7:40 AM, Dec 1, 2016 — Rolls-Royce (RR.L) unveiled plans to cut hundreds of roles worldwide on Thursday as the producer of high-performance power systems said that it is seeking to accelerate the transformation of its marine business following continued weakness in the maritime market.
The company, which employs more than 50,000 people around the world, said that it would further simplify the structure of its marine business, with a streamlining of its senior management team and a series of cost reduction initiatives which would result in the loss of around 800 roles worldwide and an estimated 45-50 million pounds ($56.9 million-to-$63.3 million) of annualized savings from mid-2017.
The costs of the restructuring are expected to be around 20 million pounds, split between 2016 and 2017,the company said. As part of the program, Rolls Royce said that investments were also being proposed to establish a research and development center for the development of new propulsion products, and an expanded services hub for Northern Europe, both in Ulsteinvik, Norway.
The proposed job cuts 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.
Mikael Makinen, president of the marine business at Rolls-Royce, 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.”
“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. This remains a fundamentally strong business, but we need to overcome the immediate challenges and focus our investments on the technologies that will shape our future growth,” he added.