Rolls-Royce plans to lay off further 400 workers from its Marine business by the end of 2016, in addition to the reduction of 600 employees previously announced in May, again stating ”the impact of the low price of oil and subsequent fall in orders” as the main reasons behind the job cuts.
The company expects the reductions in work force to generate full year savings of GBP 40 million (USD 61m), with incremental benefits expected from 2016 onwards.
In the guidance provided in July, Rolls-Royce set out that a further restructuring charge of up to GBP 30 million would be taken in the second half of the year. GBP 20 million will be charged in 2015, with the remaining GBP 10 million taken in 2016, due to the timing of the actions taken, the company 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,” Mikael Makinen, Rolls-Royce, President – Marine, said.
“This is a fundamentally strong business, but we have to take decisive action to position it for future growth, with a structure that is simple, efficient and effective. At the same time we will sharpen our focus on the marine technologies of tomorrow by significantly increasing our current rate of investment in research and development. 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.”