British aircraft engine maker Rolls-Royce on Thursday announced to cut off 4,600 jobs over the next two years as part of a major reorganisation.
The cuts, which represent 8.4 per cent of the company's 55,000 workforce, are Rolls-Royce's largest since October 2001 when the company shed 5,000 jobs in response to a downturn in the global economy after the September 11, 2001 terror attacks in the US, according to reports.
Middle managers and back-office staff will bear the brunt of the cuts, expected to hit its Derby base hard. It is the group's biggest manufacturing base in the UK, which currently has a workforce of 15,700 people, the BBC reported.
According to Rolls-Royce, about a third of the job cuts are expected to happen by the end of 2018 and the programme is expected to continue throughout 2019, with full implementation by mid-2020.
The company is refocusing its business on civil aerospace, defence, and power systems. The move is the latest by Chief Executive Warren East to improve profitability at Rolls-Royce, which lags its US rivals such as General Electric Co.
The effort has been beset by setbacks, including faster wear-and-tear on components used on different engine models, including those used on some Dreamliner long-haul jets and others powering Airbus SE A380 superjumbos, Efe news reported.
Rolls-Royce said that the programme would cost 500 million pounds to carry out, including redundancies, but would save it 400 million pounds a year by the end of 2020.
Rolls-Royce, no longer affiliated with the luxury car maker, said it would continue to work on its problems with its Trent 1000 engine.
Parts in the engines have been wearing out faster than anticipated, causing some planes to be grounded. Rolls-Royce has said it will take years to modify all the engines in service.
East said making the business "more streamlined" with "pace and simplicity at its heart" would allow the company to generate "significant" profitable growth.
"It is never an easy decision to reduce our workforce, but we must create a commercial organisation that is as world-leading as our technologies," he said.
But Rolls insisted it would honour a previous pledge not to impose compulsory redundancies on union-represented staff, including at its sites in Derby, Hucknall and Annesley.
Britain's biggest union, Unite, warned Rolls-Royce against cutting "too deep and too fast".
A government spokesman said the government was "in regular contact" with Rolls-Royce on its plans to reduce its back-office and support functions.
"This is clearly an uncertain time for affected employees and their families and Jobcentre Plus Rapid Response stands ready to help people back into employment as soon as possible," the spokesman said.
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