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Last Updated: Sunday, 10 August, 2003, 12:47 GMT 13:47 UK
Alstom confirms huge job cuts
Alstom train
Alstom has more than 3bn of debt
French heavy engineering firm Alstom has confirmed plans to halve its 10,000-strong UK workforce.

The heavily-indebted group said the number of staff it employs in the UK will drop to about 5,000 within the next two years as it turns its British operations into a non-exporting service business.

A spokesman also confirmed that among that number will be 1,000 people who work at its Birmingham train-making plant, who were told in June that their jobs were under threat.

As the company made the announcement on Sunday, it accused the UK Government of a lack of support, saying ministers had failed to back its efforts to keep train building and power equipment contracts in Britain.

The spokesman said the firm will lose about 3,500 staff who work for its power transmission and distribution division as they transfer to French nuclear power agency, Areva.

French aid

Alstom plans to complete the sale of the division, which makes equipment for electricity generators and distributors and employs 3,000 people at Stafford, Rugby and Kidsgrove near Stoke, later this year.

A further 500 staff could be affected by "some further restructuring" of its remaining UK businesses, although the spokesman did not give details.

The firm will be left with train servicing operations in the UK and its power division, which services power stations.

The group blamed the decision on the lack of a domestic market for the company's trains and power products in the UK.

Protestors in Paris
Alstom workers travelled to Paris to protest about planned closure
"We have been talking to the government for the last two to three years about the effects of this on our business and the lack of stability in the power and rail transport ordering systems," the spokesman said.

"We were not looking for a guarantee of work, just an intelligent procurement process, the sort of policies that give some sort of vision and future dimension to domestic companies, but there has been nothing forthcoming".

In a Sunday newspaper, the group said ministers had last week turned down Alstom's plea for a 30m export credit for a power station contract in Malaysia.

It would have brought a 100m contract to the company's power operations in Manchester.

Nick Salmon, the firm's executive vice-president, said: "Alstom's operations in the UK in the future will be a service business, looking after our installed base in power stations, electrical systems, railways and rolling stock.

"It will not be an exporter."

When the Birmingham train making plant completes its final contract, for 53 tilting Pendolino trains for Virgin next year, the site will switch to refurbishing trains.

Alstom, which has about 3.4bn of debt, last week announced a deal with its banks and the French Government, under which the French state would take a 31% stake in the group.

That deal could yet fall foul of European Union rules which strictly limit how and when governments can bail out private firms.

Newspaper reports on Sunday quoted the spokesman for EU Competition Commissioner Maroi Monti, who said that it could be forced to break itself up.

"One of the conditions (for approving the state aid) could be selling assets to reduce the company's presence in the market," he told The Business.

Council in talks with Alstom
03 Jul 03  |  West Midlands
Alstom halts UK train production
20 Jun 03  |  Business
Jobs to go as Alstom cuts back
12 Mar 03  |  Business
More problems for Pendolino
02 May 03  |  England

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