Rolls-Royce said this morning that it plans to cut up to 2,000 jobs next year, thanks partly to continuing delays to the new Airbus and Boeing planes. AstraZeneca is also having a rotten week: yesterday the pharma giant saw £4bn wiped off its share price, after it was forced to issue a profit warning. Now it’s admitted that it plans to shut three of its European factories and axe 1,400 jobs in the next five years. All of which will only deepen the gloom about the job market...
Rolls-Royce boss Sir John Rose said today that the engine-maker intends to shed somewhere between 1,500 and 2,000 jobs in 2009, equivalent to about 4% of its workforce. The good news – for Little Englanders and government officials, at any rate – is that less than a tenth of these job cuts will be in the UK, even though nearly two-thirds of Rolls-Royce’s workforce is based here. Although unfortunately the same can’t be said of BAE Systems, which said today that it’s cutting 200 jobs at its UK factories.
Both Rolls-Royce and BAE are suffering from a slowdown in government defence spending – when you’re having to spend every penny in the public coffers bailing out our biggest banks, there’s not much left over for 'tooling up'. But in the case of Rolls-Royce, delays to the Airbus A380 and Boeing 787 projects are proving just as costly – no new planes means no need for its engines. Then again, Rose always has run a pretty tight ship; back in January, he announced plans to cut up to 2,300 jobs before 2008 was out, so today’s announcement is really more of the same.
AstraZeneca is also worried about falling sales, although for slightly different reasons. Big pharma is usually considered a safe bet in a recession – people will always need drugs, after all. But generic drug makers are queering the pitch: AstraZeneca admitted yesterday that Israeli company Teva’s generic (i.e. rip-off) version off its biggest-selling asthma drug (which has been approved in the US) could slash its profits by £600m, should its legal challenge fail. And there are also worries about its pipeline, after its new lung cancer drug disappointed in its latest trials. Taken together, this was enough to wipe 11% off AstraZeneca’s share price yesterday.
Today’s cuts are another clear sign – as if we needed it – that UK plc is starting to bite the bullet and face up to just how tough things could get in 2009. There’ll be more news like this before the year is out...
In today's bulletin:
Britons not dropping and still shopping
Another 3,000 jobs to go at Rolls-Royce and AstraZeneca
Don't be greedy, be succeedy
Have dinner with Leighton and Rose on the LSC
Competition: Win two FREE business class flights with bmi