Rolls-Royce announces 4,600 job cuts

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June 14, 2018 6:35 am Published by
Rolls Royce engineImage copyright PA
Image caption The jet engine-maker says it needs fewer layers of management

Engineering firm Rolls-Royce is to cut 4,600 jobs over the next two years as part of a major reorganisation.

Middle managers and back-office staff are to bear the brunt of the cuts, which are expected to hit its Derby base hard.

The company is refocusing its business on civil aerospace, defence and power systems.

About a third of the job cuts are expected to happen by the end of this year, Rolls-Royce said.

The programme is expected to continue throughout 2019, with full implementation by mid-2020.

Rolls-Royce said that the programme would cost £500m to carry out, including redundancies, but would save it £400m a year by the end of 2020.

The firm also said it would continue to work on its problems with its Trent 1000 engine.

Parts in the engines have been wearing out faster than anticipated, causing some planes to be grounded. Rolls-Royce has said it will take years to modify all the engines in service.

‘Remain competitive’

Chief executive Warren East told the BBC’s Today programme that Rolls-Royce needed fewer layers of management: “We have too complex a management and support organisation and we need to simplify that so that we can remain competitive.”

He said the cuts would be “most strongly felt” in Derby, since that was where most of those functions were based.

Mr East said it was “inevitable” that there would be some compulsory redundancies because of the timescale of the programme, although the firm would honour its commitments to unions.

Chris Williamson, Labour MP for Derby North, said the job cuts were “a damning indictment” of the government’s hands-off industrial policy.

“Currently we have private shareholders directing the fate of some of Britain’s most premier firms, with total disregard for the economic needs of the country. The government has to intervene,” he said.

The firm’s earnings for 2017 were better than expected, with profits before tax of £4.9bn.

That followed a £4.6bn loss in 2016 – the largest in Rolls-Royce’s history – due to settling corruption cases and currency hedges going wrong, among other factors.

In June 2017, Rolls-Royce cut a deal with unions to safeguard 7,000 front-line engineering jobs in the East Midlands for five years and invest in UK aerospace facilities.

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