Rolls-Royce cutting 4,600 jobs in major restructuring plan

Rolls-Royce will be cutting 4,600 jobs as part of a major restructuring plan to simplify the company into three customer-focused business units.  

Around a third of the job cuts are expected to happen by the end of 2018, Rolls-Royce said in a statement.

The programme is expected to “gain further momentum” through 2019, with “full implementation of headcount reductions and structural changes” by mid-2020.

The job cuts will predominately affect middle-managers and back-office staff in the UK – where most of the company’s corporate and support functions are based.

Rolls-Royce Chief Executive Warren East said:

“It is never an easy decision to reduce our workforce, but we must create a commercial organisation that is as world-leading as our technologies. To do this we are fundamentally changing how we work. 

 “These changes will help us deliver over the mid and longer-term a level of free cash flow well beyond our near-term ambition of around £1bn by around 2020.

Rolls-Royce has traditionally operated a large corporate centre with overlapping activities between individual business units. Rolls-Royce plans on replacing its “heavily centralized control culture” with empowered businesses in a “simpler, leaner structure with much clearer accountabilities”.

Warren East told the BBC that the company needs fewer layers of management:

 “We have too complex a management and support organisation and we need to simplify that so that we can remain competitive.”

Rolls-Royce has around 55,000 employees across 50 countries.

The cost of the restructuring is forecast to be £500 million, including the cost of redundancies and  investments necessary to facilitate the programme.