Rolls-Royce chief cuts top jobs in major shake-up
ROLLS-ROYCE CEO Warren East has culled senior managers including the heads of the engine maker’s top two divisions, which will disappear in a wholesale shake-up intended to streamline decision-making following two profit warnings since he took over in July.
Mr East will split the UK firm into five units, each reporting directly to him, in the first moves of a reorganisation and costcutting programme that will be extended in February, the supplier of turbines for Boeing and Airbus jets said yesterday.
Tony Wood, 49, who has led the aerospace division for two and a half years and had been tipped as a future chief, is the highest-profile victim of the clearout, and will leave in the new year.
Lawrie Haynes, the president of the troubled land and sea unit and aged 62, will retire.
Mr East is betting that the shake-up will help him gain control of an engineering behemoth whose market value fell by £2.5bn on November 12, as the stock plunged 20% after the latest in a succession of profit revisions that have dogged the company in recent years.
Analyst Harry Breach at Raymond James in London said that while Mr Wood’s departure was a surprise, Rolls-Royce had been unable to justify a model with a high-level structure between its main units and CEO. Mr Wood said he had worked with Mr East on shaping the new organisation and would help manage the transition in the next few months before leaving.
Mr East, the former head of semiconductor developer ARM Holdings, said the management changes would “simplify organisation, add pace and drive operational excellence”.
The top-level restructuring will affect almost a dozen positions, including some managers who will not be leaving, the company said. It will create a post of group president, to be filled by engineering director Colin Smith, who will head government and regulatory affairs, and will add a chief operating officer — an outside appointment — and a head of strategic marketing to help determine which sectors to focus on.
Mr East is seeking to shave at least £150m from costs after saying last month that the company had been too slow to cut its cloth to changing market conditions that included a collapse in the sales of engines for vessels used by the offshore oil industry, slumping demand from business and regional jets, as well as the retirement of some bigger aircraft as new models entered service.
Mr Wood, who has worked at the company for 15 years, had been focused on a ramp-up in production of the Trent XWB engine that powers the latest Airbus A350 wide-body, and the introduction of a revamped powerplant for the A330.
Last month, Mr East ruled out an early return to the market for engines powering single-aisle jets, while resisting investor calls for the disposal of assets from Rolls-Royce’s marine and power divisions, saying the company was better off retaining its current portfolio.
The focus would instead be on improving the response to volatile markets and bad news, and on slimming down a bloated management.