Unions still in the dark over Rolls-Royce cuts

Over a week after Rolls-Royce said it is cutting thousands of aerospace jobs, unions have still not been told where the axe is going to fall. Even though local negotiations have begun, the company has been unable to confirm what numbers it is seeking at its plants – principally those in Derby and Bristol. Unite union reps have been told that no compulsory redundancies are being sought.

On 4 November Rolls-Royce announced proposals to reduce the workforce in its Aerospace Division by 2,600 jobs worldwide over the next 18 months. The company claimed this would intensify the programme to improve operational efficiency and would reduce costs.

Full order book

At the same time the company said that its order book stands at a value of £70 billion. The share price is plummeting and the City is breathing down the neck of the Rolls-Royce board. So it seems more important to pay shareholders a hefty dividend than to maintain continuity of the workforce through a short period.

The company justified their decision by the expectation of difficult trading conditions in 2015 and the current state of the workbook. Several major engine programmes are moving from the development phase to launch and manufacturing phases. The need for engineers involved in development is significantly reduced, but that’s a short term feature of a business with long development cycles.

Rolls-Royce workers will view this decision as a knee jerk reaction given the size of the order book and the difficulty in employing the right skilled workers.

Rolls-Royce workers will view this decision as a knee jerk reaction given the size of the order book and the difficulty in employing the right skilled workers. Unite national officer Ian Waddell said: “Rolls-Royce is in danger of making decisions in the short-term that it will later regret. Engineering skills and expertise are already in short supply across the aerospace industry and will be difficult to replace should there be an upturn in business.”

“We will be seeking guarantees over no compulsory redundancies and seeking assurances that the company doesn’t turn to casual labour to plug the skills [gap] in the future or seek to offshore skilled UK jobs. This is a bitter blow to a proud workforce”

Surprise

Financial analysts backed the company cutting costs in the wake of profit warnings, as you’d expect. But there was surprise and concern for future prospects as the company is getting rid of so many high-calibre staff.

The proposed job reductions will impact across engineering, operations management and the support functions of the aerospace division, which totals around 31,000 throughout the world. The announcement would mean a reduction in of about 8 per cent of workers in that division.

The current worldwide workforce is over 55,000. Other parts outside aerospace are under threat too. In January 2014 Rolls-Royce decided to “right size” the defence business, cutting hundreds of jobs in Coventry and East Kilbride.

Rolls-Royce will also now look to reduce costs and presumably cut jobs across other areas including the Land and Sea division covering marine, nuclear and large power systems businesses. This could also result in job losses. So far company has stressed that it would continue to recruit apprentices and graduates.