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Rolls-Royce to Cut 9,000 Jobs

May 21, 2020
Rolls' second reorganization plan in two years will address the medium-term impact of COVID-19, which has cut demand and growth projections in the commercial aircraft sector.

Rolls-Royce Holdings Plc plans to cut at least 9,000 jobs from its 52,000-person global workforce, according to an announcement of "a major reorganization to address (the) medium-term impact of COVID-19." The manufacturer of turbine systems for aircraft and industrial power has been working to downsize over the past two years, but the global pandemic has hit the civilian aerospace sector particularly hard, cutting into demand and growth projections for airlines, aircraft builders, and their suppliers.

In June 2018 Rolls began an effort to streamline its manufacturing activities and reduce complexity of its support and management functions. The new effort seeks to address the reduced level of demand in the markets Rolls supplies.

“This is not a crisis of our making," according to CEO Warren East, "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."

Both Boeing Co. and Airbus SE, as well as Rolls' rival jet-engine builder GE Aviation, have outlined job cuts representing 10-15% of their respective total employment.

East said the proposed reorganization will configure Rolls-Royce for the new level of demand from its customers, and will include spending cuts, capital investments, and other indirect expenses, to generate annualized savings of more than £1.3 billion (est. $1.59 billion), of which payroll cuts will represent around £700 million (est. $854.3 million.)

The reorganization will predominantly affect Rolls' Civil Aerospace business, the CEO stated, but it will also have implications for central support functions. The Power Systems and ITP Aero businesses are developing proposals for dealing with the current situation, but the Defence business in the U.K. and U.S. will not reduce its headcount, he added.

As Rolls-Royce is continuing to consult with employee and trade union representatives, it has not announced final details of its proposed reorganization. The restructuring announced in June 2018 will be transitioned into the new, proposed reorganization.

Rolls-Royce said the previous restructuring has substantially delivered on its objectives. “The strategic choices that we have made over the last few years have helped us to respond rapidly to COVID-19," Warren East stated, "and the synergies between our divisions leave us well placed to capitalize on the long-term potential of our markets."

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