Rolls-royce to cut 4,600 jobs in two years

The Gulf Today - Business - - FRONT PAGE -

LONDON: Rolls-royce is to cut 4,600 jobs over two years in the lat­est at­tempt by boss War­ren East to re­duce costs and com­plex­ity and make Bri­tain’s best known en­gi­neer­ing com­pany more prof­itable and dy­namic.

East, a softly-spo­ken for­mer tech boss, has over­hauled the 134-yearold Rolls since he took charge in 2015 but the new cuts come as the group grap­ples with an aero-en­gine prob­lem that has grounded planes and an­gered clients.

The an­nounce­ment, which East said is not linked to the Trent 1000 en­gine is­sue, marks the big­gest round of job cuts since the com­pany had to re­trench dur­ing the avi­a­tion cri­sis that fol­lowed the 9/11 at­tacks in the United States in 2001.

The plan will re­move 10 per cent of the work­force, tar­get­ing du­pli­ca­tion in cor­po­rate, ad­min­is­tra­tion and man­age­ment roles to try to save 400 mil­lion pounds ($536 mil­lion) a year by 2020.

Two thirds of the job cuts will fall in Bri­tain. Rolls is the big­gest em­ployer in the city of Derby, cen­tral Eng­land, with 15,700 at its head­quar­ters.

“Rolls-royce is at a piv­otal mo­ment in its his­tory,” East told re­porters. “We are poised to be­come the world leader in large air­craft en­gines. But we want to make the busi­ness as world class as our en­gi­neer­ing and tech­nol­ogy.

“We are propos­ing the cre­ation of a much more stream­lined or­gan­i­sa­tion. We have to sig­nif­i­cantly re­duce the size of our cor­po­rate cen­tre, re­mov­ing com­plex­ity and du­pli­ca­tion that makes us too slow, un­com­pet­i­tive and too ex­pen­sive.” The cuts will not af­fect its en­gi­neers, Rolls said.

The news has echoes of an an­nounce­ment from BT last month, another ven­er­a­ble com­pany that is cut­ting 13,000 man­age­rial and back-of­fice jobs to re­duce bu­reau­cracy and re­spond faster to its cus­tomers’ needs.

East, who built the chip de­signer ARM Hold­ings from a start-up into Bri­tain’s big­gest tech com­pany, has com­plained that Rolls, a ri­val to Gen­eral Elec­tric, is too com­plex and cum­ber­some due to lay­ers of bu­reau­cracy above the shopfloor.

Driv­ing home his new fo­cus, he has set a 2020 free cash flow tar­get of 1 bil­lion pounds, a size­able jump from the 273 mil­lion pounds recorded in 2017, off rev­enue of 15 bil­lion pounds.

In Jan­uary he di­vided the com­pany into three busi­ness units Civil Aero­space, De­fence and Power Sys­tems - and the new re­struc­tur­ing is de­signed to re­move man­age­ment du­pli­ca­tion be­tween those lay­ers and the cor­po­rate cen­tre.

The cuts fol­low a lengthy pe­riod of in­vest­ment in pre­vi­ous years that has meant it is now de­liv­er­ing its big­gest ever in­crease in large en­gine pro­duc­tion.

The union Unite warned: “There is a real dan­ger that Rolls-royce will cut too deep and too fast with these jobs cuts, which could ul­ti­mately dam­age the smooth run­ning of the com­pany and see vi­tal skills and ex­pe­ri­ence lost.”

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