© Rolls-Royce plc 2008 Legal Information

Operations

The supply chain in 2007 continued to evolve, meeting strong demand from all markets and managing the introduction of several new products.

A mixture of material costs, factory disruption and supplier pressures all contributed to a unit cost increase in the year of almost seven per cent.

The Trent 900 production line was successfully restarted and the engine's application, the Airbus A380, entered service successfully. The Trent 1000 engine for the Boeing 787 entered production. Boeing's decision to re-schedule the entry into service of the 787 means that we will re-plan production of the engine in line with the requirements of the aircraft programme.

Other new products entering production include the V2500Select upgrade, TP400, RR300 and WR-21.

As part of managing the introduction of a number of new programmes we maintained our focus on simplifying our supply chain, resulting in a reduction in the number of external suppliers.

The drive to improve our productivity continued with the final exit from our older UK factories and with the introduction of our planning system to more of our facilities. Our SAP system has now been embedded in 32 sites, and was introduced in 2007 to sites in the US, Canada and the UK. The smooth and quick implementation of SAP into our new repair and overhaul joint venture in Germany, N3, also took place.

Modern Working Practices were fully embedded in all our operational facilities in the UK, including civil aerospace assembly and test.

Our Process Excellence programme continued to supply both wide scale and local improvements, complementing the benefits from our major process systems such as SAP and PLM.

Worldwide, our engineers can now work simultaneously on the same live computer model, improving lead times and productivity as a result of upgrading key engineering design tools such as PLM.

The availability of these and other improved systems and processes will allow us to reduce the number of employees in management and support roles by 2,300 worldwide. We continue to recruit graduates, apprentices and employees involved directly in delivering growth for the Group. Consequently the overall productivity will improve through 2008.

Our plans to become more productive, global and less exposed to the volatility of the US dollar exchange rate have continued. There were several facilities opened around the world including the new Rotatives plant and a new test bed for large civil engines in Derby, UK, and a new facility in Bristol, UK. Our outdoor test facility in Mississippi, US, was also commissioned.

We selected the locations for two new facilities, one in Asia and the other in the US. Our new advanced assembly and test plant for Trent engines will be built in Singapore and in Virginia we will build a new manufacturing plant for the assembly and test of the RB282 engine. Both facilities will be operational by the end of 2009.

We entered 2008 with an increase in load and we have visibility of load over several years as a result of our strong order book. Raw materials have been secured and strategic hedging is in place to manage supply and cost risks.

The increase in load, allied to our supply chain simplification and improvement, gives us an opportunity to continue cost reduction and to reduce further our exposure to the US dollar. Continuing investment in IT, facilities, processes and people will allow us to grow our business and better manage the cost of overheads.

We would like to thank all employees, suppliers and partners for their commitment during the year.

+Back to top