The sharp decline in oil prices has led Rolls-Royce to decide to further cut jobs in its Marine business as it looks to cut costs while increasing investment in research and development. Furthermore, Rolls-Royce President – Marine, Mikael Makinen, has also admitted that the prolonged decline in the price of oil has impacted them negatively in terms of orders and profitability.
To improve the company’s competitiveness globally, it has decided to further reduce corporate and administrative costs over a span of two years. This means reducing the company’s employees in the Marine business by as much as 400 – worldwide. In May, Rolls-Royce announced laying off as much as 600 employees involved in supplying technology and services to customers who operate naval, merchant and offshore vessels.
For the new round of job cuts, Rolls-Royce looks to take up a restructuring charge of £30 million during the second half of the year. Moreover, due to the time at which the said cost reduction initiative is implemented, the company will take £20 million of the charges in 2015 while £10 million will be taken in 2016. Following this cost reduction plans, the company hopes to achieve full year savings of as much as £40 million. Furthermore, most of these early savings will reportedly be invested into the company’s research and development activities.
The Rolls-Royce Marine business is currently operating in 34 countries with approximately 5,800 employees. The business has around 4,000 customers including 70 navies.