Rolls-Royce to cut 1,000 jobs as sales of luxury cars dive
The cuts, far higher than expected, will dismay workers at Crewe, Cheshire, where Rolls is one of the biggest employers, and fuel fears in the City about first-results of Rolls' parent, Vickers, due on Thursday.
Stockbrokers expect Vickers, which makes Challenger tanks and owns Cosworth Engineering as well as Rolls-Royce, to reveal a loss of pounds 5m before tax in the six months to June and a cut in the interim dividend from 3.7p last time.
Rolls has already cut 1,700 jobs, leaving about 3,000 at Crewe. Previous reductions in the workforce were aimed at bringing the break-even point down to fewer than 2,000 cars a year. In April the former chairman, Sir David Plastow, said the company expected worldwide sales this year to be similar to last year's. But demand has since slumped at home and abroad. The company's revised targets are for a break-even point of fewer than 1,500 cars a year, half the level of 18 months ago.
Redundancies will be expensive. Last year, as sales at Rolls-halved, the company incurred pounds 14.6m costs in closing the Mulliner Park Ward plant in west London and pounds 16.8m restructuring costs, mostly redundancy charges.
The decision to reduce the size of the workforce follows disappointing sales figures for August, the most important month for UK car sales. Rolls' sales fell from 432 in August 1991 to 314 last month.
Sales of other luxury car makers, including Lotus and Porsche, halved but Jaguar managed to increase sales.
As well as falling sales, the job cuts reflect increased efficiency following a review by external consultants and an increase in the proportion of parts bought in.
Rolls-Royce cars already incorporate externally made air conditioning, but will now have a larger range of bought-in components. The company is considering going outside for services such as marketing and information.
It will present this switch as modernisation. Car dealers will, however, be disappointed if there is any damage to Rolls' reputation for craftsmanship.
The cuts follow Vickers' failure to sell the company or to find a partner. At the annual meeting in April, Sir David hinted that it had given up talking to potential partners as none had put a high enough price on Rolls-Royce.
Sir Colin Chandler, the chief executive, is understood to believe that closure is not an option. The costs would be huge.
Rolls is not alone in cutting the size of its workforce. Jaguar recently announced 700 jobs would go from its Coventry plant while Ford, Jaguar's parent company, put 3,800 on short-time working.
World Beard and Moustache Championships held last week
- 1 'Nasa Confirms Six Days of Darkness in December': No, they don't - it's a hoax
- 2 Number of global billionaires has doubled since the financial crisis
- 3 Kentucky gang rape: 15-year-old boy left in critical condition after sexual attack by group at party
- 4 Of course, teenage girls need role models – but not like beauty vlogger Zoella
- 5 North Korean officials 'publicly executed for watching South Korean soap operas'
'Nasa Confirms Six Days of Darkness in December': No, they don't - it's a hoax
Canadian actor punched in face after 'Islamophobia' experiment goes wrong in wake of Ottawa shooting
Number of global billionaires has doubled since the financial crisis
Elizabeth Norment dead: House of Cards actress honoured by Kevin Spacey after she dies aged 61
Kentucky gang rape: 15-year-old boy left in critical condition after sexual attack by group at party
Pope Francis declares evolution and Big Bang theory are real and God is not 'a magician with a magic wand'
Huge surge in Ukip support after EU funding row, according to new poll
Ukip ‘exploiting grooming scandal’ to secure party’s first police chief
Nigel Farage: 'There’s nothing wrong with white people blacking up'
Muslims, immigration and teenage pregnancy: British people are ignorant about almost everything
Nigel Farage and Frankie Boyle clash over Andrew Lawrence's 'Mock the Week' criticism
iJobs Money & Business
£20000 - £23250 Per Annum pro rata: Clearwater People Solutions Ltd: Pro rata ...
£40 - 48k + Benefits: Guru Careers: We are seeking a Marketing Manager to join...
£45,000 - £65,000: Saxton Leigh: Our client is a well-known APAC Corporate and...
£60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...