Rolls-Royce to Cut 400 Jobs Worldwide in Marine Unit
October 05 2015 - 11:15AM
Dow Jones News
By Robert Wall
LONDON--Rolls-Royce Holdings PLC (RR.LN) will cut a further 400
jobs at its struggling marine unit as the British engine maker
continues efforts to offset weakness in several of its key
markets.
The job losses in its marine activities follows Rolls-Royce's
repeated profit warnings over the past two years, in part because
of weakening demand from oil and gas companies as they cut back
spending plans owing to low crude prices.
"This is a fundamentally strong business, but we have to take
decisive action to position it for future growth, with a structure
that is simple, efficient and effective," Mikael Makinen, head of
the marine unit at Rolls-Royce said in a statement.
London-based Rolls-Royce said the 30 million pound ($45 million)
in restructuring costs associated with the layoffs were included in
its July earnings update and will stretch into next year. The moves
should generate GBP40 million in savings from 2016, it said.
Some of the savings would be invested in research and
development spending.
Separately, Rolls-Royce on Monday disclosed it would spend
almost $600 million to modernize manufacturing facilities in
Indianapolis, Ind. "This investment ensures that we can increase
our competitiveness in the market, which will benefit both our
customers and Rolls-Royce," said Marion Blakey, president and CEO,
Rolls-Royce North America.
The British maker of jet engines for Boeing Co. and Airbus Group
SE planes has been seeking to boost profitability and cut its
workforce after a series of profit warnings linked to weakness in
key markets for its products. The company last year said it would
shed 2,600 jobs in its aerospace division and in May said it would
eliminate 600 jobs, about 10% of the workforce, at the marine unit,
which has employees in 34 countries. Rolls-Royce warned earlier
this year that more job cuts in its marine businesses were
possible.
Chief Executive Warren East, who took the job in July, is
undertaking an operational review of the entire business, which is
due to be completed in November.
The engine maker last week also said it would shutter an engine
overhaul joint venture with American Airlines due to a lack of
work.
Rolls-Royce said its guidance for the marine unit would remain
unchanged. It anticipated sales of GBP1.45 billion to GBP1.65
billion. Profit could range from no profit for this year to GBP40
million, it said in July.
-Write to Robert Wall at robert.wall@wsj.com
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(END) Dow Jones Newswires
October 05, 2015 11:00 ET (15:00 GMT)
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