Rolls accused of hiding 6,000 job losses behind US attacks

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The aeroengine manufacturer Rolls-Royce was accused yesterday of using the terror attacks on America as an excuse to push through 6,000 job losses including 3,800 in the UK.

Rolls is making 5,000 permanent staff redundant while short-term contracts for a further 1,000 employees will not be renewed. Rolls wants to complete the job losses, which will reduce the workforce by 12 per cent, by next March.

The scale of the job losses is far higher than unions had been led to believe and may include compulsory redundancies. The Manufacturing, Science and Finance union described the news as "sickening".

John Wall, the MSF's national secretary for aerospace, said: "Rolls-Royce have some serious questions to answer. If there is any suspicion that they are using the current crisis in world affairs to do some house keeping in order to raise the share price, it will take them a hundred years to restore relations with their employees."

Rolls' share price, which has declined by 40 per cent since the 11 September terror attacks, climbed 2p to 136.75p.

John Rose, Rolls' chief executive, flatly denied that the company had decided to force through additional job losses under cover of 11 September. "Everything we have announced is a direct reaction to the events in the US. We are sizing the business to deal with the current market situation for civil engines," he said.

Analysts pointed out, however, that Rolls was axeing more jobs than either of its US rivals in response to the downturn in the aviation market. General Electric, the world's biggest engine maker, is cutting 4,000 jobs while Pratt & Whitney is reducing staff numbers by 2,500.

The Derby aeroengine plant will bear the brunt of the job losses but there will be cutbacks elsewhere with Rolls' plants at Bristol and in Scotland likely to be badly affected.

Rolls expects civil engine deliveries next year to be £1bn lower than previously expected and is forecasting a halving in civil aerospace profits in 2002 and then a recovery in 2003. Last year, civil aerospace contributed £300m in operating profits. The reduction in deliveries amounts to a 30 per cent cut compared with previous plans. Rolls said its defence, marine and industrial divisions were unaffected.

Unions were also angered by the lack of consultation. The MSF said Rolls had "failed again to grasp the concept of partnership with the workforce". Sir Ken Jackson, the general secretary of the Amalgamated Engineering and Electrical Union, said: "We will be talking to the company and to shop stewards about ways to avoid compulsory redundancies, which could massively undermine the long-term skills base of a world-class British company."

Rolls said the cutbacks would lead to rationalisation provisions in this year's accounts of £200m in addition to the £90m charge it expects to take in respect of the restructuring plan announced in August last year.

Rolls has been shedding about 2,000 staff a year for the last few years and the suspicion is that a similar number would have gone this year, even without the terror attacks in the US. But Mr Rose maintained that up until 11 September, Rolls had only been planning a "few hundred" job losses.