Cloud over industry as Rolls axes 2300 jobs

The aero-engines maker, seen as a UK champion among global industrial companies, is cutting swathes of its white-collar workers at management, professional and clerical staffing levels.

The company refused to say where the cuts will come, but it is likely most will be in Britain - bad New-Year news for as many as 1500 Rolls-Royce staff in the UK. Almost 60% of Rolls' 39,500 workers are based in Britain.

More than half of those - 12,500 - are at its Derby manufacturing base, with another 3500 in Bristol.

Jobs are also likely to go at Rolls' head office, across the road from Buckingham Palace, where some 100 people are employed.

Much-fêted chief executive Sir John Rose has passed the job of handling the cull to the group's chief operating officer Mike Terrett.

Making the announcement, Terrett said: "We are determined to create a leaner and more agile support structure, better-suited to the global markets in which we operate. The investments we have already made in new management systems will help us deliver this simplified organisation.

"Rolls-Royce will continue to focus on ongoing cost reduction and productivity improvements as the business grows."

Rolls admitted the job cuts come amid a worsening outlook for the company, in which it looks increasingly exposed to the weak dollar and soaring commodity prices. The cuts, which insiders are stressing will not affect engineering or manufacturing staff tied up delivering a £35 billion order book, are the first since 5000 workers got their cards in late 2001 as a result of the aviation industry slump that followed 9/11.

The company said: "The reductions focus on overhead and support functions. The group will continue to recruit graduates, apprentices and those required directly to deliver growth.

"Rolls-Royce has a strong track record of improving sales per employee and productivity, and has made significant investments across the business to achieve these gains. This has under-pinned the group's success in global markets and enabled it to generate skilled employment.

"Rolls-Royce has also invested substantially in strengthening its internal management capability through the introduction of new process controls and data management systems.

The company added: "As a result of this investment, there is now scope to achieve further cost reductions through simplifying the organisation of management, professional and clerical staff.

"These actions will also help the group to mitigate external headwinds such as increasing raw material costs and the weak US dollar."