Rolls-Royce is planning to temporarily close its jet engine factories for two weeks this summer to save money, marking the first time it has been forced into such a drastic change since it became a listed company in the 1980s.
The aircraft engine manufacturer is consulting with unions and employee representatives in its civil aerospace division, which makes parts for jet engines, on how shutdowns will work while cutting costs to deal with a prolonged collapse in the aviation market due to the coronavirus pandemic.
The division employs 19,000 employees globally in countries like Germany and Singapore, although the majority – 12,500 – are based in the United Kingdom.
Rolls-Royce also began negotiations with British unions on a separate target to deliver a permanent 10 percent improvement in productivity and efficiency in its civilian aerospace operations in the United Kingdom. These are predominantly focused on their historic engine production facilities in Derby, but also include smaller locations in Solihull, Tyne and Wear and Glasgow.
As reported by the Financial Times last year, the team was first warned of possible temporary plant closures in October. The company has now refined its plans for a two-week summer stoppage, although the exact dates have not yet been finalized.
Rolls-Royce confirmed that it was the first time since the 1980s that it took such a step to cut costs, although factories routinely shut down at Christmas and its UK operations were interrupted for a week last spring, while the company was introducing measures to comply with Covid- 19 guidelines.
He acknowledged that the stoppages would be “disappointing for our colleagues”, but said he intended to reduce the impact on his wages by spreading the reductions over the year.
Rolls-Royce is among the companies that have been using the UK government’s license scheme since it launched last year, but said it would not use the job retention scheme to cover the two-week closings if it was extended by the British Chancellor Rishi Sunak. The license scheme is due to expire in April.
The group has struggled to overcome the deep and prolonged drop in aviation demand since the first wave of coronavirus blockades. Last year, it announced that it would make at least 9,000 job cuts from its 52,000-person workforce to save £ 1.3 billion annually by the end of 2022, about 8,000 of which would be in the civil aerospace division. So far, it has made about 7,000 layoffs against that 9,000 target.
In January, the company warned that cash outflows this year would be worse than investors and analysts had expected, as new variants of Covid-19 extended the global aviation crisis.
Rolls-Royce declined to comment on what measures may be involved in the long-term 10 percent productivity and efficiency gains, but said it “has now started complex and constructive discussions with the union on how this can be achieved”.
News of the two-week summer stoppage was first reported by The Sunday Telegraph.
Chief executives at three of the UK’s largest airports on Sunday spelled out the crisis that engulfed the aviation industry, claiming that Heathrow, Gatwick and Manchester were losing about £ 50 million a week as passenger numbers fell, but their Fixed costs, such as commercial tariffs and policing, have fallen continued the same.
In an article for the Mail on Sunday newspaper, Charlie Cornish, John Holland-Kaye and Stewart Wingate, the top executives at Manchester, Heathrow and Gatwick airports respectively, begged for more targeted financial support for the sector.
They asked the chancellor to redistribute part of the £ 1.8 billion that was returned to the government by UK supermarkets in “unnecessary reduction in business fees”, arguing that “most airport operating costs cannot be disabled or rejected ”.
This article has been corrected to reflect the extension of the UK government’s license scheme to the end of April.