Aircraft engine maker Rolls-Royce (RR.) has announced up to 2,500 job cuts as new CEO Tufan Erginbilgic continues to shake-up the business and make it ‘fit for the future’.
- Up to 2,500 global jobs at risk
- Goal to streamline business and increase efficiencies
- Another step in multi-year transformation
Investors welcomed today’s streamlining plans, pushing the shares up 2% to 217.3p. Over the last year shares in Rolls-Royce have risen three-fold.
Rolls-Royce tried to put a positive spin on the revelation it is cutting 6% of the global workforce, pointing out this number might have been higher without ‘tight management of costs and headcount this year which has minimised the overall reduction in headcount’.
Erginbilgic explained: ‘We are building a Rolls-Royce that is fit for the future. That means a more streamlined and efficient organisation that will deliver for our customers, partners, and shareholders.
‘Our business is full of committed, talented people and I believe these changes will enable them to build greater capability in areas that are key to our long-term success.
‘This is another step on our multi-year transformation journey to build a high performing, competitive, resilient and growing Rolls-Royce.’
ORGANISATIONAL CHANGES
Engineering Technology & Safety will come together as a single division spanning the group under the stewardship of Simon Burr, who will join the executive team with immediate effect.
Burr is currently director of product development and technology, civil aerospace.
The company believes these changes will enable engineering talent and technology to be utilised more effectively across the group.
Meanwhile head office functions such as finance, general counsel and people will be brought together to standardise activity and provide shared support to the business.
A key focus for Rolls-Royce is on delivering improvement in customer service and reducing supply-chain delays.
EXPERT VIEW
AJ Bell investment director Russ Mould commented: ‘We’ve seen the classic “share price moves higher on job cuts” movement on Rolls-Royce’s restructuring efforts.
‘While not good news for people working for the engineer, cutting jobs means saving money in the future, hence why the market has given it the thumbs-up.
‘Reducing the workforce by 6% is a bold move and the challenge is not to sacrifice quality in the quest to save a few quid.’
Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The author of the article (Martin Gamble) and the editor of the article (James Crux) own shares in AJ Bell.
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