By Rolls-Royce Holdings, the U.K.-based aircraft engine manufacturer, is preparing to reduce its workforce by 2,000-2,500 employees globally. This move comes as part of a comprehensive transformation program and strategy review aimed at creating a more efficient and customer-focused business.
Better Serving Customers and Optimizing Operations
The company’s new structure will enable it to better serve its customers, deliver cost efficiencies, and enhance its capabilities in crucial areas like procurement and supply-chain management. By merging the engineering technology and safety teams into one, Rolls-Royce seeks to improve product safety, engineering standards, processes, methods, and tools. Simon Burr, the current director of product development and technology for civil aerospace, will lead the combined team.
Complementary functions such as finance, general counsel, and people teams will also be brought together to streamline operations and improve efficiency.
Departure of Chief Technology Officer
Rolls-Royce announced that Chief Technology Officer Grazia Vittadini will be leaving the company in April. This transition will allow the organization to explore new perspectives and pave the way for further innovation.
Focus on Procurement and Supply-Chain Management
The proposed changes include the establishment of a new enterprise-wide procurement and supplier management organization. This initiative aims to consolidate group spend, leverage scale, and develop consistent standards. By prioritizing these areas, Rolls-Royce not only anticipates significant cost savings but also expects to enhance customer service and reduce supply-chain delays.
Rolls-Royce CEO Tufan Erginbilgic expressed confidence in the company’s transformation journey and emphasized the determination to build a high-performing, competitive, resilient, and continuously growing organization.
Rolls-Royce: Rebuilding and Looking Ahead
Rolls-Royce, a renowned global company, stands proud with its impressive workforce of 42,000 employees. However, recent times have presented significant challenges for the company, leading to a need for transformation. The new Chief Executive, Erginbilgic, recognized the immediate priorities – reducing debt and generating cash flow – to restore the investment-grade rating, which was unfortunately lost during the pandemic. Furthermore, reinstating payments to shareholders, which had been temporarily suspended in 2020, is also on the agenda.
Erginbilgic acknowledged that Rolls-Royce is underperforming in comparison to its competitors across all divisions. This acknowledgment serves as the driving force behind his determination to turn things around. With his extensive experience in the oil industry, Erginbilgic assumed the role of Chief Executive in January and has been steadfastly working towards revitalizing the company ever since.
Positive signs have already emerged, as reflected in the recently reported financials for the six months ending June 30. Rolls-Royce achieved a notable pretax profit of £1.42 billion ($1.73 billion), a remarkable improvement from the £1.75 billion loss recorded during the same period last year. The underlying operating profit, a crucial metric for the company that excludes exceptional and one-off items, stood at £673 million, a significant leap from the previous year’s £125 million.
With these encouraging results, Rolls-Royce has set ambitious targets for 2023. The company aims for an underlying operating profit ranging between £1.2 billion and £1.4 billion. Moreover, it predicts a total of 400 to 500 engine deliveries throughout the year.
As Rolls-Royce forges ahead with its revitalization plans, it remains focused on its global operations. The company strives to reclaim its position as a leader in the industry, catering to the evolving needs of its customers while driving innovation and excellence.
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