The luxury car brand Rolls-Royce announced that they will be cutting 4,600 positions from their Derby headquarters to promote profitability.
The will be reducing positions that are redundant in similar tasks such as managers and support staff, in order to simplify their management structure. CEO of Rolls-Royce Warren East says, “We’re trying to create a stronger Rolls-Royce that is good for Derby and the U.K.” continued to say that they will be carrying on necessary positions through the U.K.
Citizens of the city near the Derby headquarters are shocked and disappointed with the choice of Rolls-Royce, since the headquarters is one of the biggest economic factors of this area. The plan for cutting their budget will last for two years and cost £500 million and the cuts should save £400 million per year.
This cut comes after the risky decision of entering the aviation field for recent reveal of the Trent engine for commercial airlines. They are facing problems as many of the planes with Trent engines are grounded due to a long list of technical issues.
The issues with the Trent engine is with the longevity of the materials used that is causing hairline cracks to develop, making the engine faulty. Fixing these issues with engines that they have already invested hundreds of millions on will be costly for Rolls-Royce, that they have already invested another billion into.
Rolls-Royce was counting on the profits from the Lindbergh-type engines that are highly desired in the aviation industry, while not accounting for the additional investment needed due to set-backs in design. The 2017 pre-tax profit for their aviation division rose 25 percent and equating to £1 billion, recovering from the company’s record loss in 2016.
The announcement of the aviation division increased Rolls-Royce shares by 15 percent in March, the highest figure since November. Rolls-Royce also focused on the cutting of cost this year to compensate for the new division.
