Rolls-Royce has announced up to 400 job cuts at its marine division, taking the number of redundancies at the struggling business to about 1,000 in the past five months.
The engine-maker said cutting mainly corporate and administrative jobs would free money for greater investment in research and development. The marine operation, which makes and maintains power and propulsion systems, has been hit by falling orders caused by the slump in the oil price.
More than half the marine division’s revenues come from the oil and gas industry, which has cancelled orders for specialist boats that Rolls-Royce designs or that use the company’s propulsion systems and other products.
Rolls-Royce said the cuts would save £40m a year. It left its guidance unchanged for profit and revenue at the marine business, which employs about 5,800 people in 34 countries.
Mikael Makinen, the president of the marine business, said: “After many years of strong performance through to 2013, led by good growth in the oil and gas sector, our order book and profitability have been adversely impacted by the sharp and subsequently prolonged drop in the price of oil.
“Reducing our workforce is never an easy decision, but the continued weak oil price, and the need to become more competitive, means it is necessary, if we are to build a strong base from which we can successfully grow this business in the future.”
The Derby-based company is cutting more than 3,000 jobs in its aerospace and marine arms as it adapts to a slowdown in demand across its business. This includes closing factories in Ansty in Warwickshire and East Kilbride in South Lanarkshire, Scotland.
Annual profit more than halved when Rolls-Royce announced its results in July. Profit at the marine unit slumped to £4m from £40m while at its main civil aerospace division profit dropped to £248m from £405m.
After a decade of rising sales, Rolls-Royce published a series of profit warnings starting early last year. Former chief executive John Rishton was replaced by Warren East, the former boss of microchip maker Arm Holdings, who issued a profit warning in July, two days after taking the helm.
This article was written by Sean Farrell, for theguardian.com on Monday 5th October 2015 10.19 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010