Rolls-Royce to cut thousands of jobs
INDUSTRY: Business Secretary Greg Clark has pledged to work with Rolls-Royce to ensure the “interests of the workforce are strongly represented” after the engineering giant announced it is axing thousands of jobs.
BUSINESS SECRETARY Greg Clark has pledged to work with Rolls-Royce to ensure the “interests of the workforce are strongly represented” after the engineering giant announced it is axing thousands of jobs.
The group, which wants to slash costs by another £400m a year, said the bulk of the cuts would affect its UK sites in Derby, Hucknall and Annesley over the next two years, with about a third expected by the end of 2018.
The Unite union warned that redundancies could have a dire economic impact on communities reliant on Rolls-Royce jobs and said there was a “real danger” the cuts would be made “too deep and too fast”, losing vital skills and experience.
Recent annual figures showed Rolls-Royce returned to profit last year with a pre-tax surplus of £4.9bn, thanks to a £2.6bn accounting boost from the recent strengthening of the pound.
In the Commons Shadow business minister Gill Furniss said it was “deeply disturbing news” and called on Mr Clark to implement “a reinvigorated local industrial strategy”.
Mr Clark said he was working very close with the local enterprise partnership to ensure that “opportunities that exist in Derby and the West Midlands are taken up”.
Speaking earlier in the question session, he said: “Rolls-Royce has told me the announcement does not reflect a reduction in growth by the company, indeed the reverse; Rolls-Royce has a growing order book of over £170bn and Mr East told me (the company) will need more staff directly employed on both the manufacture of components and assembly to meet that demand.
“The company has told me that it will continue to recruit engineers, technicians and apprentices.”
Labour MP Chris Williamson, whose Derby North constituents will likely be affected by the cuts, said the move represented a “failure of shareholder capitalism”.
He said: “When I left school in Derby in 1972 Rolls-Royce employed around 35,00 people; today it’s just under 12,00o. If these job losses go ahead the workforce will reduce to around 8,000.
“Isn’t it time that we saw the Government legislating to have workers on the boards of companies so there is somebody there to represent the interests of the workforce, because at the moment we’re seeing an expanding company, expanding order books and yet the workforce is diminishing.
“Isn’t this a failure of shareholder capitalism which basically sacrifices jobs on the altar of higher shareholder dividends?”
Mr Clark said he would make sure that the “interests of the workforce are strongly represented”, but added: “In terms of his overall statement on what he said about efficiency and companies, I think he should just reflect his desire to overthrow capitalism will make it very hard for anyone to find work in any private company at any time.”
Asked about Brexit and reports suggesting Rolls-Royce intends to move some operations to Europe, Mr Clark said chief executive Warren East had made it clear it was nothing to do with the ongoing negotiations.
The restructuring will cost Rolls-Royce about £500m – including redundancy costs – over the next three years, but will see it save £400m every year by the end of 2020.
Isn’t this a failure of shareholder capitalism?
Labour MP Chris Williamson.
THE EUROPEAN Central Bank decided on Thursday to end its 2.55 trillion euro (£2.3 trillion) bond-purchase programme at the close of the year and said interest rates would stay unchanged until the summer of 2019.
Between October and December, the ECB plans to buy 15 billion euros (£13.2bn) worth of bonds per month and then close the scheme at the end of the year.
“The Governing Council expects the key ECB interest rates to remain at their present levels at least through the summer of 2019 and in any case for as long as necessary to ensure that the evolution of inflation remains aligned with the current expectations of a sustained adjustment path,” the ECB said in a statement.
This is in line with investors’ expectations.
The ECB has already spent well over 2 trillion euros buying bonds since 2015 and has kept its deposit rate below zero, effectively charging banks for their idle cash, for four years in a bid to revive inflation.
Its chief economist, Peter Praet, said last week economic data was making the ECB more confident that inflation would converge to its target of just under 2 per cent and policymakers would decide this week whether progress was sufficient.
With Thursday’s decision, the ECB’s rate on bank overnight deposits remains at -0.40 per cent.