An Aventra Class 345 electric multiple-unit test train, manufactured by Bombarider Inc., to be used on the Elizabeth Line as part of the Crossrail project, sits on tracks in a hangar at the Bombardier Transportation UK Ltd. Rail Vehicles Production Site in Derby, U.K., on Friday, July 29, 2016.Simon Dawson/Bloomberg
Bombardier Inc.'s rail division has clinched a $1.7-billion order for 660 cars, to be built at the company's historic train works in Derby, England, in a deal the British government described as "the biggest investment in the railways since the Victorian era."
The British government's Department of Transport said on Wednesday that the contract for "state of the art" carriages from Bombardier is part of an effort to boost rail services for passengers across the region of East Anglia and one of the largest orders ever for British-built trains.
"We are making the biggest investment in the railways since the Victorian era," British Transport Secretary Chris Grayling said.
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The franchise for the rail service was awarded to Abellio East Anglia, a division of Dutch transportation company Nederlandse Spoorwegen.
"Abellio's decision [to use Bombardier as a supplier] will ensure our train-building industry in Derby remains strong," Mr. Grayling said.
Berlin-based Bombardier Transportation said the contract is "expected to be finalized within the next few weeks."
A total of 1,043 cars are to be ordered, with 660 coming from Bombardier and 383 from Swiss firm Stadler Rail.
"Bombardier is delighted to be chosen, pending final contract signing, as the preferred supplier for new trains for the East Anglia franchise," Bombardier Transportation spokesman Marc-André Lefebvre said in an e-mail.
"This announcement is a true endorsement of our workforce and the quality of the products they design, engineer and manufacture in the U.K. The contract will provide a stable, long-term workload for our staff, as well as supporting many jobs in the wider U.K. rail supply-chain."
The future of the historic rail works at Derby – which Montreal-based plane- and train-maker Bombardier acquired in a transaction 15 years ago – was thrown into doubt in 2011 when the company lost out to German rival Siemens on a contract to build rolling stock for the upgrade to London's Thameslink network.
The issue grew into a political controversy and the British government promised at the time to place domestic manufacturers on an equal footing with overseas rivals.
The Derby works – in the East Midlands – is Britain's only remaining train manufacturer. Trains have been made at the site since 1839, and it was a significant player in Britain's industrial revolution.
Bombardier Transportation's British commercial director, Des McKeon, said the order is "a great endorsement of Bombardier's next-generation Aventra train family, which offers maximum flexibility to serve many different market requirements from metro to inter-city."
Abellio said it plans to invest a total of $2.2-billion to boost rail services in East Anglia, between London's Liverpool Street and stations that include Norwich, Cambridge and Stansted Airport.
Bombardier Transportation president Laurent Troger is trying to boost the company's EBIT (earnings before interest and taxes) margins on rail contracts to more than 8 per cent by 2020, and push revenue past $10-billion (U.S.) with the help of new investor Caisse de dépôt et placement du Québec. Margins including special items were 4.4 per cent in the latest quarter.
The company says it intends to be more selective in its bidding as part of that effort to raise profitability. It also intends to increase standardization of its rail equipment to reduce complexity and lead times, for example by cutting in half the number of single-deck rail product platforms it offers to 10 from 20. Through the first half of this year, Bombardier Transportation had completed about 60 per cent of the 3,200 train business job cuts announced in February.
Bombardier Transportation expects large train orders to be tendered in upcoming quarters for high-speed trains in France and Spain, as well as significant contracts for metro cars in Britain, France and Germany. The company's rail-equipment backlog stood at $29.8-billion at the end of June.
With files from Nicolas Van Praet