countries, who are considering setting up or extending mass transit systems. Many of these projects have been deferred through lack of money, but as transport problems grow in these expanding cities the pressures to establish such systems will eventually prove irresistible.
The problem is ensuring that Metro-Cammell survive to take advantage of these future opportunities. Their major customer, London Transport, does not propose to order any cars at all in the period 1983 to 1988. Although it is important in the context of public purchasing policy to have an even ordering programme, it appears that there is very little scope for London Transport to bring forward orders into this six-year gap.
Using their successful performance in both the UK and Hong Kong as show cases, Metro-Cammell are actively pursuing a number of overseas possibilities (such as Baghdad), but only two of these are sufficiently far advanced to provide work in the early years of the gap.
The KCR extension is one and the new Island Line for the Hong Kong Mass Transit Railway is the other. Officials are currently examining a currency obstacle which if resolved will enable the company to negotiate a contract on the Island Line too, and I expect that this issue will be coming before Ministers shortly The two contracts together would enable Metro-Cammell to survive with a slimmed down capacity during the early years of the gap and we are confident that other contracts at home and abroad can be found to carry them over the later years of the decade.
If Metro-Cammell were not able to accept these two negotiated contracts, we would have to face the very real possibility that Metro-Cammell would not survive the LT ordering gap, with the consequences that LT would probably turn overseas for their future requirements and that valuable export business in an expanding world market would be lost. This would be particularly galling when Metro-Cammell and the Government have put considerable effort into making Hong Kong an attractive show case for the company. Closure of Metro-Cammell would mean the loss of around 1500 jobs in the West Midlands, over 1000 of which are based on good long term: prospects. A similar amount of work would be lost to Metro- Cammell's suppliers in the UK.
I hope you
A decision on the KCR contract is required urgently. will be able to agree to the request for Cost Escalation Cover.
I am copying this letter to members of EX Committee, to Norman Fowler and to Sir Robert Armstrong.
form
Yours nievely, Yomather Hal
KENNETH BAKER (Approved by the Minister and regred
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alpene
in his
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