Rolls-Royce has announced that it plans to layoff
at least 9,000 people as a result of reduced business caused by
the ongoing COVID19 pandemic.
In a statement issued on Wednesday, Rolls-Royce,
said that it is “increasingly clear that activity in the
commercial aerospace market will take several years to return to
the levels seen just a few months ago. We must now address these
medium-term structural changes, as demand from customers reduces
significantly for our civil aerospace engines and aftermarket
Rolls-Royce's reorganisation will see at least
9,000 people lose their jobs, from a global workforce of 52,000.
In addition to the savings generated from
this headcount reduction, Rolls-Royce will cut expenditure across
plant and property, capital and other indirect cost areas.
The proposed reorganisation is expected to
generate annualised savings of more than £1.3 billion, of which
the layoffs will contribute approximately £700 million.
The cash restructuring costs related to these
actions are likely to be around £800 million, with outflows
incurred across 2020 to 2022.
Warren East, Rolls-Royce, CEO, said, “This is not
a crisis of our making. But it is the crisis that we face and we
must deal with it. Our airline customers and airframe partners are
having to adapt and so must we. Being told that there is no longer
a job for you is a terrible prospect and it is especially hard
when all of us take so much pride in working for Rolls-Royce. But
we must take difficult decisions to see our business through these
unprecedented times. Governments across the world are doing what
they can to assist businesses in the short-term, but we must
respond to market conditions for the medium-term until the world
of aviation is flying again at scale, and governments cannot
replace sustainable customer demand that is simply not there. We
have to do this right, which means we will work closely with our
employee and trade union representatives as appropriate, look at
any viable alternatives to mitigate the impact, consult with
everyone affected and treat our people with dignity and respect.”
The proposed reorganisation will predominantly
affect Rolls-Royce's Civil Aerospace business, but will also have
implications for its central support functions.
The Power Systems business and ITP Aero are
currently developing, negotiating and executing extensive measures
to deal with the current situation.
Rolls-Royce says that its Defence business, based
in the UK and US, has been robust during the pandemic, and will
not see any layoffs.
As Rolls-Royce needs to consult with the
appropriate employee and trade union representatives, it has not
provided any further details of the impact of the proposed
reorganisation on specific sites, or countries, at this stage.
“The world on the other side of this
pandemic will need the power that we generate to fuel economic
recovery. I absolutely believe the call for that power to be more
sustainable will be stronger than ever. This plays to our
strengths. We must ensure that we are able to continue to innovate
and play our leading role in enabling the vital sectors in which
we operate achieve net zero carbon emissions. We have emerged from
troubled times before, to achieve incredible things. We will do so
again,” added Mr. East.