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Rolls-Royce to cut more than 200 positions from management teams

Monday, September 19, 2016 - 06:47

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Rolls-Royce Holdings Plc is eliminating more than 200 positions from its management team as chief executive officer Warren East (pictured) extends a wide-reaching restructuring of the embattled enginemaker.

[LONDON] Rolls-Royce Holdings Plc is eliminating more than 200 positions from its management team as chief executive officer Warren East extends a wide-reaching restructuring of the embattled enginemaker.

The additional cuts brings the total trimming of management positions under East's reign to more than 600, a Rolls-Royce spokesman said in a statement Sunday in response to a Financial Times report outlining the plans. About 270 of those positions had been phased out as of July 28, the CEO said at the company's half-year earnings report.

Rolls-Royce is on target to reach the upper end of a £30 million- to £50 million-pound (S$53.3 million - S$88.9 million) savings target from Mr East's turnaround plan this year out of a total 200 million pounds targeted by the end of 2017.

The CEO has said the company, which has been struggling amid a downturn in demand for its marine engine and servicing revenues from its business jet turbines, could aim to match margins achieved by it's competitors Pratt & Whitney and General Electric Co, implying savings of as much as £1 billion.

"Last week we gave details of the latest stage of our transformation to our managers. This involves restructuring our management population and will result in a number of people leaving the business," according to the statement. "This is part of our ongoing transformation programme, designed to remove complexity and cost by simplifying our processes and our structure."

Mr East, who took over the leadership role from predecessor John Rishton in July last year, has said the enginemaker has suffered from a bloated management team and overly complex decision-making procedures.

The leadership change came as Rolls-Royce entered a demanding ramp up of engine deliveries for Airbus Group SE's A350 XWB and A330neo aircraft, that will see the manufacturer double its output of engines to meet demand.

Last year the company said its average annual employee numbers had dropped by 3,600 to 50,500 in 2015. Under Mr East, the company has separately announced 3,200 staff cuts in its aerospace business and 400 in its marine business, which supplies engines mainly to the oil and gas industry.

At the same time the company, which on Friday was awarded a contract to develop Britain's first nuclear plant in three decades, has doubled its employees in its nuclear business since 2011.

Rolls-Royce took £53 million in restructuring charges in the first half, the company said in July, with its expectations for a full-year hit on profits of between £75 million and £100 million unchanged, the company said Sunday.

BLOOMBERG

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