Rolls-Royce boss Warren East axes 4,600 desk jobs in bid to save £400m per year


Rolls-Royce boss Warren East slammed the firm’s financial performance as ‘abysmal’ as he axed 4,600 jobs in a bid to save £400million per year.

Middle managers and office staff are being axed in the engineer’s biggest round of job cuts in almost two decades.

About 3,000 jobs are expected to go in the UK, about 13 per cent of its total staff, with its headquarters in Derby the worst affected.

It comes on top of 2,000 marine division roles and 800 managers chopped since East took over in 2015 and set about trying to turn around the business.

Rolls-Royce boss Warren East has struggled to streamline the company since he took the controls in 2015

Rolls-Royce boss Warren East has struggled to streamline the company since he took the controls in 2015

Rolls-Royce boss Warren East has struggled to streamline the company since he took the controls in 2015

Consultancy firm Alvarez & Marsal has been helping Rolls decide where to make the cuts, which employs more than 55,000 people worldwide.

East said that rather than leaving it understaffed, the job cuts will strip out duplication of roles and speed up decision-making in a bid to ensure that the company is more competitive.

Asked if he would be happy with the shape of the company after this round of cuts, he added: ‘I think broadly the shape of the company will be right – it’s always a very competitive business.

‘We need to keep our eyes on being competitive on a continuous basis, and one of the challenges we have here is we have been concentrating on developing technology, on modernising our facility, on scaling up volume production.

‘For many years we probably haven’t been paying much attention to making ourselves competitive as a business.

‘It’s a big correction to not paying attention to the business side of it for quite a long time. This is a pivotal moment in our history.’

East, 56, who was paid £2.3million last year, has been trying to double the number of airplane engines that Rolls produces, as well as generate up to £1billion cash even as he has cut staff.

He is also planning on slimming the company down from five to three core divisions – civil aerospace, defence and power systems.

However, he has been beset by problems, including having to pay a record £671million fine in 2017 over historic allegations it paid bribes to win export contracts.

Ongoing problems with its flagship Trent 1000 engines, which is in service with airlines around the world, has forced it to divert engineers and resources.

Justifying the latest round of cuts, East said there should be six to seven layers of management between the chief executive and the shop floor, rather than up to 11, as at present.

He added: ‘We are a roughly £15billion turnover business ,and in 2017 we generated £273million cash. That is approximately 2 per cent. That’s abysmal.’ 

Last year Rolls announced £150million of investment in its facilities in Derby. 

Previous commitments with unions will be honoured but most of the staff affected by this round of cuts are not unionised and some face compulsory redundancies.

Steve Turner, assistant general secretary for aerospace at Unite union, warned of the potential economic impact on communities in Derby and elsewhere dependent on jobs at the engineer.

He added: ‘There is a real danger that Rolls-Royce will cut too deep and too fast with these jobs cuts, which could ultimately damage the smooth running of the company and see vital skills and experience lost.’

 



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