'Disaster' fear for train factory

1 July 2011 Last updated at 18:13 GMT Bombardier is the UK's last train-making factory The leader of Derby City Council has spoken of a possible jobs "disaster" after train-maker Bombardier lost a major contract.

Philip Hickson went to a meeting with the firm in Berlin after it missed out on a contract for London's Thameslink.

He said the full impact would be revealed to staff next week and added the future of the train-making factory - the UK's last - was "dire".

Bombardier employs about 3,000 people at its plant in Derby.

Concerns for the factory were immediately raised when it lost the ?1.4bn Thameslink contract last month, as most of its other projects are ending in the near future.

'Full consequences'

Mr Hickson said he went to Berlin hoping for good news but was now far less confident.

"We were hoping, in terms of the discussion, there might be some mileage in moving other things around in Europe to bring to Derby but clearly that is not going to be possible.

"Clearly the situation is dire."

He added: "I understand Bombardier have called all their workers to a meeting on Tuesday and although we were not told directly, I believe that is when the news of the full consequences of the loss of this contract are going to be.

"I think that is when the full scale of the disaster will be revealed."

Bombardier's Derby plant is the UK's last remaining train factory.

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Japan's factory output rebounds

29 June 2011 Last updated at 02:17 GMT Car production was hit badly due to a shortfall of parts following the earthquake and tsunami Japan's factory output rose at a faster-than-expected pace in May as the economy continued to recover from March's earthquake and tsunami.

Japan's industrial output jumped by 5.7% in May, compared with the previous month, the latest government data showed.

The twin disasters had damaged factories and caused disruption to the country's supply chain.

This is the second successive month that industrial output rose in Japan.

"As supply chains recover from the damage caused by the March earthquake, output is showing a strong recovery, mainly in cars," said Yuichi Kodama, of Meiji Yasuda Life Insurance.

'Downside risk' Some of the biggest Japanese manufacturers had to suspend or curb production after the earthquake and tsunami, due to a shortage of parts and electricity supply.

While an improvement in the supply chain has eased the parts shortage, power cuts still remain a big concern for manufacturers, not least because of peak consumption during the summer months.

"The prospect of power shortages in the summer is making companies cautious about the outlook," said Mr Kodama.

Analysts also warned that if a solution to the power crisis is not found quickly, it may have an adverse affect on the overall economy.

"Longer-term, power constraints are a downside risk to the economy as more companies may decide to shift their production overseas, which would weigh on Japan's potential growth rate," said Yoshiki Shinke, of Daiichi Life Research Institute.

Back on track

One of the sectors worst hit by the twin disasters was Japanese car manufacturing.

A shortage of parts coupled with power supply constraints saw leading manufacturers like Toyota and Honda suspend production at their factories.

However, the latest production numbers show that the pace of decline at Japan's car manufacturers is slowing down.

On Tuesday, Toyota reported that its domestic production in May fell by 54.4%, compared with the same month last year. Last month it reported a 74.5% drop.

Honda said its Japanese factories produced 53.4% fewer cars in May. Its output had plunged by 81% in the previous month.

Meanwhile, Nissan said production at its domestic factories actually increased by 0.8% in May, compared with a 48.7% drop in the previous month.

Analysts said that the recovery in the sector had been faster than they had expected.

"Carmakers have been able to recover very quickly from the loss of output after the earthquake," said Shuji Tonouchi, of UFJ Morgan Stanley Securities.

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