Rolls-Royce today announced changes to its senior management, as the British-based manufacturer looks to simplify its organisational structure and trim the fat from bloated operations. The decision means the company must make major cuts to its senior management division, and more are expected to follow as part of the company’s wide-ranging restructuring programme announced last month (November 12).
The announcement follows a line of five profit warnings and marks an important first step towards reviving its diving share price
“The changes we are announcing today are the first important steps in driving operational excellence and returning Rolls-Royce to its long-term trend of profitable growth,” said the Rolls-Royce chief executive Warren East in a statement. “This is a company with world-class engineering capability, strong market positions and exceptional long-term prospects.”
The announcement follows a line of five profit warnings and marks an important first step towards reviving its diving share price, down 40 percent this year. A new low-oil price environment, together with cuts to defence spending and slumping demand for wide-bodied commercial aircraft, have upset the company’s momentum. Still, executives are hoping the latest measures will go some way towards weathering the storm.
Tony Wood, Head of Aerospace and company veteran, and Lawrie Haynes, who heads the land and sea division, have decided to leave – though both will stay on into 2016 to see the transition through. Heads of Rolls-Royce’s five divisions will now report directly to East and a new chief operating officer is to join from the outside next year.
For East, who joined in July, the aim is to keep a close eye on costs by accelerating decision-making and doing away with unnecessary middlemen. A further update on the programme will arrive in February of next year, as the company looks to make savings of £150-200m per year.