Providing an update on its actions to reduce cash expenditure and ongoing cost base discussed in July 2020, Rolls-Royce Holdings has announced proposals to consolidate its manufacturing efforts to balance its capacity with the new levels of demand.
This includes proposals to:
- Consolidate advanced Trent fan blade production from two global sites to one in Singapore;
- Consolidate widebody engine assembly and test from three global sites to one in Derby, UK;
- Focus its advanced disc and turbine blade machining in the UK, including the consolidation of advanced turbine blade machining from two global facilities to one in Derby; and
- Consolidate blisk production from three sites to two facilities in Derby and Oberursel, Germany.
This was shared in the company's half-year results announced on 27 August, where Warren East, Chief Executive, said: "We have made significant progress with our restructuring, which includes the largest reorganisation of our Civil Aerospace business in our history.
"This restructuring has caused us to take difficult decisions resulting in an unfortunate but necessary reduction in roles. These actions will significantly reduce our cost base, which combined with recovery in Power Systems and continued resilience in Defence, will help us to deliver significantly improved returns as the world recovers from the pandemic."
Essentially, the restructuring plan first announced in May 2020, entails a worldwide reduction of up to 8,000 roles from Civil Aerospace, approximately a third of the pre-COVID-19 total, and a further 1,000 mainly from its central functions.
Thus, this reduction of 9,000 roles across the Group worldwide amounts to a reduction of over 17% of Rolls-Royce's workforce. In June 2020, the company opened up voluntary severance in the UK, including an enhanced early retirement scheme.
In the latest update, as of 27 August, more than 4,000 people have left the business, with at least 5,000 expected to do by the year-end, spread across the Group in UK, Germany, Singapore and other global locations. "This includes more than 2,500 voluntary severance and early retirement agreements in the UK, substantially reducing the need for compulsory redundancies," per the statement.
The company added, on the way forward: "As we reorganise our aerospace activities to reflect the expected market size post-COVID-19, we are also assessing significant changes in our make-versus-buy strategy, focusing on high value manufacturing, increasing the use of third parties for other components, and reducing overall capital intensity."