Britain’s Engineering Company, Rolls-Royce, has decided to cut 4,600 jobs over two years in the latest attempt to cut costs and make more profit.
The Chief Executive Officer of the company, Mr. Warren East, said on Thursday in London that the aim was also to create a much more streamlined organization.
“Rolls-Royce is at a pivotal moment in its history,” East said.
“We are poised to become the world leader in large aircraft engines. But we want to make the business as world class as our engineering and technology is.
“We are proposing the creation of a much more streamlined organization. We have to significantly reduce the size of our corporate centre, removing complexity and duplication that makes us too slow, uncompetitive and too expensive.”
Rolls-Royce has 55,000 employees worldwide of which 26,000 are in Britain. The latest cuts follow previous job cuts and the creation of other roles following a series of profit warnings in 2014.
The company had said that two thirds of the job cuts would fall in Britain, where it employs 15,700 at its headquarters in Derby, central England.
It said the cuts would not affect its engineers.
“These changes will help us deliver over the mid and longer-term a level of free cash flow well beyond our near-term ambition,” East said.
“The people that will be leaving the business have nothing whatsoever to do with solving the issues our customers are having with our engines today.
“I know it sounds incongruous at face value, the loss of the workforce while we’re dealing with these issues but they’re really two separate issues altogether.”
East, a softly-spoken former tech boss, has overhauled the 134-year-old Rolls since he took charge in 2015 but the new cuts come as the group grapples with an aero-engine problem that has grounded planes and angered clients.
The announcement, which is not linked to the Trent 1000 engine issue, marks the biggest round of job cuts since the company was forced to retrench during the aviation crisis that followed the 9/11 attacks in the United States in 2001.
The plan will remove just over 10 per cent of the workforce, targeting duplication in corporate and management roles to try to save 400 million pounds ($536 million) a year by 2020.
East, who built the chip designer ARM Holdings from a start-up into Britain’s biggest tech company, has vowed to simplify Rolls and drive greater efficiencies to enable it to generate 1 billion pounds of free cash flow by 2020.
In January he divided the company into three business units and said he was now ready to remove management duplication between those layers and the corporate centre.
Rolls shares traded 2.7 per cent higher by at 851 pence early on Thursday after it published details of the plan.