The British engineering company Rolls-Royce has unveiled a major reorganization plan to adapt to the shrinking demand amid the COVID-19 pandemic, including a global cut of at least 9,000 jobs.
The significant cuts — nearly a fifth of its global workforce of 52,000 — is expected to contribute around 700 million British pounds (about 858 million U.S. dollars) of savings to the company.
The impact of COVID-19 pandemic on Rolls-Royce and the whole of the aviation industry is “unprecedented”, and the activity in the commercial aerospace market will take “several years” to return to the levels before the crisis, said the company.
The job losses came as British labor market was severely hit by the novel coronavirus crisis, with the number of people claiming jobless benefit soared by 69.1 percent monthly in April.
In addition to the headcount reduction, the jet engine manufacturer also plans to cut expenditure across plant and property, capital and other indirect cost areas, to generate total annualized savings of more than 1.3 billion pounds (about 1.6 billion dollars).
“Governments across the world are doing what they can to assist businesses in the short-term, but we must respond to market conditions for the medium-term until the world of aviation is flying again at scale, and governments cannot replace sustainable customer demand that is simply not there,” said Warren East, CEO of Rolls-Royce.
Rolls-Royce is a major global aerospace power and propulsion systems provider, with China being one of its key strategic market, crucial supply chain hub and manufacturing base. In 2019, around 10 percent of its annual revenue was generated by its Civil Aerospace and Power Systems businesses in the Chinese market, according to Rolls-Royce China.