Rolls Royce plans to boost profits from more than 4,000 job cuts

Giant aero-engine maker, Rolls Royce is making efforts to increase its profits by scrapping its middle-management positions; a move that will bring more than 4,000 job cuts.

The Guardian reports that Rolls Royce CEO, Warren East has decided to take action this week after repeatedly saying that the company is bloated with duplicated roles, unnecessary costs and many layers of management. The job cuts would be announced on Friday when the firm would be updating the City analysts. However, the giant aero-engine maker has refused to confirm or deny the information, according to BBC. And some of the City analysts have proposed a cut down of as much as 10% of the company’s 50,000 employees.

Frontline engineers are unlikely to be affected by this restructuring, however. The company’s deal last year that involved a $200m investment in UK aerospace facilities will protect some 7,000 roles at Derbyshire plant, Annesley in Nottinghamshire and Hucknall. But areas such as human resources, purchasing, and financing are expected to undergo the 4,000 job cuts.

Rolls Royce job cuts

Rolls Royce is making efforts to increase its profits by scrapping its middle-management positions

A spokesman for the aero-engine maker has confirmed that the company is considering a staff structure that’s simpler, with few layers and wider control across the group. “We said we had retained restructuring experts … to support us with this program. We added that we expected this program to deliver a significant reduction in costs and assist us in improving performance across the group as a whole,” he added.

East, who has cut 5,500 jobs so far in his reign, was appointed as chief executive three years ago. He has pledged to increase the profitability of Rolls Royce and to generate free cash-flow of about $1.3b by 2020. Meanwhile, the company recently faced allegations of corruption which led to $896m in penalties. It was found that the aero-engine maker paid bribes worth millions of pounds’ to secure orders in 6 countries, including China, Russia, and Indonesia.

The potency to develop new engines in the future depends on if Rolls Royce is able to raise enough free cash-flow: a measure of cash available to do business after expenses on core business infrastructure. Is cutting jobs a viable route?

Early this year, the company reduced its operating businesses from 5 to 3: defense, power systems, and aerospace. And the company has also announced that more drastic measures will be taken, which includes cutting staff.

“In the restructuring which followed from the transformation programme we announced in 2015, then approximately 600 senior managers left the organization and we did, in fact, achieve some simplification,” East said in March.

“The reality is, however, that there is more simplification that we need to do to make ourselves truly competitive and fit for the future. And that’s why we’re embarking on this further restructuring, seeking out duplications that exist. So, we’ll have more to talk about as we get further into it.”

A research released last month says that JP Morgan is expecting a recurring savings of about $267 by 2021 from the company’s job cuts.

Carrie Ann
Carrie Ann is Editor-in-Chief at Industry Leaders Magazine, based in Las Vegas. Carrie covers technology, trends, marketing, brands, productivity, and leadership. When she isn’t writing she prefers reading. She loves reading books and articles on business, economics, corporate law, luxury products, artificial intelligence, and latest technology. She’s keen on political discussions and shares an undying passion for gadgets. Follow Carrie Ann on Twitter, Facebook

Recent Posts

Elon Musk’s Starlink satellite internet set to cover the globe soon

Elon Musk’s Starlink satellite internet set to cover the globe soon

Starlink, the satellite internet unit of Elon Musk’s SpaceX, will most likely be able to provide global coverage by September, according to the company’s president Gwynne S
48 mins ago
At the next Krispy Kreme IPO, the donut maker aims to raise nearly $4 billion

At the next Krispy Kreme IPO, the donut maker aims to raise nearly $4 billion

Krispy Kreme, the popular donut chain, aims raise roughly $4 billion as it makes one of the biggest IPO debuts at the NYSE.
2 hours ago
Panasonic hopes Blue Yonder acquisition will improve its software woes

Panasonic hopes Blue Yonder acquisition will improve its software woes

Most Japanese major companies, which at one time were leaders in consumer electronics, are struggling to find their feet in a world that has moved to digital software. Electronics
19 hours ago
Ikea and Rockefeller Foundations to raise $10 billion for renewable energy projects in poor countries

Ikea and Rockefeller Foundations to raise $10 billion for renewable energy projects in poor countries

The Ikea and Rockefeller foundations are jointly launching a $10 billion fund to promote small-scale renewable power projects in developing nations. Both
2 days ago
EC initiates another probe into Google’s adtech practices

EC initiates another probe into Google’s adtech practices

EU antitrust regulators are planning a formal investigation into Google’s digital advertising practices by the end of this year. Google is already facing unprecedented regulatory
2 days ago
Some Microsoft employees stayed at data centers during Pandemic to keep all systems going

Some Microsoft employees stayed at data centers during Pandemic to keep all systems going

The Covid-19 pandemic ravaging the world for more than a year has forced companies and organizations to find viable solutions to keep the business going. Most found a solution in w
3 days ago