In the marine segment of UK-based Rolls-Ro[ds_preview]yce, another 800 jobs will be cut to cope with the weak market environment and to save costs.
With this step, the company »plans to accelerate the transformation of its Marine business as a result of continuing weakness in the maritime market«, it was announced. Planned measures would include a further simplification of the structure of the business, with a streamlining of the senior management team, and a series of cost reduction initiatives which will result in the loss of around 800 roles worldwide and an estimated £45-50 million of annualised savings from mid-2017. Costs of this restructuring are expected to be around £20 million, split between 2016 and 2017, Rolls-Royce added.
Mikael Makinen, Rolls-Royce, President – Marine, said: »The ongoing market weakness that has followed the dramatic fall in the price of oil continues to have an adverse impact upon our order book and profitability. We have made significant progress in transforming Marine into a far more agile and simplified business than we were and we have to take further steps to address our cost base.«
As part of the programme, investments are also being proposed to establish an R&D centre for the development of new propulsion products, and an expanded Services hub for Northern Europe, both in Ulsteinvik, Norway. According to the announcement, the organisational changes will also increase the strategic focus on developing further electrical and digital technologies as the maritime industry shifts towards a more digital future where Ship Intelligence plays a greater role.
The now announced cuttings are not the first during the shipping crises. It follows a series of cost reduction initiatives carried out over the past three years. »The proposed job reductions are in addition to the reduction of 1,000 employees announced in May and October last year. The Marine business currently employs around 4,800 people in 34 countries«, Rolls-Royce emphasized.
»In the trading update on 16 November, we highlighted that there were no signs of a recovery in offshore oil & gas markets and orders for new equipment remain very weak, resulting in expectations of further revenue weakness for the business in 2017. Service revenues have also been impacted by lower utilisation of vessels.«
Warren East: »Actions will enhance competitive strenght«
Makinen added, »Reducing our workforce is never an easy decision, but we have no option but to take further action beyond the changes we have made to date.« Warren East, CEO of Rolls-Royce said: »I am very supportive of Mikael and his team’s proactive efforts to optimise our Marine business in extremely challenging market conditions and at the same time to target investment on future opportunities. The actions being taken will enhance the competitive strength and resilience of the business in what remains an attractive market for Rolls-Royce.«
Rolls-Royce operates in the businesses of Civil Aerospace, Defence Aerospace, Marine, Nuclear and Power Systems and has 4,000 marine customers. Annual underlying revenue was £13.4 billion in 2015, around half of which came from the provision of aftermarket services. The firm and announced order book stood at £79.5 billion at the end of June 2016. The company over 50,000 people in more than 46 countries. More than 16,000 of these are engineers.
