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The sun sets over Rolls-Royce in Derby
The sun sets over Rolls-Royce in Derby. The job losses follow a profit warning three weeks ago that wiped £2bn off the company's market value. Photograph: Reuters
The sun sets over Rolls-Royce in Derby. The job losses follow a profit warning three weeks ago that wiped £2bn off the company's market value. Photograph: Reuters

Derby MP says Rolls-Royce job cuts will have devastating impact

This article is more than 9 years old
Derby and Bristol likely to bear brunt of 2,600 redundancies, dealing a ‘bitter blow to staff behind company’s success’

Rolls-Royce to axe 2,600 jobs

Thousands of job cuts announced by Rolls-Royce this week will have a devastating impact on Derby, where the company employs more than 12,000 people to make jet engines, the local MP has said.

“Rolls-Royce was created in Derby, and this will be a bitter blow to the proud workforce that has delivered the company’s success,” said Chris Williamson, MP for Derby North, in a speech to parliament on Wednesday.

He said the 2,600 job cuts, which would mostly be felt in Derby and Bristol, but also in the US, were among highly skilled aeronautical engineers. “These are high-value jobs, not the sort of zero-hours jobs we have seen [created recently],” he said.

Rolls-Royce has declined to say how many of the redundancies will be in the UK, but the Unite union says up to 1,700 engineering jobs could be axed in Derby and Bristol. The company employs 24,800 workers in Britain out of 55,200 worldwide.

It disclosed on Wednesday the near-£1m departure terms for its finance director Mark Morris. He will receive 12 months of his salary and benefits - a total of £717,150 - in equal instalments spread over 12 months and a payment for unused leave. He will also receive 18,591 shares - worth around £160,000 - although other share awards have lapsed. He is also to be offered £40,000, plus VAT, “in respect of career transition support”.

Iain Wright, the shadow industry minister, asked the government to ensure Rolls-Royce was not cutting jobs for “short-term share-price gains”. He pointed out that the redundancies could lead to further job losses as “for every engine sold by Rolls-Royce 3,000 jobs [are used] in the supply chain”.

Matthew Hancock, business minister, said he and Vince Cable, the business secretary, had spoken to Rolls-Royce to mitigate the scale of the cuts and to help secure alternative jobs for the engineers. “We realise this will be a worrying time for the workforce and employees,” he said. “Announcements of job cuts are never welcome. We will work with all involved to mitigate this.”

Hancock, who vowed to support Rolls-Royce through the upheaval, said the company was facing an increasingly challenging environment and needed to make the cuts to remain competitive.

The job losses follow a profit warning three weeks ago that wiped £2bn off Rolls-Royce’s market value – its second such warning in eight months.

John Rishton, the chief executive, admitted that more jobs would go. “We are taking determined management action and accelerating our progress on cost,” he said. “The measures announced today will not be the last; however, they will contribute towards Rolls-Royce becoming a stronger and more profitable company.

“We will work closely with employees and their representatives to achieve the necessary reductions on a voluntary basis where possible, while making sure we retain the skills needed for the future.”

The next round of redundancies could hit the company’s aviation division, which makes engines for Boeing 787 Dreamliners and Airbus A350s.

Ian Waddell, Unite’s national officer, said: “Rolls-Royce is in danger of making decisions in the short term that it will later regret. Engineering skills and expertise are already in short supply across the aerospace industry and will be difficult to replace should there be an upturn in business. We will be seeking guarantees over no compulsory redundancies and seeking assurances that the company doesn’t turn to casual labour to plug the skills gap in the future or seek to offshore skilled UK jobs.

“This is a bitter blow to a proud workforce and we will be doing everything we can to fight for jobs and skills.”

The redundancies announced on Tuesday, which will cost the company £120m, follow about 1,000 indirect job losses last year as well as several hundred within its defence business.

More on this story

More on this story

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  • Rolls-Royce set for boost after reports of Airbus Delta deal

  • Rolls-Royce to axe 2,600 jobs

  • Rolls-Royce shares tumble after profit warning

  • Hong Kong tycoon buys 30 Rolls-Royce Phantoms

  • Rolls-Royce share buyback and capex pledge not a case of City short-termism

  • Rolls-Royce roars ahead on £1bn buyback while Federal Reserve lifts FTSE

  • Rolls-Royce hands back £1bn to shareholders

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