This year, a further decline in aviation revenues due to COVID-19-induced impact has prompted Rolls-Royce to execute yet another round of layoffs in less than a decade. Cutting a chunk(6%) of its original headcount(50,000). On the sidelines, Microsoft’s professional social media platform Linkedin this Monday revealed its plans to lay off 668 of its workforce in engineering, product development, talent acquisition, and finance departments. This follows a previous booting of 716 staff in May, along with the closure of its job application in China. Let’s find out why Rolls-Royce is cutting 2,500 jobs.
Derby-based Rolls-Royce on the other hand is set to trim its workforce by up to 2,500 positions in a thorough global restructuring initiative by its new CEO Tufan Erginbilgic. Who claims that axing a considerable number of its workforce is to simplify operations and improve profitability. Rolls-Royce Holdings PLC, a prominent British name specializing in the production of aircraft engines, military vehicles, marine propulsion systems, and power-generation systems, is a UK enterprise creating and providing power and propulsion solutions for crucial safety applications. The company is an engine supplier for Airbus A350 and Boeing 787 aircraft.
What is happening with Rolls-Royce?
Over the past decade, Rolls-Royce has undergone numerous restructurings under successive leadership. A prior overhaul, conducted under former CEO Warren East in response to the severe impact of the Covid pandemic on Rolls-Royce’s civil aerospace division aimed to shed 9,000 frontline jobs.
However, this time around, Rolls-Royce booting the jobs of over 2,000 people will predominantly affect the non-engineering segments of the workforce. McKinsey, the consulting firm, was enlisted this year to provide counsel on Rolls-Royce’s restructuring efforts. Roughly half of Rolls-Royce’s employees are based in the UK, with 10,800 in Germany and 5,400 in the US.
In May, Rolls-Royce was in the news for potential staff redundancies, but the company firmly debunked rumors of layoffs. According to a spokesperson from Rolls-Royce, the British engine manufacturer has not yet made any decisions regarding alterations to its workforce. Officially stating that a reduction of approximately 3,000 non-manufacturing positions was baseless and merely speculative.
Erginbilgic has moved swiftly to leave his imprint on the 117-year-old corporation, characterizing it as a critical juncture in an address to the staff in January. He has also been highly critical of the management of Rolls-Royce’s power systems division, responsible for producing diesel and gas engines for ships and trains.
What’s different this time with Rolls-Royce Jobs Layoff?
The impending job cuts will touch across the global operations of the engine manufacturer. With a significant impact anticipated on a substantial number of UK-based personnel. As part of the cost-reduction initiative, Rolls-Royce aims to merge its engineering technology and safety divisions. This restructuring will also instigate significant transformations in the company’s procurement and supply chain management processes.
Since taking over as CEO of Rolls-Royce in January, Tufan Erginbilgic has been vocal about the company’s imperative to enhance cash flow, reduce debt, and invest in its future. In line with this vision, Erginbilgic initiated a comprehensive strategic review. The outcomes of this will be revealed in the latter part of 2023. Under him, Rolls-Royce has witnessed a robust recovery. Erginbilgic has consistently emphasized the vigilant management of the firm’s cost structure to counterbalance inflationary pressures.
Mr. Erginbilgic communicated these plans to investors. He lauded the talent and dedication within the organization. And expressed confidence that these adjustments would bolster capabilities in areas critical to the company’s enduring triumph. He characterized this maneuver as yet another milestone in the company’s multi-year endeavor to forge a competitive, and expanding Rolls-Royce. These new modifications come on the heels of two prior turnaround strategies enacted under Mr. Erginbilgic’s predecessor, Warren East. The initial plan was in 2020; with the chief objective of weathering the repercussions of the pandemic. Ultimately resulting in the shedding of 9,000 jobs. The second initiative, executed in 2018, led to 4,600 redundancies.