Company Vitae: Rolls-Royce

This most British of brands started out in luxury cars only to become a world leader in aero engines.

by MT Staff
Last Updated: 09 Oct 2013

Formative years Rolls-Royce was founded in 1906 by the Hon Charles Rolls, purveyor of horseless carriages to the gentry, and Henry Royce, a talented young engineer. The combination of Rolls' dosh and connections with Royce's technical know-how proved a winner and Rolls-Royce cars rapidly gained a name for being among the best in the world.

But it was in the air rather than on the ground that Rolls-Royce's future would be based. The firm made its first aero engine in 1914, but it was the Merlin of WWII that cemented its pre-eminence in the field, powering planes such as the Spitfire, Lancaster and Mustang.

In the late 1960s, however, the wings started to fall off. RR spent heavily on the development of a new engine, the RB211, for the Lockheed TriStar airliner. The engine was troublesome, the TriStar faced strong competition and RR suffered. In 1971, it had to be rescued, nationalised by the Heath government, as a result of which the car business was hived off in 1973 and is now owned by BMW.

Rolls-Royce was privatised in 1987, becoming the plc that we know and love today.

Recent history RR's position is built on consistent technical excellence - a relentless quest to make better products and sell more of them. Its Trent engines power versions of the Airbus A380 Superjumbo and the new Boeing Dreamliner.

Who's the boss? For the past 14 years, the low-profile Sir John Rose has been at the controls, turning Rolls-Royce from a mid-tier outfit into the world's number two aero engine manufacturer and boosting the order book from £7.6bn in 1995 to £58.3bn today. Rose is perhaps the outstanding industrialist of his generation, but he is about to retire. John Rishton, boss of Dutch supermarket Ahold and a former FD of British Airways, takes over in March.

The secret formula? The firm invests heavily not only in R&D but also in the skills and development of its staff, many of whom are RR lifers. As well as aero engines, it has diversified into marine propulsion systems, electricity-generating equipment and civil and military nuclear power technology. Only 20% of revenues derive from defence contracts, so it is less exposed to public spending cuts than many rivals.

Proudest moment RR's succession plan - slickly orchestrated by chairman Sir Simon Robertson - has so far gone without a hitch.

Don't mention Public relations. Rose is someone for whom communication with what an associate has described as 'lesser mortals' does not come easily. Perhaps under Rishton we will be treated to a few glimpses inside the RR boardroom.

Revenue: £10.4bn
Profit: £915m
R&D spend: £379m
Employees: 38,900 (2008)
All figures are for 2009, except where indicated

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