Canadian manufacturer Bombardier axed over 1,400 jobs at Britain's only train factory on Tuesday, blaming the move on the British government's decision to award a contract to German rival Siemens.
Bombardier said it would cut 446 permanent staff and 983 temporary workers at the plant in Derby, in central England, sparking calls from unions and the opposition Labour party for the coalition government to reverse the decision.
Bombardier's move comes after it failed to win a £1.4-billion ($2.2-billion, 1.5-billion-euro) contract for 1,200 carriages on the Thameslink railway route which cuts across London.
"The loss of the Thameslink contract has forced us to conduct a UK-wide review of our operations. This announcement today is part of an on-going process," Colin Walton, chairman of Bombardier Transportation in Britain, said in a statement.
Len McCluskey, head of Britain's biggest trade union, said the situation at Bombardier had "reached crisis point."
Unite's general secretary added: "The government must now act swiftly and decisively to save Britain's last train manufacturer.
"The dire consequences of the government's misguided decision to exclude Bombardier from the contract to build carriages for the Thameslink project is now becoming a reality," McCluskey added.
John Denham, business spokesman for the Labour party, insisted that it was "not too late" to review the contract decision, which he described as a "body blow" for the manufacturing sector.
The coalition Conservative-Liberal Democrat government has stressed that Britain's economic recovery is partly dependent on a strong manufacturing industry.
However transport minister Philip Hammond said reversing the decision to award Siemens the contract was "not an option" because his administration was following guidelines that were put in place by the previous Labour government.
"The only options available to us were to go ahead and award the contract to the bidder who made the highest value-for-money bid on the basis of the criteria Labour set out when they launched this procurement in 2008, or to cancel the project altogether," Hammond told BBC radio.
About 3,000 employees currently work at Bombardier's Derby plant, while the group employs some 25,400 staff across Europe.
Siemens has pledged to create up to 2,000 new jobs at their British operations and across the supply chain in component manufacturing, and also in depot construction and fleet maintenance. However these are not directly related to the Thameslink project.
Britain said in June that Siemens was the preferred bidder for the contract to build and maintain carriages for the 220-kilometre Thameslink commuter line, which runs from Bedford, north of London, and crosses the capital to Brighton on the south coast.