Rolls-Royce to cut up to 2,500 jobs in bid to cut costs

• Posted on October 17, 2023October 17, 2023
• by Nana Kwesi Coomson
• Comment

Rolls-Royce has announced plans to axe up to 2,500 jobs globally to create a “more efficient and effective” company.

It is the first major move by Tufan Erginbilgic who, on becoming chief executive in January, described Rolls-Royce as a “burning platform.”

The company, which makes engines for aircraft, is based in Derby. It employs 42,000 people around the world with about half based in the UK.

It was hit hard by the pandemic when air travel was grounded for months.

Rolls-Royce did not give details of where the job cuts will fall, but reports have suggested that hundreds of back-office posts will be affected in the UK.

The engineering giant said it needed to engage with unions before making further announcements.

Rolls-Royce employs 13,700 people in Derby, 3,400 in Bristol, and has smaller bases in Lancashire, Glasgow, Tyne & Wear and Rotherham.

It is understood its submarines division in Derby, which is funded by the Ministry of Defence and employs 3,600 people, will be unaffected by the cuts. The company’s Small Modular Reactor nuclear programme – a joint venture with partners in Qatar and the US – will also be untouched.

However, operations in Germany, where the company employs 11,000 people, are expected to be badly hit – particularly the Power Systems engine-building operation in the south of the country.

Rolls-Royce said the planned changes would “remove duplication and deliver cost efficiencies”.

“We are building a Rolls-Royce that is fit for the future,” said Mr Erginbilgic.

“That means a more streamlined and efficient organisation that will deliver for our customers, partners and shareholders.”

The company struggled during the Covid pandemic when it was forced to raise billions of pounds to support the business, and in 2020 it cut 9,000 jobs.

When Mr Erginbilgic, a former executive at oil giant BP, took over at Rolls-Royce he told staff the company’s performance was “unsustainable”.

Under the new plans, Rolls-Royce will merge its engineering technology and safety teams, with its chief technology officer Grazia Vittadini stepping down.

The company plans to cut costs by improving its procurement and supply chain management processes. Its finance, legal and human resources teams will also be brought together across the group.

“This is another step on our multi-year transformation journey to build a high performing, competitive, resilient and growing Rolls-Royce,” Mr Erginbilgic said.

-BBC