Rolls-Royce to axe 4,600 jobs in £400m savings plan

The Rolls-Royce headquarters in Derby. PICTURE: Rui Vieira/PA Wire
The Rolls-Royce headquarters in Derby. PICTURE: Rui Vieira/PA Wire
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AS MANY as 4,600 jobs will be slashed at engineering firm Rolls-Royce in a bid to make annual savings of £400m.

The company said the bulk of the job cuts would affect the UK workforce and would be made over the next two years, with around a third expected by the end of 2018.

Rolls Royce said the overhaul, which follows its announcement in January that it plans to slash its five operating businesses to three core units, will impact support functions and management, including within engineering.

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.’

But amid the cuts, Rolls Royce insisted it would honour its previous pledge not to impose compulsory redundancies on union-represented staff, including at three sites in the north of England.

The announcement from the firm marks the largest reduction in its headcount since 2001, when it announced plans to reduce 5,000 jobs, plus 1,000 contractors – which at the time was around 12 per cent of its workforce.

Overall, Rolls has 55,000 employees worldwide, of whom 26,000 are in the UK, with 15,700 of those in Derby. It employs around 19,400 engineers.

In 2014, Rolls-Royce Marine opened a plant at Broad Oak, Hilsea, after closing down its facility at North Harbour in Cosham. Before the company shut the site – which made electrical systems for Royal Navy vessels – it announced its closure would lead to 33 job losses, with a further 30 staff being offered a transfer to Bristol.

But later that year, in December, Rolls-Royce said 24 people would leave, while highly-skilled engineering jobs would be saved in the move to the new plant.

On the latest round of job proposed losses, Unite union assistant general secretary, Steve Turner, 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 said its group-wide revamp will see it shift away from operating with ‘overlapping activities between individual business units and a large corporate centre’.

It said: ‘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 restructuring will cost the firm about £500 million – including redundancy costs – over the next three years, but will see it save £400m every year by the end of 2020.

Recent annual figures showed Rolls-Royce returned a 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.

PA WIRE