In an unanticipated move that has left industry analysts and employees alike concerned, Rolls-Royce has announced a drastic downsizing plan to cut up to 2,500 jobs globally. 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.
The Impact of the Pandemic
Having been severely impacted by the Covid-19 pandemic, the Derby-based engineering giant is grasping for stability as air travel came to a standstill for months. Although the company employs 42,000 people worldwide, around half of them are based in the UK. Last year, the company was forced to raise billions of pounds to support the business, even after cutting 9,000 jobs in 2020.
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. Likewise, the company’s Small Modular Reactor nuclear programme, a collaborative venture involving partners in Qatar and the US, is also said to remain untouched. Conversely, the company’s German operations, where 11,000 people are employed, particularly the Power Systems engine-building operation in the south, are expected to bear the brunt of the cuts.
In a bid to turn the tide, the new CEO aims to create a “more streamlined and efficient organisation.” Merging its engineering technology and safety teams, 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. While the news has understandably stoked anxieties among workers, it also underscores the enormous challenges that the aerospace and engineering sector faces in a post-pandemic world. The situation has ignited debates over how companies should approach redundancies, employee relations, and union engagements in times of crisis.
The Workers Union says…
“Whilst Erginbilgic acknowledged that the company’s previous performance was “unsustainable,” indicating that these cuts are a part of a “multi-year transformation journey.” Whether this will mark the onset of a rejuvenated Rolls-Royce or lead to further degradation remains to be seen. Either way, it is clear that the decisions made today will shape the engineering giant for years to come.”