Rolls-Royce to set to cut 9,000 jobs cue to COVID-19 crisis

Covid-19 News | Employment & Skills | Latest News | Manufacturing | Transport & Distribution

The impact of COVID-19 on Rolls-Royce and the whole of the manufacturing industry has been unprecedented. 

Rolls-Royce has already taken action to strengthen the financial resilience of its business and reduce the cash expenditure in 2020 – however, up to 9,000 people will now be let go to secure the future of the business.

In the opinion of the global manufacturer, that it is increasingly clear that activity in the commercial aerospace market will take several years to return to the levels seen just a few months ago. 

Warren East, Rolls-Royce, CEO said: “This is not a crisis of our making. But it is the crisis that we face and we must deal with it. Our airline customers and airframe partners are having to adapt and so must we. Being told that there is no longer a job for you is a terrible prospect and it is especially hard when all of us take so much pride in working for Rolls-Royce. But we must take difficult decisions to see our business through these unprecedented times.

“Governments across the world are doing what they can to assist businesses in the short-term, but we must respond to market conditions for the medium-term until the world of aviation is flying again at scale, and governments cannot replace sustainable customer demand that is simply not there. We have to do this right, which means we will work closely with our employee and trade union representatives as appropriate, look at any viable alternatives to mitigate the impact, consult with everyone affected and treat our people with dignity and respect.”

Today’s announcement sees Rolls-Royce propose a major reorganisation of its business to adapt to the new level of demand from customers. As a result, up to 9,000 roles from its global workforce of 52,000.

In addition to the savings generated from this headcount reduction, there will also be a cut expenditure across plant and property, capital and other indirect cost areas.

The proposed reorganisation is expected to generate annualised savings of more than £1.3bn, of which we expect headcount to contribute around £700m. The cash restructuring costs related to these actions are likely to be around £800m, with outflows incurred across 2020 to 2022.

East added: “The strategic choices that we have made over the last few years have helped us to respond rapidly to COVID-19 and the synergies between our divisions leave us well placed to capitalise on the long-term potential of our markets. The world on the other side of this pandemic will need the power that we generate to fuel economic recovery.

“I absolutely believe the call for that power to be more sustainable will be stronger than ever. This plays to our strengths. We must ensure that we are able to continue to innovate and play our leading role in enabling the vital sectors in which we operate achieve net zero carbon emissions. We have emerged from troubled times before, to achieve incredible things. We will do so again.”

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