Rolls-Royce to Restructure Further, Accelerates Marine Business Transformation

December 9, 20168:05 am385 views

Rolls-Royce announced plans of restructuring further last week, to accelerate the transformation of its marine business as a result of continued slowdown in the maritime industry. Some of the planned measures include streamlining of the senior management team, and simplifying the structure of business with a series of cost-reduction initiatives to reduce 800 more job roles worldwide. This move would result in estimated annualised cost savings of £45-50 million from mid-2017.

However, costs involved for this restructuring operation is estimated to be around £20 million, split between 2016 and 2017. As part of the programme, investments are also being proposed to establish an R&D centre for the development of new propulsion products, and an expanded services hub for Northern Europe, both in Ulsteinvik, Norway.

The organisational changes will also increase the strategic focus on developing further electrical and digital technologies, as the maritime industry shifts towards a more digital future – where Ship Intelligence plays a greater role.

These follow a series of cost reduction initiatives carried out over the past three years to improve the affordability and competitiveness of the Marine business. The proposed job reductions are in addition to the reduction of 1,000 employees announced in May and October last year. The Marine business currently employs around 4,800 people in 34 countries.

See: Bosses join hands to draw S’poreans to marine sector

Mikael Makinen, Rolls-Royce, President of Marine business, said: “The ongoing market weakness that has followed the dramatic fall in the price of oil continues to have an adverse impact upon our order book and profitability. We have made significant progress in transforming Marine into a far more agile and simplified business than we were and we have to take further steps to address our cost base.”

“Reducing our workforce is never an easy decision, but we have no option but to take further action beyond the changes we have made to date. This remains a fundamentally strong business, but we need to overcome the immediate challenges and focus our investments on the technologies that will shape our future growth.”

Warren East, CEO of Rolls-Royce added: “I am very supportive of Mikael and his team’s proactive efforts to optimise our Marine business in extremely challenging market conditions and at the same time to target investment on future opportunities. The actions being taken will enhance the competitive strength and resilience of the business in what remains an attractive market for Rolls-Royce.”

Also read: After 20,000 job cuts, world’s top shipyards brace for more

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