Thousands of UK jobs could be axed as Rolls-Royce looks to make cuts to boost profits, it has been reported.
As many as 4,000 people could be out of a job if the aero-engine maker goes ahead with the reported ‘middle management’ cull, which could see the biggest impact in Derby.
Chief executive Warren East is expected to announce the company is slashing back-office staff and middle managers on Friday.
An employee works on a Trent aircraft engine on the production line at the Rolls-Royce Holdings Plc factory in Derby where cuts are expected to be made – although it is middle management and office staff who are likely to take the hit, it has been reported
Since taking the helm of the company which holds Civil Aerospace and Nuclear divisions in Derby, Mr East has overseen 5,500 job cuts since 2015.
The Sunday Times reports Mr East will continue with his mission to cut what is seen as duplicated roles.
According to the paper 10% of the 50,000-strong workforce could be cut.
Despite boasting customers in more than 150 countries, comprising more than 400 airlines and leasing customers, 160 armed forces, 4,000 marine customers including 70 navies, and more than 5,000 power and nuclear customers – East said in 2017 the company got ‘a little bit fat’.
Just two months ago Rolls Royce came back fighting as it announced it was working to profit after its worst ever performance, a £4.6 billion pre-tax loss for 2016.
The Rolls Royce factory in Allenton, Derby. The British maker of plane engines recently announced it was making a huge profit, but the chief executive says it has become ‘too fat’ and the company could now be streamlined
Issues with the Trent 1000 and Trent 900 aero engines, where parts wore out sooner than expected, cost the company around £270m before it staged a fightback.
In 2018 it announced a pre-tax profit of £4.9 billion.
Just last week the company announced it had struck a new deal with Spain’s Astilleros Gondan shipyard for the design, propulsion and auxiliary machinery systems for the ‘world’s most advanced fishing vessel’ for delivery in 2020.
It also announced weeks ago the MT30 gas turbine has been chosen by military chiefs to power a new class of frigates for the Japan Maritime Self Defence Force (JMSDF).
A Rolls-Royce engineer is seen through the blades of a Trent Jet engine turbine at their factory in Derby. An announcement over job cuts is expected on Friday
Rolls Royce is a big employer in Derby but jobs are expected to be on the line this week as chief executive Warren East looks to make more profit by slashing what is believed to be duplicated roles
Rolls Royce announced new contracts this month but job cuts are expected for about 4,000 staff. A man works on the Trent 700 aircraft engine
However, cuts are expected to be far reaching.
In 2017 the company promised 7,000 jobs were safe, telling unions no compulsory redundancies would be made among its engineers for five years.
However, white collar managers roles were not under the same protection.
JP Morgan Cazenove analysts said: ‘We would not be surprised if Rolls-Royce announces a headcount reduction of about 10%’.
Rolls-Royce reportedly brought in firm Alvarez & Marsal to help the company’s reorganisation through cuts, which will target back-office staff rather than its 18,000 engineers.
A spokesman for Rolls Royce said: ‘In January, we announced a simplification of our business and began work on a restructuring of our support and management functions.
‘We added at the time of our annual results in March that we would focus on operational restructuring of management, support and engineering and technology functions across the corporate centre and also in our three divisions (Civil Aerospace, Defence and Power Systems). We are proposing to move to a considerably simplified staff structure, with fewer layers and greater spans of control across the group.
‘We said we had retained restructuring experts Alvarez & Marsal to support us with this programme. We added that we expected this programme to deliver a significant reduction in costs and assist us in improving performance across the Group as a whole, and that we would provide clarity of these benefits at an event for financial analysts and investors on 15 June.
‘We are not commenting on current media speculation about the potential impact.’