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Coronavirus: Firms warned on 'knee-jerk' lay-offs as Rolls-Royce job fears grow

Tom Belger
Finance and policy reporter
Reports say aeroplane engine maker Rolls-Royce is drawing up plans to slash up to 8,000 jobs. (Mel Evans/AP Photo)

Manufacturing firms have been urged not to make “knee-jerk” lay-offs as the coronavirus crisis has triggered mounting job losses.

The Unite union urged UK companies to “step back from drastic, short-term responses” by keeping on staff to protect British manufacturing capacity.

It comes amid reports aeroplane engine maker Rolls-Royce (RR.L) is drawing up plans to slash up to 8,000 jobs, in what could be the worst round of lay-offs in more than three decades at the company.

Shares in the engineering giant shed 6.7% on Monday morning in London after the report over the weekend in the Financial Times (FT), citing a company source. Demand for planes and parts has collapsed, as global lockdowns and virus fears have forced many airlines to scrap most of their flights.

READ MORE: EU factories’ record slump sparks worst lay-offs since 2009

A spokesperson for Rolls-Royce did not confirm the job cuts report to the FT. But the company told the paper it had promised its workforce details on how the “unprecedented” crisis would impact headcount by the end of the month. Consultation with those affected will follow.

"We have taken swift action to increase our liquidity, dramatically reduce our spending in 2020, and strengthen our resilience in these exceptionally challenging times. But we will need to take further action,” the statement said.

Steve Turner, assistant general secretary at the Unite union, said the union understood the challenges facing the sector.

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But he warned on Monday: “Right now we are asking Rolls-Royce, along with others across manufacturing, to hold firm and defer from short-term reactions that will both damage the economy and undermine our ability to emerge from this with job security and consumer confidence intact.”

He also said UK manufacturing was crucial to major public infrastructure and producing new technologies for dealing with climate change. The pandemic itself and shortages of personal protective equipment (PPE), ventilators, and car parts had highlighted “dangerous weaknesses” in UK manufacturing’s resilience, he added.

Eurozone manufacturing firms suffered a record slump on the closely watched purchasing manager' index (PMI) in April. (IHS Markit)

It comes as a closely watched survey of more than 3,000 manufacturers across the eurozone shows they suffered their bleakest month since the poll began in 1997.

The purchasing managers’ index (PMI) for eurozone manufacturers, published by data provider IHS Markit, showed output, new orders, exports and confidence all plunge at record rates.

It showed manufacturing employment levels dropped in April at the fastest rate since 2009.

Rolls-Royce has been approached for comment.

READ MORE: UK factories slash jobs in ‘worst month in recent history’