Rolls-Royce consults with employees on future employment

Thursday, 20 November 2008

Rolls-Royce announced today that it is consulting employee representatives about a proposed reduction of 140 jobs at its Assembly and Test facility in Derby, UK, which forms part of the Group’s Civil Aerospace business.

Today’s announcement represents the first stage in a more general programme aimed at matching the Group’s capacity more closely with the expected load in its facilities. The Group currently employs around 39,000 people globally, of whom around 60 per cent work in the UK.

Rolls-Royce has been reviewing the possible impact of current economic uncertainties, delays on individual programmes, such as the Airbus A380 and the Boeing 787, and the benefits of the Group’s continuing focus on efficiency. While it is too early to be specific about the precise implications for the number and location of job reductions, the Group’s current assessment is that in 2009 it will be necessary to implement job reductions across the various sectors and functions of around 1,500 to 2,000 on a worldwide basis, including the reduction announced today.

These proposals have no effect on the Group’s 2008 financial guidance and the costs in 2009 are expected to be balanced by the savings achieved in the course of the year, as is the case in 2008.

These reductions account for around four per cent of the total workforce and will have an effect globally. As the precise scale and location of the reductions become clear, Rolls-Royce will enter into detailed consultations in the relevant locations. It is possible that in some areas there will be little or no impact.

To put these proposed reductions into context, Rolls-Royce announced in January that it would continue its focus on efficiency by reducing by 2,300 during 2008 the number of staff working in overhead functions, a programme that is now largely complete. To minimise compulsory redundancies, the Group reduced its temporary workforce and, where possible, relied on voluntary severance, natural attrition and avoided recruitment. It has continued to recruit to support growth in key areas of the business and, importantly, maintained its commitment to apprentice and graduate recruitment. Rolls-Royce will adopt a similar approach in 2009 so as to mitigate, as far as possible, the impact of the proposed reductions.

Sir John Rose, Chief Executive, said: “We are determined to maintain our focus on cost reduction and competitiveness as the world economy enters a challenging period. It is too early to determine the precise effects of the global economic downturn and programme delays. However, we wanted to give all our employees an early indication of the likely scale of the job reductions we expect in 2009.”

  1. Rolls-Royce, a world-leading provider of power systems and services for use on land, at sea and in the air, has over the last ten years established a strong position in fast growing global markets - civil aerospace, defence aerospace, marine and energy.
  2. At the end of September 2008 Rolls-Royce employed around 39,000 people in 50 countries. Around 22,100 are employed in the UK, 8,250 in North America, 6,900 in the rest of Europe, 780 in Asia, about 480 in the rest of the world and a further 550 on a range of international assignments.
  3. Annual underlying sales were £7.8 billion in 2007. New product development is carried out on a global basis with 50 per cent of new programmes developed outside the UK. Overall 55 per cent of the Group’s 2007 annual sales came from services revenues and less than 20 per cent came from Original Equipment sales to the civil sector. The firm and announced order book at 30 June 2008 was £53.5 billion, an increase of 17 per cent from December 2007.
  4. The Group has businesses headquartered in a wide range of countries including the UK, US, Canada, Germany, Scandinavia and China. This global presence allows the Group to access long-term international growth opportunities with its technology, presence, partnerships and people.
  5. Rolls-Royce invests in core technologies, products, people and capabilities with the objective of broadening and strengthening the product portfolio, improving efficiency and enhancing the environmental performance of its products. Capital investments made by the Group over the last five years exceeded £1.3 billion. Sales per employee have improved by more than seven per cent compound over the last ten years.
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