Rolls-Royce, that in January unveiled plans to restructure its business on Thursday said it will let 4,600 workers go over the next 24 months.
Around a third of these roles, predominantly in the UK, are expected to leave by the end of 2018. The programme is expected to gain further momentum through 2019, with full implementation of headcount reductions and structural changes by mid-2020.
Rolls-Royce said the restructuring into three customer-focused business units is aimed at creating smaller and more cost-effective corporate and support functions and reduce management layers and complexity, including within engineering.
Commenting on the restructuring process, Chief Executive Warren East said, “we have made progress in improving our day-to-day operations and strengthening our leadership, and are now turning to reduce the complexity that often slows us down and leads to duplication of effort.”
He added that the changes will enable the company to deliver over the mid and longer-term a level of free cash flow well beyond our near-term ambition of around £1bn by around 2020.
East noted that the company does not expect the restructuring to lead to any reduction in the skills and capabilities required to run the current programmes.
The total cash cost of the restructuring is expected to be £500 million ($671.6 million) which includes the cost of redundancies and required systems investments to facilitate the programme.
These cash costs will be incurred across 2018, 2019 and 2020 and, given the one-off nature of the restructuring programme, the company’s statement reads, noting the full-year net cost savings from this restructuring are expected to reach a run rate of £400 million per annum by the end of 2020.