Rolls-Royce to cut 4,600 jobs as part of major shake-up
Rolls-Royce has announced it is to cut 4,600 jobs as part of a major shake-up of its business, mainly affecting UK managerial and administrative roles.
Warren East, the aircraft engine maker’s chief executive, said Britain would bear the brunt, with around 3,000 of the job losses, and that he could not rule out compulsory redundancies.
“It’s a horrible decision, never easy,” he said, but added that the cuts were necessary “if we want to be around for the next 100 years”.
The job losses will fall heavily on Derby, the group’s biggest manufacturing base in the UK, which has a workforce of 15,700. The firm’s human resources, finance, and legal departments are also based in Derby. Some management and support jobs in Bristol, its second-biggest base in the UK, will also go.
While most of the cuts will be in middle management jobs, the group said engineers working on early-stage design would also be laid off as they were not needed at present, but it was still hiring engineers in electrification and digitalisation.
About 1,500 of the jobs will have gone by the end of the year. It is the company’s biggest round of redundancies since 2001.
Investors reacted positively to the announcement, with Rolls-Royce’s share price closing up 6.5%, at 883p.
Rolls-Royce said the move would simplify the business into three customer-focused units with smaller corporate and support functions, and reduce management layers and complexity, including within engineering.
The company is also ramping up production and hopes to be making 600 engines a year for wide-body aircraft by 2020, twice as many as five years ago.
Rolls-Royce employs about 55,000 people worldwide. It has a workforce of 26,000 in the UK, which includes contractors.
Britain’s biggest union, Unite, warned Rolls-Royce against cutting “too deep and too fast”.
Steve Turner, Unite’s assistant general secretary for aerospace, said: “This announcement will be deeply unsettling for Rolls-Royce workers and their families and could have a dire economic impact on local communities reliant on Rolls-Royce jobs.”
East, who took the helm three years ago, expressed frustration at the pace of change at the business, and said: “We must create a commercial organisation that is as world-leading as our technologies. We need to modernise the way in which we do business.”
The 33,000 non-manufacturing staff were “too many for a business of our size”, he said.
This week, Rolls-Royce revealed that it had discovered new problems with its troubled Trent 1000 engines, which power Boeing’s 787 Dreamliner aircraft.
More than 30 aircraft have been grounded, and analysts reckon the bill for fixing the problems and compensating airlines could reach £1bn.
The firm said it would stand by a deal made with the unions a year ago that will protect 7,000 engineering jobs in the east Midlands – Derby, Hucknall and Annesley – as part of a £150m investment.
Unite said the collective agreement included a guarantee against compulsory redundancies, and that it would be seeking a similar guarantee for its members affected by yesterday’s announcement who were not covered by that agreement.
Rolls-Royce says it has found new problems with its Trent 1000 engine. Below left, a worker in Derby in 1947