Rolls-Royce Gets Union Backing for 700 Compulsory Job Cuts

(Bloomberg) -- Rolls-Royce Holdings Plc has reached agreement with unions on up to 700 U.K. job cuts this year, with the rest of its planned downsizing made up by employees taking voluntary buyouts.

The company announced in June it planned to eliminate 3,000 U.K. jobs this year. While more than that number applied for voluntary severance, the company will still make enforced reductions in some areas, according to a spokeswoman.

A plant in Inchinnan, Scotland, as well as two English sites in Barnoldswick and Birmingham, are set to bear the brunt, according to people familiar with the matter. Rolls-Royce has been hit by a drop in demand for engines after Covid-19 sparked a deep recession in the aerospace industry.

After the first wave of cutbacks, the London-based company will emerge from the pandemic as a much smaller business. Chief Executive Officer Warren East warned this month that it will take several years for the civil aviation industry to recover. Rolls-Royce’s aerospace business will likely be about one-third smaller, and there will be a charge on its dollar-hedging book to reflect the downsizing, he said.

Unite national officer for aerospace Rhys McCarthy said that while the union had worked “tirelessly” to reduce the number of forced departures, the outcome was still the same and 3,000 posts would ultimately go. He called for the company to come up with a “Plan B” for civil aviation and examine measures such as short-time working to minimize the need for further reductions.

The British industrial icon is taking other measures to cut costs as the pandemic crimps demand for long-range aircraft and profitable maintenance. It’s looking at raising equity and divesting units, as well as seeking to save hundreds of millions of pounds by closing its final salary pension plan to future contributions four years early.

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