strong player in the UK rail industry, and are reorganising ourselves to respond to the new market opportunities."
Alstom added that it had decided to build the new tube trains for the London Underground abroad rather than in the UK.
The engineering giant, formed as a joint venture between Alcatel and GEC - later to become the ill-fated Marconi - has been hit by cost overruns on some of its train contracts, as well as technical problems with its gas turbines, and the bankruptcy of a major shipping client.
Its best-known products are France's high-speed TGV trains.
Under pressure to stem heavy losses and reduce its debtpile, the company has shed thousands of jobs in Europe this year as part of a restructuring plan aimed at halving its debts by 2005.