Thursday, 14 June 2018

4600 jobs to go at Rolls-Royce

It has been confirmed that around 4,600 jobs are to go at the British engineering firm Rolls-Royce as they battle to save £400 million a year. 

Rolls-Royce said this latest restructuring and overhaul of the business, follows on from a previous announcement in January this year to bring down its five operating businesses to three core units. These new job cuts will mostly impact support operations as well as management roles. Many office jobs are to go at the UK head office in Derby, where morale among the 15,700 employed there is already low and unemployment levels above the national average.

The vast amount of jobs would go from within its UK workforce who will be told over the next two years. The company said it expected to axe a third of the jobs by the end of this year.  The chief executive Warren East said: “We have made progress in improving our day-to-day operations and strengthening our leadership, and are now turning to reduce the complexity that often slows us down and leads to duplication of effort.

“It is never an easy decision to reduce our workforce, but we must create a commercial organisation that is as world-leading as our technologies.”

Rolls-Royce has confirmed it would honour its previous pledge not to impose compulsory redundancies on union-represented staff, including those at sites such as Hucknall and Annesley. However, many familiar with the company say that due to the scale of job losses it was inevitable that there would be compulsory redundancies. 

Steve Turner, the assistant general secretary at the union Unite 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 Roll-Royce jobs. 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."

Rolls-Royce is a huge company with just over 55,000 employees worldwide, 26,000 of those are employed in the UK where the bulk of those cuts will bite. The company said the new cuts would be aimed at eliminating overlapping activities between the individual business units and the large corporate centre, “We will be significantly reducing the size of our corporate centre to remove the complexity and duplication. A traditionally heavily centralised control culture will be replaced by empowered businesses, in a simpler, leaner structure with much clearer accountabilities.” the company said.

The restructuring will incur costs it around £500 million, including redundancy payments the company estimates, which will be spread over the next three years.  However, they say it will produce savings of £400 million every year onwards by the end of 2020.

Rolls-Royce reported a pre-tax surplus of £4.9 billion last year, however continuing problems with the 787 Dreamliner engines it is currently experiencing is likely to take a vast chunk out of those profits.