Trade unions claimed victory yesterday as Japanese manufacturing giant Hitachi announced the transfer of its headquarters and rail business to London after taking a huge order for new trains.

The next generation of intercity trains will be built to a £1.2 billion order at Hitachi's new factory at Newton Aycliffe in County Durham.

Hitachi's decision to build the factory came after intense lobbying involving Sedgefield Labour MP Phil Wilson, trade union leaders and businesses in the area.

Train drivers' union Aslef general secretary Mick Whelan said: "We welcome this news because it will create much-needed jobs in the north-east of Britain."

The factory is expected to be operational from 2015 with full production starting in 2016.

Under the new order, 270 carriages will be manufactured at the plant, enhancing the factory's ability to win lucrative rail contracts across Europe.

Mr Whelan said: "I would rather it was a British company creating jobs and winning orders from the Department for Transport, but it is good news.

"We want investment, in trains and carriages as well as in our infrastructure, to build a better railway for everyone in Britain."

Although Hitachi plans to move its headquarters to London, the Japanese arm of its business will still be run from Tokyo.

The success in winning the order for the north-east sharply contrasts with the Con-Dems' disastrous handing of the £1.4bn Thameslink train contract to German firm Siemens in 2011.

Government fumbling cost 1,000 jobs at train manufacturer Bombardier in Derby and jeopardised the future of British train manufacturing.

The deal was followed by two years of wrangling over the way it had been struck.

Despite the disastrous decision and job losses, Bombardier survived and won a £1bn contract to supply London's Crossrail development.

The order, securing over 1,000 jobs, was won after a determined campaign in which unions, MPs and the local community united in pressing the coalition government into awarding the contract to Bombardier.