British engine maker Rolls-Royce cuts 4,600 jobs

Rolls-Royce has some 16,000 staff at its UK operational base in Derby, above, central England. (Reuters)
Updated 14 June 2018
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British engine maker Rolls-Royce cuts 4,600 jobs

  • Rolls-Royce employs about 55,000 staff worldwide, almost half of whom are in Britain
  • Rolls-Royce had in January announced a major overhaul of its operations, reducing the number of core units and basing the remainder around civil aerospace, defense and power systems
LONDON: Rolls-Royce plans to axe 4,600 mainly British management roles by 2020 to further slash costs, the UK maker of plane engines announced on Thursday.
“Rolls-Royce announces the next stage in our drive for pace and simplicity with a proposed restructuring that will deliver improved returns, higher margins and increased cash flow,” the group said in a statement.
The London-listed company, whose engines are used in Airbus and Boeing aircraft, said the latest cuts would produce £400 million ($536 million) of annual cost savings by the end of 2020.
Rolls has faced a tough trading environment in recent years on weak demand for its power systems, in particular ones used by the marine industry, resulting in the loss of about two thousand jobs alongside the creation of new posts.
The latest update will result in the largest cull at the group since 2001, when it axed 5,000 jobs on a global economic downturn and following the September 11 attacks in the US.
“Our world-leading technology gives Rolls-Royce the potential to generate significant profitable growth,” the company’s chief executive Warren East said in Thursday’s announcement.
“The creation of a more streamlined organization with pace and simplicity at its heart will enable us to deliver on that promise, generating higher returns while being able to invest for the future,” he added.
Although Rolls roared back into profit last year, this was largely owing to a recovery in the pound.
While the plunge in the value of the pound in the wake of Britain’s 2016 vote in favor of Brexit helped many exporters, Rolls-Royce was forced to book a vast charge as it had not hedged against such a swing in the currency.
Rolls said the latest round of restructuring, leading to the loss of many corporate-supporting roles, was expected to cost the group £500 million, while about two-thirds of the job losses would be in the UK.
East, who has implemented a group-wide restructuring since his appointment as chief executive in 2015, insisted that the latest cull was not linked to repairs it has been forced to carry out on Trent engines.
Used by the Boeing 787 Dreamliner and Airbus A380 superjumbo, the engines have seen some parts wear quicker than expected, forcing Rolls to carry out costly repairs.
Rolls employs about 55,000 staff worldwide, almost half of whom are in Britain.
The company meanwhile has some 16,000 staff at its UK operational base in Derby, central England.
“Most of these management and support functions (set to go) are in Derby and therefore, it will be most strongly felt in Derby,” East said in an interview with BBC radio.
Rolls had in January announced a major overhaul of its operations, reducing the number of core units and basing the remainder around civil aerospace, defense and power systems.
“We have world-class technology in Rolls-Royce, but... (not) a world-class business to go along with it,” East said Thursday in a call with reporters.
At the same time, the company has said it would consider selling its commercial marine business, while in April, Rolls sold German division L’Orange for €700 million to US group Woodward.
Speaking to the BBC, East said he saw opportunities in China.
“We look at China and we see an opportunity there for aircraft engine... that’s where a lot of opportunities are.”


Saudi crown prince’s India visit to boost bilateral investment

Saudi Aramco CEO Amin Nasser leaves after attending the Saudi-India Forum in New Delhi on Wednesday. (Reuters)
Updated 20 February 2019
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Saudi crown prince’s India visit to boost bilateral investment

  • Vision 2030 offers huge opportunities to Indian businessmen in non-oil sector

Many Indian businesses that already operate in the Kingdom are interested in expanding as part of Vision 2030. Retail company Lulu Group International, for example, plans to open 12 new hypermarkets and five malls in Saudi Arabia by next year. 

It already employs more than 2,700 Saudi nationals and plans to increase this number to about 5,000 by 2020.

“Saudi Arabia is a very important market and we will invest in the booming retail sector as we are upbeat about the vast opportunities in the Kingdom through its Vision 2030 initiative,” said Yusuff Ali M. A., the chairman of Lulu Group.

Saudi Crown Prince Mohammed bin Salman’s first visit to India will propel trade and bilateral business relations between the two countries to new heights, experts predict.

Saudi Arabia has long been an important trade partner for India, said Mir Gazanfar Ali Zaki, the general secretary of the Saudi Indian Business Network, and the crown prince’s trip could expand and enhance ties in diverse fields.

According to Saudi Arabia’s General Investment Authority, more than 420 Indian companies operate in the Kingdom through joint ventures or with 100 percent ownership. They have capital of more than $1.5 billion and cover sectors including management and consultancy services, construction projects, telecommunications, information technology and pharmaceuticals.

Saudi Vision 2030, the crown prince’s brainchild, aims to transform the country by diversifying its economy through a series of reforms in non-oil sectors. India hopes to play a significant role in this expansion. The key sectors that India can target to expand and boost trade ties with the Kingdom include software development, solar energy, jewelry, fashion, tourism, education and food, said Zaki.

The cultural reforms initiated recently by the crown prince also clear the way for a wide range of business opportunities in the entertainment sector that India is well placed to cash in on. Bollywood films and music rank high on the list of popular entertainment among many Saudis, and with the recent reopening of cinemas in the Kingdom, and ambitious plans to build hundreds of theaters across the country, there is a huge opportunity for an Indian film to grab a large share of the market.

India’s bilateral trade with Saudi Arabia was worth $27.48 billion in the financial year 2017-18, according to the Indian Ministry of Foreign Affairs, making the Kingdom the country’s fourth-largest trading partner. It is the main supplier of energy, providing more than 18 percent of India’s oil. However, bilateral trade has dropped by almost a half from a high of about $48 billion five years ago because of the fall in global demand for oil. This might soon change, analysts say, as more investors from India are tempted by the Vision 2030 opportunities.

This view is shared by a Middle East Institute analysis that said: “As reforms related to Saudi Arabia’s Vision 2030 are implemented, Indian investors are likely to be attracted to several sectors, including infrastructure, hydrocarbons, desalination, renewable energy, education, research and development, health and pharmaceuticals.”

“We have trained about 200 Saudi nationals to take our business forward,” P. A. Ibrahim, the chairman of Indian company Malabar Gold and Diamonds said. “It is really a huge success that gives us the confidence to open more branches in the Kingdom. Vision 2030 and the Neom project have opened up good opportunities for us to invest more. We are planning four more jewelry outlets in the Kingdom soon,” he said.

A growing area of trade cooperation between the two countries is the field of petrochemical projects. Saudi oil company Aramco, in partnership with the UAE’s Adnoc, recently announced a joint venture for a stake in the $44 billion Ratnagiri Refinery and Petrochemicals project. Cooperation in the sector is expected to grow and it is thought new agreements might be signed during the crown prince’s visit.

An enduring and tangible aspect of the bilateral relations is the presence of a strong, vibrant community of 2.7 million Indians in Saudi Arabia, the largest single group of expatriates in the country. In addition, the Kingdom welcomes more than 175,000 Indian Hajj pilgrims every year.

“We can transform the trade links and cooperation to people-to-people coexistence because of this,” said Zaki. “By promoting foreign direct investment at Saudi trade shows and Indian trade shows, businesses from both countries can benefit. India and Saudi Arabia can organize Indo-Saudi trade exhibitions in both countries so that it can be a common platform for bilateral trade. Both countries should organize as many business-to-business meetings as possible.”

He highlighted the recent efforts by the Saudi Indian Business Network to achieve this through exhibitions such as the Kerala Gems and Jewelry show, the Kolkata Gems and Jewelry Show, Indus Food 2019 in Greater Noida, the International Indian Jewelry Show Signature in Mumbai, the Food Festival of India in Jeddah, the Film Festival of India in Jeddah, Global Exhibition on Services in Mumbai, Business Opportunities in India in Jeddah, and Tea Around the World in Jeddah.

The crown prince’s visit has great political significance, too. While energy and economic cooperation will remain the mainstay of bilateral ties, the two nations are trying to strengthen their cooperation in defense and security. The Ministry of External Affairs has talked of a growing desire in Riyadh for stronger strategic relations and improved intelligence sharing.