Rolls-Royce Holdings PLC is planning to shut down jet engine factories in its civil aerospace division this summer due to the drop in demand caused by the COVID-19 pandemic.
A report in The Telegraph on Saturday said the move was due to the “significantly reduced” workload resulting from the global pandemic. The two-week closure will affect all 19,000 staff within the company’s civil aerospace division.
Pay reduction spread throughout year
The Telegraph added that exact dates for the shutdown had not been finalised but staff had been informed they would lose pay for the two-week period with the reduction spread throughout the year to ease the impact of the shutdown on employee income.
Rolls-Royce is not planning to use the government’s furlough scheme to pay wages during the shutdown, even if the furlough scheme is extended beyond the end of March.
Furlough option would “not be within spirit of scheme”
A Rolls-Royce spokesman told the Telegraph: “Unilaterally claiming furlough for all employees across the UK civil aerospace business in a pre-planned way is not consistent with the intent – nor is it, we believe, within the spirit – of the scheme, as workload is not impacted across all areas.”
Sources within the company told the Telegraph the shutdown was not because Rolls was close to clearing its order backlog, but “about saving money by not working at low volumes, which would be uneconomic.”
The Telegraph reported that the company had been in talks with unions, including ongoing negotiations with Unite, with the aim of achieving a 10 per cent improvement in efficiency and productivity. Rolls-Royce has agreed not to enact any further job cuts until its current redundancies finish in early 2022.