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Jun 3, 2020

Rolls-Royce expects 3,000 U.K. jobs to go as COVID cuts begin

An employee inspects a Rolls-Royce Trent XWB engine in Berlin. Photographer: Adam Berry/Getty Images

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Rolls-Royce Holdings Plc expects to cut 3,000 jobs in the U.K. this year, the first wave of cuts it needs to adjust to the aviation downturn that’s threatened its civil aerospace business.

The London-based engine maker said it ultimately expects to trim 8,000 roles from the division, the bulk of the 9,000 global reductions it announced in May after the Covid-19 crisis undermined demand for new aircraft.

Rolls-Royce is offering voluntary redundancy package to all of its aviation workforce and part of its back-office staff, it said in an email on Wednesday.

The company expects 1,500 jobs to go in Derby and the East Midlands, its main manufacturing base, 200 in nearby Barnoldswick, and an added 700 in Inchinnan, Scotland.

Sites across the rest of the U.K., including Bristol and Solihull, will also see losses ranging from 50 to 200 jobs per location.

The company had initially planned to open up voluntary redundancy on May 28 but had to hold off following disagreement with unions over the terms of the package, based on an earlier statement on the GMB union’s website.

“We are facing changes to the business on a scale we have not seen for 50 years,” said Chris Cholerton, president of civil aerospace at the company in the emailed statement. “This is going to be very tough for everyone, but we have to ensure Rolls-Royce can thrive for future generations.”

The British manufacturing giant, which also has operations in the defense and energy sectors, has been through several contractions in its aerospace business, and Chief Executive Officer Warren East was just turning a corner on persistent engine-quality problems before the pandemic struck.

It’s now left facing the loss of a huge chunk of revenue as airlines ground planes and airframers cut production to get through the crisis.

Union Tussle

Unions were caught off-guard by Rolls-Royce’s initial announcement in May that it planned to cut jobs. They resisted the original plan to request more roles be trimmed voluntarily.

While that obstacle’s been cleared, more friction is possible if not enough employees accept terms of the buyout offers. The next meeting with the union will take place on June 19, Rolls-Royce said.

Rolls-Royce has said it may close sites entirely. A company official said Wednesday that it’s considering closing the services business at its Inchinnan site in Scotland, which makes a range of gas-turbine products including compressor blades and aircraft seals.

East has told investors that Rolls-Royce aims to save 1.3 billion pounds this year and expects 700 million pounds (US$881 million) of savings to come from job cuts. He said last month that Rolls-Royce aims to make more than half of the job cuts this year, while acknowledging that union consultations could take months.

Trade union representatives are seeking to expand voluntary redundancies into nuclear and submarine operations, to retain more of the skilled aerospace workforce for an eventual recovery.