Almost 4,000 British Rolls-Royce workers on Friday paid the price for the downturn in the global civil aviation industry since the Sept. 11 attacks heightened the fear of flying.
The aero-engine maker reacted to an expected US$1.4 billion hit on its core business next year by announcing plans for 5,000 redundancies among its 43,000-strong worldwide workforce. A further 1,000 sub-contracting staff will lose their jobs.
Just under half the 3,800 job losses in Britain will hit Derby, in the north midlands, the heartland of Rolls's aero-engines business where 13,000 people work, with the rest spread "unevenly" over Bristol in the south-west and East Kilbride and Hillington in Scotland.
The scale of the redundancies, coming on top of 1,000 already taking place this year, shocked union leaders, who accused the Rolls board of a panicky over-reaction and of failing to hold its nerve.
Sir Ken Jackson, AEEU leader, who laid that charge, urged the government to fight the war on two fronts: against terrorism and for jobs. Bill Morris, the TGWU leader, said: "There is little point in winning the military and political battle if we go on to lose the war in manufacturing."
City analysts also suggested that Rolls had seized on Sept. 11 as a pretext for pushing through more drastic cuts than warranted and pointed out that its rivals, US-based GE and Pratt & Whitney, were axing fewer jobs despite being more exposed to the dramatic fall in air travel.
GE, the world's biggest aero-engine maker, is laying off 4,000 workers while Pratt & Whitney, part of United Technologies, said this week it would get rid of 2,500. They are among the 200,000 jobs to go since airlines slashed routes, parked aircraft "in the desert" and postponed orders for new jets.
John Rose, Rolls's chief executive, angrily rebutted union charges of "using the current crisis in world affairs to do some housekeeping in order to raise the share price".
He said: "It is fair to say that that has not been said by a single union member who works at Rolls-Royce and has only been said by national union leaders who make their own judgments."
"We are working with the best data available to us to make our own judgment about what the future basis of our business should be and, over the past month, have talked to the airlines and aircraft manufacturers to form that judgment."
Squarely blaming Sept. 11 for the latest measures, which will save Rolls US$360 million a year, Rose said this year's profits should remain on track but next year deliveries of civil engines would be down 30 percent compared with 2001 and profits would be halved.
Rolls, which issued a profits warning last year, had appeared to turn the corner this year, reporting underlying first-half profits of US$275 million three weeks before Sept. 11. The civil aero-engines business, which reported a 40 percent rise in deliveries in the six months to June 30, contributed US$236 million of this.
This week Boeing, which has seen 50 order cancellations, said it expected to deliver just 350-400 new aircraft in 2002 compared with earlier forecasts of more than 500, and to build even fewer in 2003.
The more upbeat Airbus, its European rival for which Rolls supplies engines for a range of aircraft, reckons on building 300-400 next year, while Embraer, the Brazilian regional jet-maker and a key Rolls customer, has slashed next year's output by a third.
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