Main Menu

Cuts were feared

Rolls-Royce axes 700 jobs at Inchinnan plant

Rolls Royce Inchinnan

Inchinnan will be hard hit by the cuts

Aerospace giant Rolls-Royce has confirmed that 700 jobs are to be axed at its Inchinnan factory near Glasgow Airport.

The company said it hopes the cuts can be achieved through voluntary redundancy. A further 1,500 are being cut at plants in the East Midlands, while more cuts elsewhere will take the job losses to about 3,000 in this first phase.

Staff at the Renfrewshire plant, which manufactures compressor blades and seals for planes, have been facing an uncertain future since the company announced plans to cut at least 9,000 jobs, mainly in the UK.

Rolls-Royce is looking at withdrawing its entire services capability from the Inchinnan site.

The company said: “Offering voluntary severance is an important step as we re-size our business to adapt to the impact of the Covid-19 pandemic on the aviation industry.

“At our Inchinnan facility, we have indicated that the likely number of impacted roles will be around 700, based on our immediate load reduction requirements.

Follow Daily Business on LinkedIn

“We hope to reach this number through the voluntary severance scheme that we have launched today with the support of Unite. These roles will be predominantly from our services team, which has seen a dramatic drop in demand since the start of the pandemic, and as a result we are considering withdrawing our services capability from the site entirely.

“We have briefed the Scottish Government and other local stakeholders on the business impact of Covid-19 on Rolls-Royce and are keeping them up to date as our consultation process progresses.

“This number of proposed job losses is a terrible prospect for the people and communities that are impacted, and we understand how devastating the news must be for everyone at the Inchinnan facility.”

First Minister Nicola Sturgeon told MSPs today that the government is working with the trade unions and she would ask the Economy Secretary Fiona Hyslop to set up a cross-party response to the announcement.

Speaking during FM’s questions in the parliament, she said that as far as financial support is concerned the government will look at all options, within the state aid rules.

SNP MP for Paisley & Renfrewshire North Gavin Newlands said: “The workforce at the Rolls-Royce Inchinnan base have been integral – both in the UK and abroad – to the success of the firm over many years.

Rolls-Royce

The company makes aircraft engines

“The job losses announced today is devastating news which will hit workers, their families and the wider community during these difficult times.

“Throughout the period since the proposed job losses were first announced, the Scottish Government has made clear many times that it is keen to sit down with Rolls-Royce and support the operation at Inchinnan in whatever way it can. That remains the case and it is vital that the firm engages meaningfully and in good faith to protect jobs and people’s livelihoods.

“Even at this late stage, there is still time for management to have substantive discussions with unions and the wider workforce about what action is needed to weather the current economic storm.

“There is no denying the unprecedented challenges the aviation and aerospace industry finds itself in during this health pandemic.

“However, those challenges are best met by a collective effort by management, workers and unions to map out a future that secures employment and potential long-term growth once we are through the worst of the current crisis.

“It is also extremely disappointing that since the start of the difficulties facing the workforce, not a single UK government minister has contacted me to discuss the future of the plant.

“I urge the UK government to roll up its sleeves and join in efforts to work out a strategy that encourages high-skill, high-value jobs to be safeguarded rather than allowing them to be slashed.”

Job cuts a response to aviation dip

Scottish Labour leader Richard Leonard wrote to the Prime Minister at the weekend demanding an industrial strategy to save jobs and to the company’s CEO Warren East asking him to examine other options to redundancies.

However, Mr East had already expressed his own regret at having to make such an announcement, describing it as “terrible news” for employees. The company said the cuts would help it save around £1.3 billion a year, enabling it to meet expected medium-term demand. 

Like many of its aerospace peers, it has had to adjust its cost base to a market which could be up to half the size in the next four years as a result of the coronavirus pandemic.  Airlines do not believe air travel will return to 2019 levels until at least 2023. 

The company last week lost its investment-grade status — held for the past 20 years — after Standard & Poor’s downgraded the company to “junk” because of “prolonged weak profitability” and expectations of materially lower cash flow from its engine service contracts.

Follow Daily Business on LinkedIn

The downgrade affects the terms on which it can borrow money, though the company said it would not trigger any short-term early debt repayments.

However, it could have an impact on the share price because of actions by institutional investors. Many large investors will have to sell their debt holdings in the FTSE 100 company as they are restricted to investing in investment-grade bonds.

Since the start of the year the company’s shares are down 60%, equal to £8bn in lost value.

Hedge fund manager Nicolai Tangen sold his 5.2% stake. 

Comment: The challenge facing Scotland’s new manufacturing institute just got harder



Leave a Reply

Your email address will not be published. Required fields are marked as *

This site uses Akismet to reduce spam. Learn how your comment data is processed.