Rolls-Royce warns Brexit would hit firm at a critical time

Chief of British jet engine maker says EU membership benefits company and it is in its interests for UK ro remain in bloc.

The giant Rolls Royce turbines of the world's largest passenger aircraft, the Airbus A380. Torsten Blackwood/AFP

The Rolls-Royce Holdings chief executive Warren East has warned staff that a British exit from the European Union in a UK vote on June 23 would inhibit the engine-maker’s decision making at a critical time in its restructuring.

“The long-term consequences of leaving the European Union are not clear,” Mr East said in a message to employees posted on the London-based aerospace company’s website on Wednesday. “Uncertainty is unsettling for business as it limits any company’s ability to plan and budget for the future.”

Mr East at the same time acknowledged that opinion on whether to stay in the 28-nation bloc “is divided inside the Rolls-Royce population”.

“We have taken the public position that as a company Rolls-Royce believes our customers, suppliers and employees benefit from the UK’s membership of the European Union and that it is in the company’s interests to remain a member,” Mr East said.

Rolls joins businesses including the telecoms major BT Group, the textbook publisher Pearson and the weapons-maker BAE Systems in warning employees of the potential impact of quitting the EU. chancellor of the exchequer, or finance minister, George Osborne previously called on pro-EU businesses to speak up as the “Vote Leave” campaign gains ground in opinion polls.

About 23,000 people are employed by Rolls-Royce in the UK – half at its main factory in Derby, England – and a further 14,000 elsewhere in Europe, comprising 75 per cent of the company’s global workforce.

Mr East, who has previously written to investors detailing the company’s desire to remain in the EU, also highlighted Rolls-Royce’s reliance on more than 9,000 “critical” suppliers spread across Europe.

Prime minister David Cameron, who is leading the “Remain” campaign, said in a tweet that Rolls, one of Britain’s biggest exporters, had made it clear “that their staff & suppliers are #StrongerIN”.

Mr East is in the final phases of a restructuring programme aimed at reviving earnings hurt by lower demand for marine turbines and engines for business jet and some older wide-body models. He has already cut 200 senior management posts in two tranches and will announce the elimination of 300 more jobs by the end of the first half, he said on May 5.

Rolls-Royce forecasts that it will do no better than break even in the six months as 2016 earnings are skewed toward the second half following a slowdown in deliveries of the Airbus A350 jet, for which it supplies the engines.

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