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© alexey utemov dreamstime.com Electronics Production | June 14, 2018

Rolls-Royce confirms restructuring – 4’600 employees to go

Rolls-Royce is looking to create a simpler, leaner and more agile organisation. The company is now announcing the next stage in its push to create this new business with a proposed restructuring that aims to deliver improved returns, higher margins and increased cash flow.
“Following the announcement in January that we will simplify the Group into three customer-focused business units, this proposed restructuring will create smaller and more cost effective corporate and support functions and reduce management layers and complexity, including within engineering,” the company writes in a press release.

What this means is that over the next 24 months, Rolls-Royce expects that the proposed restructuring will lead to the reduction of around 4’600 roles, predominantly in the UK where the majority of our corporate and support functions are based. Around a third of these roles are expected to leave by the end of 2018.

The programme is expected to gain further momentum through 2019, with full implementation of headcount reductions and structural changes by mid-2020.

“The creation of a more streamlined organisation with pace and simplicity at its heart will enable us to deliver on that promise, generating higher returns while being able to invest for the future,” says Chief Executive, Warren East, in the press release.

“We have made progress in improving our day-to-day operations and strengthening our leadership, and are now turning to reduce the complexity that often slows us down and leads to duplication of effort. It is never an easy decision to reduce our workforce, but we must create a commercial organisation that is as world-leading as our technologies. To do this we are fundamentally changing how we work,” Warren East continues.

While the company is laying off 4’600 employees, Rolls-Royce says that it does not anticipate that this will lead to any reduction in the skills and capabilities it require to support its current programmes.

“We will continue to support our current ramp-up in Civil Aerospace engine production and will remain focused on our management of the current in-service issues with the Trent 1000,” the release reads..

The total cash cost of the restructuring is expected to be GBP 500 million which includes the cost of redundancies and required systems investments to facilitate the programme. These cash costs will be incurred across 2018, 2019 and 2020. Full year net cost savings from this restructuring are expected to reach a run rate of GBP 400 million per annum by the end of 2020.

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October 15 2018 11:56 pm V11.6.0-1