UK: The Rolls-Royce model. (3 of 4)

UK: The Rolls-Royce model. (3 of 4) - In the light of the trend towards joint ventures it is not without irony that one of the benchmarks of Rolls' remarkable recovery was the breaking of a joint venture agreement with GE four years ago. The deal was tha

Last Updated: 31 Aug 2010

In the light of the trend towards joint ventures it is not without irony that one of the benchmarks of Rolls' remarkable recovery was the breaking of a joint venture agreement with GE four years ago. The deal was that Rolls would give the Americans a share in its RB211 adaptation for the Boeing 757, while GE would let Rolls in on developing a giant engine with a thrust of over 60,000lbs.

The venture had been set up by Lord Tombs's predecessor as chairman, Sir William Duncan, against a background of quiet in the industry. But by the late '80s the strategic importance of high-thrust engines was becoming clear. If Rolls was to stop being a poor relation to its American cousins then it had to be in the mega-thrust market in its own right. The final impetus to make the break, explains Stuart Miller, managing director of aerospace, came from customers. "They wanted another RB211, not a GE engine," he says.

The decision paid off. GE was left high and dry on the 757, leaving Rolls and Pratt to divide the spoils. The British took 50% of the market and 75% of all customers. At the same time Rolls further developed the RB211 series, without which it would not have the Trent today.

These gains in market share have not come easily. Rolls knows all too well the danger of letting costs run wild and has worked relentlessly since the mid-1980s to drive them down. As the smallest of the big three it is starting with a handicap when it comes to economies of scale and to the resources that it can devote to the vital area of research and development.

R and D has been set at a ceiling of 8% of turnover, the figure which Robins feels the company can sustain while remaining competitive. Last year the figure was exceeded due to expenditure on the Trent. R and D spending rose from £161 million in 1989 to £237 million and was a major factor behind the 1990 fall in profits.

To husband the precious R and D resources, a philosophy of cost consciousness has been instilled into engineers across the company. Simultaneous engineering - with design engineers and production engineers working together from the start of a project - is being introduced.

"In the old days", says Miller, "there was a constant rivalry between departments. The production people would challenge the designers: 'If you can draw it, we can make it.'" Now they work together to produce the most cost-effective solution. It is a considerable culture change and one on which Miller, formerly engineering director and a Rolls Royce veteran of 37 years' standing, is eminently well placed to comment. "An engineer's training encourages him to go for perfection," says Miller. "In a business sense you have to make do with an 80 or 90% solution."

Technology has also played its part in cutting costs. Computer simulation, for example, means a large proportion of testing can be done on screen, with enormous effect, among other things, on fuel bills. Rolls recently acquired a Cray supercomputer and has also been improving communications between the military and civil sides to help technology transfer. The Trent engine uses technology developed in the EJ200 project, the engine that will power the new European Fighter Aircraft.

But the most visible form of cost cutting has undoubtedly been on the labour side. In the past seven years the workforce has been reduced by a third to 45,000. Last year 800 jobs went in military and in January 1991 a further 1,500 cuts were announced in civil. "At the end of the '60s we were hideously overmanned, so if anything went wrong we were in trouble instantly," reflects Robins. Even now, he confirms, cuts in the order of 10,000 are on the cards over the next five to six years.

In parallel with this there has been considerable investment in machinery and systems and a streamlining of production facilities. A steel fabrication plant at Hartlepool has been closed and the Parkside factory in Coventry is set to go by the mid-1990s.

But the pride and joy of Rolls' manufacturing is the AIMS (Advanced Integrated Manufacturing System) factory at the main works in Derby. Opened by Mrs Thatcher five years ago, it is one of the most sophisticated of its kind in the country - aptly housed in the low brick building where Henry Royce first built cars in 1908.

From the outside it looks quite unassuming; unchanged by the years, even down to the outline of the words "Motor cars", still discernible on the wall where the letters were removed to leave just "Rolls-Royce Engines". But inside compressor discs and turbine wheels are made and stored in a highly automated process, managed and monitored from a computer control centre on the shopfloor.

Workers in the factory log each job onto and off the computer system via terminals dotted about the site, and eight unmanned, automated vehicles glide around, like sensible bumper cars (that never collide, of course) delivering jobs from one process to the next and then into an automated storage facility.

The system is not cheap. The original investment was £4 million (none of the machinery is British, incidentally) and operating costs are also high. But the system has paid for itself through increased quality and lower lead times. "We make some components in parallel," explains Jim Partington, AIMS control supervisor. "There's one where Kawasaki is given 100 days and we get 40."

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