Rolls-Royce to shed 200 management jobs

Despite a number of major cost-cutting exercises which saw the UK engineering giant Rolls-Royce post an unexpected profit for the first half of 2016, the company, under the helm of new CEO Warren East, has continued along the same path, this time seeing 200 management jobs being cut. This is yet another part of the company’s strategy to save between £150m (US$195m) and £200m (US$260m) per annum, with an indication there is more to come. This cut in what was described as a bloated management structure has come after the last 600 layoffs and an indication in May that the cuts would now stop.
According to a Rolls-Royce spokesman, “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. This is part of our ongoing transformation programme, designed to remove complexity and cost by simplifying our processes and our structure.
“The detail we have announced is part of a programme announced on November 12 2015 that we expect to generate incremental gross cost savings of between £150m and £200m a year with the full benefits from the end of 2017 onwards.”
East has said the company suffers from an overly complex structure, making it slow to respond to change. He has been swift to slim processes by reducing the number of divisions from nine to five and replacing leadership in the critical wide-body aircraft engine sector of the business.
Amid a downturn in demand for marine engines, Rolls-Royce has also struggled with service revenues from its business-jet turbines. The target of reducing costs by £150m to £200m by the end of 2017 is part of an attempt to get margins closer to those of rivals Pratt & Whitney and General Electric Co.