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Rolls-Royce to slash 4,000 jobs as it looks to save up to ?400m

Rolls-Royce will tomorrow announce it is slashing 10pc of its workforce – about 4,000 jobs – as chief executive Warren East aims to make annual savings of up to ?400m at the troubled engineering business.
The cuts will be focused on management, administration and support roles in the UK with core engineering jobs expected to escape the efficiency measures.
Mr East was parachuted into Rolls in 2015 after the company suffered a run of profit warnings. He was tasked with getting the business back on track and boosting Rolls’s profitability, which has lagged its rivals.
He has already cut out layers of Rolls’s bloated management, having previously said that the company was too slow to respond to changing markets because of company’s unwieldy structure.
In January Mr East announced another major shake-up, reducing the company from five divisions to three, and selling off the under-performing marine business. The company also employed restructuring experts Alvarez & Marsal to identify where savings can be made, and their findings are expected to form the core of the jobs cuts being announced.
Rolls Royce shares March 2017
The efficiency measures are at the top end of what analysts had been predicting, with the City scheduled to meet with the company’s management on Friday for a capital markets event where the cuts had been expected to be detailed. 
Pressure on Rolls to reduce costs has been increased by problems with its newest engine, the Trent 1000. Issued with it were first identified two years ago, with parts for the engine used on Boeing’s 787 Dreamliners wearing out faster than expected.
Rolls started a costly inspection and modification programme, which analysts had estimated could cost the company ?1bn in total. However, earlier this week Rolls revealed more engines were suffering similar problems than first thought, increasing the squeeze on the company’s balance sheet.
Rolls-Royce to slash 4,000 jobs as it looks to save up to ?400m

Rolls-Royce chief executive Warren East has already launched a simplification programme for the business 

Credit:
TOBY MELVILLE/Reuters
The company’s largest shareholder, US activist investor ValueAct, has also ramped up pressure for Rolls’s management to make savings. In March an agreement between Rolls and ValueAct, which they had signed when ValueAct took the stake two years earlier and which said that the shareholder would not interfere in the day-to-day running of Rolls, ended.
Combined, these factors have seen Rolls introduce cost cuts such as a ban on discretionary travel and it is seeking cheaper office accommodation for its London headquarters, leaving its established base in Westminster.
Mr East has said that he wants Rolls to generate ?1bn in cash by 2020. The company remains on course to achieve this despite its latest troubles.
A spokesman for Rolls declined to comment.
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