Rolls-Royce plans major management restructuring

Rolls-Royce, Bankfield site Barnoldswick.'Photo Ben Parsons
Rolls-Royce, Bankfield site Barnoldswick.'Photo Ben Parsons

A major restructuring of management positions has been announced by Rolls-Royce which could save the company up to £200m. a year.

Rolls-Royce Chief Executive Warren East announced the plan on Tuesday as part of a review of operations.

As a group we are undergoing an unprecedented period of change. Change in our mix of business and how we account for it.

Warren East, Rolls-Royce Chief Executive

The firm, which has two sites in Barnoldswick, has issued repeated profit warnings this year.

Mr East said “major restructuring” will simplify the organisation, streamline senior management, reduce fixed costs and add greater pace and accountability to decision making at the company.

He also said the move would mean incremental gross cost savings of between £150m. and £200m. per annum, with benefits accruing from 2017 onwards.

Mr East said: “As a group we are undergoing an unprecedented period of change. Change in our mix of business and how we account for it.

“Change in our industrial footprint as we invest in a wide-ranging transformation.

“And change in demand for our products as we double our large engine output and manage reductions in demand in other markets.

“These changes, while more painful than we expected in the near-term, are vital to our long-term success.

“My review has underpinned my confidence about the opportunities before us and I am convinced that our long-term outlook is positive.

“It has also highlighted a number of areas where we can simplify the way we work, inject pace into our decision-making and responsiveness, and improve our operational gearing and operational effectiveness.

“This is fundamental to ensuring Rolls-Royce best positions itself to compete for the long term opportunities before us.”

The review has been backed by Rolls-Royce’s board and Jon Brough, who is Unite’s convenor at the company’s two sites at Bankfield and Ghyll Brow in Barnoldswick, believes the effect felt there would be small.

Mr Brough said: “I don’t think this will have a huge direct impact on Barnoldswick, I think the level of restructuring is outside of our site at very senior manager level.

“When you get outside the factories, there are all sorts of heads of business and projects directors.

“Trade unions have been saying for a long time now we need to streamline top tier managers and to be fair to Warren, he has come in with a fresh pair of eyes and said that.”

Mr Brough also said that the redundancies announced at Barnoldswick this year have been achieved without any compulsory redundancies, describing it as a “huge weight off people’s minds” and the outlook as “much more positive”.