Rolls-Royce to axe 4,600 jobs, company announces

Most of the cuts to affect UK workforce over the next two years

The company said cutting roles will make it more profitable (Reuters)

Around 4,600 jobs are being cut at Rolls-Royce over the next two years, the firm has announced.

The engineering giant said the roles were being shed in an effort to slash costs by another £400m a year.

According to the group, the bulk of these job cuts will affect the UK workforce and will 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 affect support functions and management, including within engineering.

Unite the union said the company was cutting “too deep and too fast”, and said the job losses would have a “dire” economic impact on communities where Rolls-Royce is a major employer.

“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,” said Unite’s Steve Turner.

“Over the coming days Unite will be working with Rolls-Royce, relevant agencies and other employers to find people affected alternative employment and to retain skills in the aerospace sector.”

Warren East, chief executive of Rolls-Royce, said making the business “more streamlined” with “pace and simplicity at its heart” would allow the company to generate “significant” profitable growth.

He added: “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 the company insisted it would honour a previous pledge not to impose compulsory redundancies on union-represented staff, including at its sites in Derby, Hucknall and Annesley.

A government spokesperson said Whitehall was in regular contact with the company over its plans to cut jobs: “This is clearly an uncertain time for affected employees and their families and Jobcentre Plus Rapid Response stands ready to help people back into employment as soon as possible.”

Earlier this week, the group said it had discovered technical problems with a number of its Package B Trent 1000 engines, used in Boeing planes. Dealing with the issue will add to costs already racked up by the discovery of problems with its Package C Trent 1000 engines, revealed in March.

Rolls-Royce has warned that Brexit will probably have a negative impact on the business, due to global supply chain disruptions. Ahead of the EU referendum in 2016, Mr East told his staff to vote Remain because the engine maker is better off in the EU.

Meanwhile, the Confederation of British Industry boss said on Wednesday that the UK motor industry faces “extinction” if the UK leaves the EU customs union after Brexit.

Shares in Rolls-Royce rose 3 per cent in early trading on Thursday. Russ Mould at AJ Bell said: “Reducing costs is typically applauded by shareholders as it tends, in the short-term at least, to boost the profit and cash flow of which they are part owners.

“Although it will be little compensation to those affected, it would be inaccurate to describe this as a slash and burn exercise by Rolls-Royce management. Chief executive Warren East has been arguing for some time that there is duplication of roles within the business and the company’s cash generation has consistently disappointed.”