Rolls-Royce axes 5,000 jobs and shuts four plants

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ROLLS-ROYCE, the aero-engine manufacturer, yesterday announced 5,000 job losses and the closure of four plants, blaming the recession and the downturn in defence spending.

The latest redundancies bring the number of jobs axed at Rolls since 1991 to 17,400 and prompted angry exchanges in the House of Commons. The company also announced a bottom-line loss for last year of pounds 184m and slashed its final dividend.

Of the 5,000 job losses, 3,000 will take place this year and 2,000 in 1994, spread across Rolls' military and civil engine plants.

The unions and Labour expressed horror at the scale of the cuts, saying they demonstrated the urgent need for the Chancellor, Norman Lamont, to introduce a Budget for jobs and manufacturing next week.

In the Commons, John Major rejected Labour's appeal for a government rescue of Rolls- Royce jobs, saying it was not 'nannying intervention' that Britain needed but the sort of supply- side measures he was already taking. 'The way to create engineering and other jobs is to make sure we have a growing economy,' the Prime Minister said at Question Time.

But John Smith, the Labour leader, said: 'This litany of self- serving excuses gives no comfort to the 5,000 people who are going to lose their jobs, let alone the 10,000 who have lost their jobs in Rolls-Royce in recent years.'

Bill Jordan, president of the Amalgamated Engineering and Electrical Union, said the cutback confirmed the continuing haemorrhaging of jobs and skills. 'It is a devastating blow and much worse than we feared. It looks like some companies are using the recession as an excuse to shed jobs.'

Sir Ralph Robins, Rolls' chairman, said the company had no choice if it was to survive the savage decline in military and commercial aircraft orders. 'I like to see this not as 5,000 jobs going but as 47,000 jobs being saved,' he said.

He said that although Rolls would try to avoid compulsory redundancies, it was unlikely that all the job losses would be achieved voluntarily since it was only shedding 600 to 700 a year through natural wastage.

Rolls has made provisions of pounds 180m to cover the redundancies and plant closures and a further pounds 50m against potential bad debts or cancellations among airline customers, hit by dollars 10bn in combined losses last year. Leaving these aside, the company made a pre-tax profit last year of pounds 84m compared with pounds 109m in 1992.

Hardest hit will be Rolls' civil engine division at Derby, where 1,545 jobs are going, and the military engine plant in Bristol, where the workforce will be cut by 400.

The four sites closing are the Leavesden helicopter engine plant in Hertfordshire, with 400 job losses, the Coventry military engine plant (505), the Mountsorrel civil engine plant in Leicester (600) and the Rodney plant in Bristol.

Rolls' order book stands at a record pounds 6.7bn and civil engine deliveries are expected to top 400 in each of the next two years. The company's military division has also received a twin boost with confirmation that the European Fighter Aircraft is going ahead and the sale of 48 Rolls-powered Tornado fighters to the Saudis.

But the company said the cuts were still necessary if it was to keep pace with its American rivals, General Electric and Pratt & Whitney.

'We are determined to keep this company competitive and this is what the provision is about,' Sir Ralph said. Spending on research and development would continue at about pounds 500m a year.

Despite the cut in the final dividend, reducing the year's payout to 5p (7.25p), Rolls shares were marked up 2.5p to close at 131.5p.

(Photograph omitted)