Engineering news
Rolls-Royce is to accelerate the transformation of its marine business, which includes plans to cut an additional 800 jobs, as a result of continuing weakness in the sector.
The planned measures include a further simplification of the structure of the business, with a streamlining of the senior management team, and a series of cost reduction initiatives which will result in the loss of around 800 roles worldwide and an estimated £45-50 million of annualised savings from mid-2017. Costs of this restructuring are expected to be around £20 million, split between 2016 and 2017.
As part of the programme, investments are also being proposed to establish an R&D centre for the development of new propulsion products, and an expanded services hub for Northern Europe, both in Ulsteinvik, Norway. The organisational changes will also increase the company’s focus on developing electrical and digital technologies, as the maritime industry shifts towards a more digital future where ship intelligence plays a greater role.
Mikael Makinen, president of marine, said: “The ongoing market weakness that has followed the dramatic fall in the price of oil continues to have an adverse impact upon our order book and profitability. We have made significant progress in transforming marine into a far more agile and simplified business than we were and we have to take further steps to address our cost base.
“Reducing our workforce is never an easy decision, but we have no option but to take further action beyond the changes we have made to date. This remains a fundamentally strong business, but we need to overcome the immediate challenges and focus our investments on the technologies that will shape our future growth.”
Warren East, chief executive of Rolls-Royce, added: “I am very supportive of Mikael and his team’s proactive efforts to optimise our marine business in extremely challenging market conditions and at the same time to target investment on future opportunities. The actions being taken will enhance the competitive strength and resilience of the business in what remains an attractive market for Rolls-Royce.”
The proposed job reductions are in addition to the reduction of 1,000 employees announced in May and October 2015. The marine business employs about 4,800 people in 34 countries.