Rolls-Royce to slash up to 2,500 jobs amid transformation plan

The aerospace engineering giant announced a major restructuring that will affect its global workforce and operations.

Why is Rolls-Royce cutting jobs?

  • Rolls-Royce said it aims to become a “simpler, more streamlined, organisation” through the process of cutting between 2,000 and 2,500 jobs across its global business.
  • The company, which currently employs 42,000 people, said it also plans to remove “duplication” and deliver cost efficiencies through the shake-up.
  • The move is part of a significant transformation plan that Rolls-Royce has been implementing since 2018 to improve its performance and competitiveness.
  • The company has been struggling with the impact of the Covid-19 pandemic on the aviation industry, which has reduced the demand for its jet engines and services.
  • In 2020, Rolls-Royce reported a record loss of ÂŁ4 billion and cut 7,000 jobs.

Which areas of the business will be affected?

  • Rolls-Royce said the job cuts will mainly affect its civil aerospace and power systems divisions, which account for about 80% of its revenue.
  • The company said it will also review its corporate and central functions to identify further savings and efficiencies.
  • The company did not specify which countries or regions will be hit by the job losses, but said it will consult with its employees and trade unions to minimise the impact.
  • The company has operations in more than 50 countries, with major sites in the UK, Germany, France, Singapore, India and the US.

rolls royce jet engine

How will Rolls-Royce achieve its transformation goals?

  • Rolls-Royce said it will focus on four strategic priorities to achieve its transformation goals: restoring profitability, generating positive cash flow, strengthening its balance sheet and investing for the future.
  • The company said it will accelerate its transition to low-carbon technologies and solutions, such as sustainable aviation fuels, hybrid-electric propulsion and hydrogen.
  • The company said it will also leverage its digital capabilities and innovation to enhance its products and services for its customers.
  • The company said it expects to deliver annualised savings of at least ÂŁ750 million by 2022 as a result of its restructuring measures.

How has the market reacted to the announcement?

  • The market reacted positively to the announcement, as Rolls-Royce’s share price rose by more than 6% on Tuesday morning.
  • Analysts said the job cuts were necessary and expected, given the challenges faced by the company in the wake of the pandemic.
  • However, they also warned that the company still faces significant uncertainties and risks in its recovery path, especially in terms of the demand for air travel and the pace of vaccination programmes around the world.
  • They also said that Rolls-Royce will need to demonstrate its ability to execute its transformation plan effectively and efficiently, while maintaining its reputation for quality and innovation.

What are the implications for the workers and the industry?

  • The job cuts are a blow for the workers and their families, who face uncertainty and hardship in a difficult economic environment.
  • The trade unions representing the workers said they will oppose any compulsory redundancies and fight for every job at Rolls-Royce.
  • They also called on the government to provide more support and investment for the aerospace sector, which is vital for the UK’s economy and security.
  • The industry body ADS said the announcement reflects the severe pressure that the aerospace industry is under due to the pandemic.
  • It said that more than 30,000 jobs have been lost in the UK aerospace sector since February 2020, and urged the government to extend the furlough scheme and introduce testing regimes to restore confidence in air travel.
By Ishan Crawford

Prior to the position, Ishan was senior vice president, strategy & development for Cumbernauld-media Company since April 2013. He joined the Company in 2004 and has served in several corporate developments, business development and strategic planning roles for three chief executives. During that time, he helped transform the Company from a traditional U.S. media conglomerate into a global digital subscription service, unified by the journalism and brand of Cumbernauld-media.

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