Rolls Royce revealed its plans of cutting approximately 800 jobs in its marine division to save around £50m a year in response to the decline in demand from energy and shipping customers.
The British manufacturing group has been cutting costs since 2013 while seeking to improve its marine division's competitiveness. Rolls Royce stated that the dismissals will cost £20m over the next two years, intended to save between £45m and £50m each year from the middle of 2017, BBC reported.
According to the group's chief executive Warren East, the actions being taken will develop the competitive strength and resilience of the marine division, which remains an attractive market for Rolls Royce.
Rolls Royce's marine division, whose main operations are based in Norway, employs 4,800 people and has suffered from a decline in demand for new equipment and lower maintenance revenues as customers use their vessels less than they used to.
The group said that the overhaul of its operations was expected to deliver cost savings at the high end of its £150m to £200m target. Its order book in the offshore oil and gas markets continued to be very weak even though the demand for its engines for extra-wide-body aircraft was strong, This Money reported.
While its long-term order book for 2017 remained at near record levels, the company added its performance in the year to date which is in line with the expectations it set out in November last year. "There's a steady progress in 2016 to date, bringing an upgrade in large engine production and implementing the first stage of the transformation program" said East.
Meanwhile, the Rolls Royce' marine division's president added that reducing their workforce is never an easy decision, but they have no option but to take further action beyond the changes they have made to date. It remains a fundamentally strong business, but they need to overcome the immediate challenges and focus their investments on the technologies that will shape future growth.
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