United Kingdom (Commonwealth Union)_ In an unanticipated move that has left employees and industry analysts concerned, Rolls-Royce, the British manufacturer of aircraft engines, said yesterday it plans to axe up to 2,500 jobs worldwide, or about 6% of its staff.
The announcement marks the first major business decision by the company’s new Chief Executive, Tufan Erginbilgic. Just a few months into his role, Erginbilgic described the Rolls-Royce company as a “burning platform,” laying bare the urgent need for change.
Tufan Erginbilgiç said the company was “building a Rolls-Royce that is fit for the future. He said that meant a more efficient organization that will deliver for their customers, partners and shareholders.”
Even though the company employs 42,000 people worldwide, around half of them are based in the United Kingdom. The company was forced to raise billions of pounds last year to support the business, even after cutting 9,000 jobs in 2020.
The group said in a statement that it was estimated that 2,000-2,500 roles would be removed globally under plans for a simpler, more streamlined, organization.
Previous CEO Warren East had axed over 9,000 jobs and launched a major divestment program in 2020 to navigate damaging pandemic fallout across the aviation industry.
In a quick turnaround under its new boss, Rolls in August posted first-half net profit totaling 1.2 billion pounds ($1.5 billion), compared with a loss after tax of 1.6 billion pounds a year earlier.
Uncertainty Surrounding Job Cuts
Despite the headlines, the details about exactly where the job cuts will land remain ambiguous. Reports suggest that hundreds of back-office roles in the UK are likely to be impacted, however, the company has chosen to remain tight-lipped, indicating the need to engage with all unions before divulging further details.
A Glimmer of Hope in Derby and Beyond
Rolls-Royce’s submarines division in Derby seems to be shielded from the recent announcement. Funded by the Ministry of Defence, this division employs around 3,600 people.
Rolls-Royce also revealed that the current chief technology officer, Grazia Vittadini, will be stepping down. In addition to headcount reduction, Rolls-Royce intends to streamline its finance, legal, and human resources teams across the group and improve its procurement and supply chain management processes.
What Lies Ahead?
The new leadership has taken a bold step that indicates a significant transformation in the company’s operational approach.
