REUTERS/Danish SiddiquiRolls-Royce is bailing out its Marine division.
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Rolls Royce says the plant renovations will reduce its costs. “As the company evaluates its future and looks to remain competitive across the globe, Rolls-Royce is choosing the State of Indiana for this investment because Indiana offers the business-friendly climate needed to succeed”.
The investment is the largest the company has made in the United States since 1995.
ROLLS-ROYCE Holdings PLC (RR.L) may announce a reduction of 400 management jobs in its marine division this week, the Financial Times reported, citing people familiar with the matter.
Rolls said the low crude price has led to a fall in orders for the unit, which employs 5,800 staff in 34 countries.
Right now, there are 4,000 Central Indiana employees, with almost 1,500 at the Raymond Street facility.
Rolls-Royce marine president Mikael Makinen said: “After many years of strong performance through to 2013, led by good growth in the oil and gas sector, our order book and profitability have been adversely impacted by the sharp and subsequently prolonged drop in the price of oil”.
The company said the latest job cuts would generate full-year savings of £40 million with incremental benefits from 2016 onwards, and that it would now spread a previously flagged £30 million restructuring charge over this year and next.
Maintaining the profit guidance for the unit, the engineering firm Rolls-Royce said on Monday it would invest cost-savings into research and development activity to position for the future.
Last year, underlying revenue at the division was about 1.7 billion pounds, 59 percent connected with offshore oil and gas, according to the company.
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Rolls-Royce’s Chief Executive Warren East, who took up the role on July 2, is in the process of carrying out an operational review of the whole business, the results of which he will present on November 24.
