Hitachi chair warns UK train factory at risk unless HS2 northern leg revived

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The chair of Japan’s Hitachi has warned that its UK train factory is at risk unless the government revives the northern leg of HS2 or launches other significant infrastructure programmes within a year.

In an interview with the Financial Times, Toshiaki Higashihara said the 750 jobs at the site at Newton Aycliffe near Durham could not be guaranteed unless demand increased.

“If [the northern leg] stays cancelled, then the volume of work at Newton Aycliffe goes down,” he said, “so the issue is rising in terms of the extent to which we must think about manpower.”

“If the Labour government doesn’t re-examine plans within one year, it’s going to be a problem,” Higashihara added, referring to the drop in demand before Hitachi starts construction next year of trains for the first leg of HS2 and the longer term uncertainty over demand.

Former prime minister Rishi Sunak cancelled the Birmingham to Manchester leg of HS2 a year ago due to costs, sparking outcry among regional leaders and businesses, who warned that the extension was vital for economic growth.

While in opposition, the Labour party ruled out reviving the project — a position it has continued to hold since winning the general election in July. However, in October, senior officials confirmed that ministers would launch a feasibility study for a new alternative non-high-speed rail route north of Birmingham.

Hitachi, the Japanese-headquartered conglomerate that employs 6,000 people in the UK, was one of the companies set to benefit most from the ambitious high-speed rail project.

The group’s joint venture with French manufacturer Alstom received an order for 54 trains for the first phase of HS2, which has been unaffected by the cancellation of the extension.

Any future orders for the second leg of HS2 would be made in several years’ time, according to people with knowledge of the timings.

Prime Minister Sir Keir Starmer will claim on Friday that a new £500mn order from First Group for 70 train cars will help secure the future of the Newton Aycliffe factory.

But while the order, which is not backed by government funding, is a significant boost to the plant, it will not be enough to entirely fill production gaps, people with knowledge of the business said.

Higashihara said he had met Starmer and discussed HS2, adding that he believed the project could be resurrected under Labour.

“For Labour, the original plan connects to economic development and regional revitalisation, so I think returning to the original plan would be better for the development of the UK,” he said.

“We want to support the workforce at Newton Aycliffe to the highest degree,” he added, “but the era where we need to think about that might be coming based on the volume of work.”

Higashihara said the company was also discussing alternative plans with the government, including possible deals to replace diesel engines on trains with batteries, “to see if we can adjust the workload at Newton Aycliffe”.

The UK rail industry has been facing headwinds from policy U-turns, rising costs and a dearth of new orders from cash-strapped British transport operators.

The Newton Aycliffe factory opened in 2015 as a result of the UK government’s decision to upgrade train carriages on the East Coast main line and Great Western line. The region has suffered from high levels of unemployment after Teesside Steelworks closed down.

In December 2023, Hitachi wrote down the value of the plant by £64.8mn, raising speculation that it could be heading towards closure.

The Department for Transport did not immediately respond to a request for comment.

Additional reporting by Jennifer Williams and Jim Pickard