As part of a company overhaul, 4,600 jobs at Rolls-Royce are to be axed over the next two years in order to save £400 million a year by 2020.
Rolls-Royce announced their intentions this week, with the argument that they had too many layers of management and needed “a much simpler, healthier and dynamic organisation”. Job losses are predicted to affect the UK the most, where 23,000 out of the total 50,000 who work for the motor trade giant reside.
Rolls-Royce predicts that one third of the cuts will occur by the end of 2018, with the rest being implemented by mid-2020. They acknowledge that the reorganisation of the business will cost them £500 million but believe it will save them £400 million a year to make up for it.
The suggestion for job cuts was first put forward by Rolls-Royce chief executive Warren East back in March, though he failed to specify numbers. He is now making good on his suggestion and stated the cuts were “inevitable” for Rolls-Royce to remain competitive.
Rolls-Royce turned over £4.9 billion before tax in 2017, however, in 2016 they recorded a £4.6 billion loss - the largest in their history – due to a mixture of a weak pound following Brexit and settling corruption charges. They have also struggled recently with their Trent 1000 engine faults, that are used in Boeing 787 aircrafts.
Derby, the headquarters of Rolls-Royce, is going to see the most radical change, as that is where most back office services take place.