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Rolls-Royce plans to temporarily shut down its jet engine factories for two weeks this summer to preserve cash flow, marking the first time it has been forced to make such a drastic decision since becoming a listed company in stock market in the 1980s.
The aero-engine maker is consulting with unions and employee representatives in its civil aerospace division, which manufactures jet engine parts, on shutdown operation as it cuts costs to deal with a prolonged market slump in the aviation resulting from the coronavirus pandemic.
The division employs 19,000 people worldwide in countries like Germany and Singapore, although the majority – 12,500 – are based in the UK.
Rolls-Royce has also entered into discussions with UK unions on a separate target to permanently improve the productivity and efficiency of its civil aerospace operations in the UK by 10 percent. These are mainly focused on its historic engine production facilities in Derby, but also include smaller sites in Solihull, Tyne and Wear and Glasgow.
As the Financial Times reported last year, staff were first warned of possible temporary plant closures in October. The company has now fine-tuned its plans for a two-week shutdown this summer, though exact dates are yet to be finalized.
Rolls-Royce has confirmed that this is the first time since the 1980s that it has taken such cost-cutting measures, although factories regularly close at Christmas and its UK operations have been shut down for a week. last spring while the company introduced measures to comply with Covid-19 advice.
He acknowledged the closures would be “disappointing for our colleagues,” but said he intended to lessen the impact on their wages by spreading the cuts throughout the year.
Rolls-Royce is among companies that have used the UK government’s time off program since its launch last year, but said it would not take advantage of the job retention program to cover two-week shutdowns s it was extended by British Chancellor Rishi. Sunak. The leave program is to end in April.
The group is wondering how to overcome the deep and prolonged decline in aviation demand since the first wave of coronavirus lockdowns. Last year it announced it would cut at least 9,000 jobs out of its 52,000 employees to save £ 1.3bn a year by the end of 2022, including around 8,000 in the civil aerospace division. So far, it has made about 7,000 layoffs against that target of 9,000.
In January, the company warned that the cash outflows this year would be worse than investors and analysts expected, as new variants of Covid-19 would prolong the crisis in global aviation.
Rolls-Royce declined to comment on measures that could be involved in the 10 percent long-term productivity and efficiency gains, but said it had “now entered into complex and constructive discussions with the union on the way to achieve it ”.
News of the two-week summer shutdown was first reported by The Sunday Telegraph.
On Sunday, the CEOs of three of the UK’s largest airports described the crisis engulfing the aviation industry, saying Heathrow, Gatwick and Manchester collectively lose around £ 50million a week as the passenger numbers were decreasing, but their fixed costs such as commercial fares and policing remained the same.
In a Mail on Sunday article, Charlie Cornish, John Holland-Kaye and Stewart Wingate, managing directors of Manchester, Heathrow and Gatwick respectively, pleaded for more targeted financial support for the sector.
They called on the Chancellor to redistribute part of the £ 1.8bn returned to the government by UK supermarkets as “unnecessary relief from trade tariffs”, arguing that “most of the costs of operating an airport cannot be deactivated or reduced ”.
This article has been corrected to reflect the extension of the UK government’s leave program until the end of April.
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