The company said that the commercial aerospace market will take several years to return to pre-Covid-19 levels and is instigating a cut in expenditure – including plant and property – that will save over £1.3bn on an annualised basis. Roll-Royce has a workforce of 52,000 and the reduction in headcount will account for around £700m in savings.
In a statement, Warren East, Rolls-Royce, CEO said: “This is not a crisis of our making. But it is the crisis that we face and we must deal with it. Our airline customers and airframe partners are having to adapt and so must we.
“Governments across the world are doing what they can to assist businesses in the short-term, but we must respond to market conditions for the medium-term until the world of aviation is flying again at scale, and governments cannot replace sustainable customer demand that is simply not there.”
Rolls-Royce said its Power Systems business and ITP Aero are ‘currently developing, negotiating and executing extensive measures to deal with the current situation’. The company’s defence business in the UK and US is unaffected and as part of the reorganisation Rolls-Royce said it will ensure that its internal civil aerospace supply chain continues to support defence programmes.
“The strategic choices that we have made over the last few years have helped us to respond rapidly to COVID-19 and the synergies between our divisions leave us well placed to capitalise on the long-term potential of our markets,” East said. “The world on the other side of this pandemic will need the power that we generate to fuel economic recovery. We have emerged from troubled times before, to achieve incredible things. We will do so again.”
Unions have been quick to criticise the decision, with Unite calling it 'shameful opportunism'.
Unite assistant general secretary for manufacturing Steve Turner said: "The news that Rolls Royce is preparing to throw thousands of skilled, loyal, world class workers, their families and communities under the bus during the worst public health crisis since 1918 is shameful opportunism.
"This company has accepted public money to furlough thousands of workers. Unite and Britain’s taxpayers deserve a more responsible approach to a national emergency. We call upon Rolls Royce to step back from the brink and work with us on a better way through this crisis."
Unite is concerned that Rolls Royce will do as it has done in the past and have the majority of its planned job cuts fall upon the UK.
Steve Turner continued: "In recent weeks, thousands of skilled jobs have gone and we are seriously concerned that we are going back to the dark days of the 1980s when businesses ran away from their responsibilities to workers who were the basis of their success.
"Actions then condemned hundreds of thousands to unemployment and our status as a major manufacturing nation was destroyed. Our country became a divided and depleted place as a result. We appeal to government and employers, do not repeat the mistakes of the past.
"Our members at Rolls Royce, fearful and anxious already in the face of a pandemic, will be shocked and distressed by this news, but we say to them we have their back at this difficult time.
“We will leave no stone unturned in our fight to protect skilled jobs and the backbone of our manufacturing sector.
"We will be meeting with the company over the coming days to convince them to take a different approach, and pressing the government to step up to the plate to protect our manufacturing base.
“This is no time for the government to sit on the sidelines. UK manufacturing has shown that it can adapt quickly to the needs of the nation, working around the clock to produce the kit needed to protect the sick and key workers during this national crisis. Do not let this incredible national resource go to the wall.
"I repeat my calls to government: we urgently need you to work with unions and industry on a programme to take industry through the next phase of this crisis.
“Establish a National Council for Recovery and work with us, sending a clear signal that there is a strategy to reposition UK Plc and build Britain out of this dreadful situation. That is what a nervous business community needs in order to keep investing in our jobs and communities.
"Without this plan more companies will sack more people and the mass unemployment, broken families and devastated communities that we all dread will become a stark reality.”