Rolls-Royce is to cut 4,600 jobs over the next two years in the UK as part of a restructuring programme. This comes after the jet engine maker recorded a loss of £4.6bn in 2017.
It is expected that the majority of cuts will affect middle management and back-office staff, with staff at the Derby base being hit the hardest. The company has also said it may leave its base in one of London’s most expensive districts for a cheaper area.
This announcement follows increased pressure from shareholders in March, when its biggest holder, ValueAct, refused to extend an agreement that it wouldn’t interfere in management’s plans.
But there have been signs that such a move might be in the pipeline for a while: Rolls-Royce has been feeling the pinch from price squeezes from major customers such as Boeing and Airbus, and it is hoping to bring its margins closer to its rivals General Electric Co. and Pratt & Whitney. It has already shed layers of management, cut less successful products and agreed to sell its fuel-injection unit.
Re-focusing activities
The job cuts are part of a larger restructuring plan, which will see Rolls-Royce refocus its business on civil aerospace, defence and power systems. The programme will continue through 2019, and is expected to be fully implemented by mid-2020. The company says the actions it is taking could save it £400m a year by the end of 2020.