RE: fly3 Dec 2020 12:18
On 20 May 2020 we announced a major restructuring, predominantly of our Civil Aerospace business, to achieve total annual pre-tax cash savings of at least £1.3bn by the end of 2022. As part of the restructuring we are reviewing our global footprint. Today we are providing an update to our people on further proposals from this extensive review.
First, we are proposing to transfer our facility and workforce in Hucknall, UK, into ITP Aero. Hucknall, which manufactures a range of aero-engine parts, will bring ITP Aero new capabilities and become a critical part of the enlarged business, helping to secure the future of the site. As part of ITP Aero, the Hucknall site will, in future, have the potential to unlock new growth and investment opportunities.
Second, we are proposing to consolidate the manufacture of aero-engine structures into ITP Aero. Due to the significant reduction in global demand for our products and services from commercial aviation customers, which is forecast to last several years, we must reduce our manufacturing capacity and cost base in order to protect our remaining workforce. ITP Aero, currently undergoing its own restructuring, offers a more cost competitive option than our existing structures facility in Barnoldswick, UK. We are commencing consultation on a proposal to close the structures facility on the site. While this will be hugely upsetting news for our colleagues in Barnoldswick, this does not mean we are closing our Barnoldswick site. Following our proposal in August to relocate part of our fan blade manufacturing, Barnoldswick will be the home of a product development and technical support centre for wide chord fan blades and continue to manufacture blades for a range of Defence and Civil Aerospace applications.
As announced alongside our half year results in August, we have identified a number of potential disposals that are expected to generate proceeds of more than £2bn in order to strengthen our balance sheet, and these include ITP Aero. Preparation work is under way and we will provide an update as appropriate. Any potential disposal is, of course, dependent on market conditions. Notwithstanding the outcome, ITP Aero is a key partner for Rolls-Royce and we will retain a long-term relationship with the business – including the operations we are today proposing to place within it – across our Civil Aerospace and Defence programmes. ITP Aero works with other large commercial and business aviation engine manufacturers and a disposal could unlock new growth and investment opportunities, including by enabling it to attract further work from third parties.
Third, we have today informed our colleagues in Inchinnan, Scotland, that our objective is to continue the manufacture of aero-engine turbine blades and compressors aerofoils in our facility there. We have signalled our intention to discuss with the Trade Union options to make the site more competitive, reduce operating costs and define the medium-term direction
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