Rolls-Royce falls prey to aviation downturn

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Brave faces, but most knew the cuts had to come

Outlook

The aircraft engine manufacturer Rolls-Royce became the latest casualty of the worldwide downturn in aviation when it announced 5,000 job losses.

The civil engine plant in Derby will bear the brunt of the cutbacks, although redundancies will be spread across the company's UK sites and possibly also its operations in America and Germany.

About 2,500 of the job losses result directly from the slump in airline orders caused by the terrorist attacks in America. The remainder are part of a job reduction programme that began two years ago.

The 5,000 job cuts are expected to be made over the next two years, with engine production rates next year likely to be cut by up to a third. Civil aerospace engines account for 54 per cent of the company's £6bn a year turnover.

The cutbacks are not thought to involve the closure of any plants. Derby, the main site for production of Trent and RB211 engines, employs about 10,000 out of a total British workforce of 30,000. Worldwide, Rolls-Royce employs 43,000.

Other British sites include Bristol, the headquarters for military engine production, Hucknall and Anstey in the Midlands, East Kilbride in Scotland, and Sunderland.

Rolls-Royce also has a factory in southern Germany producing aero engines for regional aircraft, and an American subsidiary, Allison, which mainly produces military engines.

Rival US engine-makers have already announced redundancy programmes since 11 September. General Electric has cut 4,000 jobs, and earlier this week Pratt & Whitney said it was shedding 2,500 jobs.

Union leaders urged the company to pull back from the announcement of thousands of job losses. Sir Ken Jackson, general secretary of the Amalgamated Engineering and Electrical Union, said: "Rolls-Royce must hold its nerve and not take short-term decisions on redundancies. Rolls-Royce has its biggest order book ever, supplying a record number of aircraft types. Any panic job cuts could seriously jeopardise the long-term skills base of a great British company with a bright future."

Roger Lyons, general secretary of the Manufacturing Science and Finance union, said: "Our members are very angry that they have heard of possible redundancies in the press rather than from the company. Rolls-Royce is a world-class company because of the contribution of the workforce, and breaching the partnership agreement is a slap in the face for the staff."

Shareholders in Rolls-Royce have been urging the company to make a statement. Its shares have fallen by 40 per cent since the attacks and yesterday they fell 4 per cent.