Rolls -Royce - "a burning platform" - new Boss

[NutLoose]

The place to me appeared to be full of managers and not workers.

[dera]

Originally Posted by KeepItStraight

The last time I heard the "Burning Platfrom" statement from a new CEO it was that usless Stephen Elop the Microsoft stooge when he took over Nokia.

That speech is often listed as one of the worst and most destructive corporate speeches ever.

[WideScreen]

Originally Posted by Asturias56

“Our intention throughout this process is to be as open and transparent with our people as we can be. Although it is regrettable someone has leaked details of Tufan’s message, we will continue to speak with our people first, whenever that is possible given our obligations as a publicly-listed company.”

How naive to assume a controversial on-line broadcast, challenging a lot of people, will not leak .....

Originally Posted by Asturias56

The new boss of Rolls-Royce has likened the engineering group to a “burning platform” and described the company’s performance as “unsustainable”.

Tufan Erginbilgic, who took over as chief executive from Warren East at the start of the year, told staff “we do have a burning platform, not because I say so but because of what I am going to share with you”. The former BP executive said the company’s performance was “unsustainable”, adding that “it is at a level [at
which] it cannot continue. Rolls-Royce has not been performing for a long, long time.
.....

Looks to me, the classic, old-story again, where corporate leadership does demand beyond what the company/people is/are able to deliver. Ignoring that operating on the edge of the technical capabilities is not a place where output/results can be demanded, though proper corporate results are the "consequence" of cooperative working together to sell what the company is able to create.

So many good companies have been destroyed by that leadership approach. And now we see another leader promoting this disastrous strategy.

Or so to say, a derivative of "Oh, by just thinking about it, I did declassify documents". Dreaming "leaders".

[WideScreen]

Originally Posted by pax britanica

Are we just too small a country with too small an industrial base to make complex high tec stuff like Aero engines profitably ?
......

Well, a small country doesn't have to be bad, though the big back-country (EU) just got slaughtered with Brexit, to be replaced by prosperous far away green fields (which more and more show to be non-existing). Not to forget, slaughtered in such a way, that a lot of harm has been done in the relations with that big back-country. All on the fake promises of improved and affordable healthcare, which has now (unsurprisingly) collapsed, seemingly beyond the brink of repair in a near future.

[Busbert]

Sounds like the Jack Welch “shareholder value” paradigm. That worked not very well at Boeing. Pouring profits into share buybacks rather than investing in the future. Outsourcing to the lowest bidder and getting to the point where no 787s were delivered for a year due to production quality issues, and the corporate reputation stained by the 737max fiasco.

[Asturias56]

" Pouring profits into share buybacks "

profits and Rolls Royce are not synonymous -

[Busbert]

Originally Posted by Asturias56

" Pouring profits into share buybacks "

profits and Rolls Royce are not synonymous -

Agreed, but hard talking market friendly CEOs are the first step. To be fair all of the major jet engine OEMs have had problems with maturity/durability, but the Trent 1000 was the gift that kept on giving. Hopefully the Trent 7000 and XWB don’t go the same way.

[petit plateau]

Originally Posted by dera

That speech is often listed as one of the worst and most destructive corporate speeches ever.

The particular phrase was an accurate description of Nokia's situation. That they went on to make possibly the worst decision of all with respect to how to resolve it does not mean the diagnosis was wrong.

Originally Posted by pax britanica

Are we just too small a country with too small an industrial base to make complex high tec stuff like Aero engines profitably ? We have Airbus of course but bizzarely, as it so important to AI its not British owned . BAe systems deciding (another short term view) that there was more money in robbing the Government on Military equipment than being part of the worlds biggest civil aviation manufacturer. This coming in a week where it was revealed that UK car production has fallen by half since you know what and is now on a par with the strike ridden mid sixties , failure of the much hyped battery plant and failure of the space launcher test. Where now for UK engineering, desperately sad.

We all know that in a post-Brexit environment the UK engineering sector is stuffed, just as almost everything else in the UK economy. Anyone who can is fleeing the b*****g p******m. This particular speech was, once again, an accurate description of RR's dilemma.

[pax britanica]

Widescreen and PP , I certainly share your views about the self inflicted disaster we currently face (tho it appears the City isnt as badlye ffected as 'proper' indesutries . My comment about size was that it is relaly ahrd for a small country in global terms despite qa moderate popualtion size will sruggle up agains t the USA and China and the Eu. Debatebly one could add india to this list as its military is probably bigger than the UK with Brasil and Indonesia soon to follow.

These kinds of CEOs are the commercial world equivalent of Trump (who of course has a foot in both camps) johnson , Putin, Erdogan , Bolsanaro .. They all play the same game adapted to the style and circumstance of their countries . it looks to me like he is just there to be a hatchet man. He is from outside aviation although he was senior figure at BP and the Chair has no knowledge of anyhting technically complex . Same ol' mantra, shareholder value, delivering, driving etc ... All comes down to one thing mass redundancies and scaling back investment to bump up the short term while another genuinely world scale UK entity slides into history.

[paulross]

Originally Posted by petit plateau

The particular phrase was an accurate description of Nokia's situation. That they went on to make possibly the worst decision of all with respect to how to resolve it does not mean the diagnosis was wrong.

Indeed, Nokia's problems started long, long before Stephen Elop arrived. By then Nokia, like Kodak, was too far gone to survive.
Disclaimer: I was working for Symbian and we had just been acquired by Nokia a couple of years before. I remember very well when that memo hit.

Originally Posted by petit plateau

We all know that in a post-Brexit environment the UK engineering sector is stuffed, just as almost everything else in the UK economy. Anyone who can is fleeing the b*****g p******m. This particular speech was, once again, an accurate description of RR's dilemma.

And RR got on the the wrong side of Brexit that cost them £4.4bn with their GBP/USD exchange rate hedge

[petit plateau]

Originally Posted by pax britanica

Widescreen and PP , I certainly share your views about the self inflicted disaster we currently face (tho it appears the City isnt as badlye ffected as 'proper' indesutries . My comment about size was that it is relaly ahrd for a small country in global terms despite qa moderate popualtion size will sruggle up agains t the USA and China and the Eu. Debatebly one could add india to this list as its military is probably bigger than the UK with Brasil and Indonesia soon to follow.

These kinds of CEOs are the commercial world equivalent of Trump (who of course has a foot in both camps) johnson , Putin, Erdogan , Bolsanaro .. They all play the same game adapted to the style and circumstance of their countries . it looks to me like he is just there to be a hatchet man. He is from outside aviation although he was senior figure at BP and the Chair has no knowledge of anyhting technically complex . Same ol' mantra, shareholder value, delivering, driving etc ... All comes down to one thing mass redundancies and scaling back investment to bump up the short term while another genuinely world scale UK entity slides into history.

Indeed, so small countries need to get into bed inside the local hegemon. Or pursue a web of alliances that create even more interdependency and greater loss of sovereignty than being inside the local hegemon. The UK has been trying to have its cake and eat it ever since 1945. Something tells me that it is even less possible now than ever.

Originally Posted by paulross

Indeed, Nokia's problems started long, long before Stephen Elop arrived. By then Nokia, like Kodak, was too far gone to survive.
Disclaimer: I was working for Symbian and we had just been acquired by Nokia a couple of years before. I remember very well when that memo hit.

And RR got on the the wrong side of Brexit that cost them £4.4bn with their GBP/USD exchange rate hedge

Yes, I remember that period very well indeed, for much the same reason.

RR is now permanently on the wrong side of Brexit. If you are not at the table you are on the menu. At this stage RR is poorly performing prey.

[Mr Mac]

Originally Posted by Lonewolf_50

How Wallstreetian. (Yes, I understand, any business intends to make a profit. No sheet, Sherlock, and all that)

I gather from the OP that this was an internal communication which leaked out.
I have had the opportunity to receive a variety of Corporate trickle down info of a similar character.

I guess that he has close personal experience with burning platforms.
I do hope he and the team are able to keep it all together. I'd rather not see RR go the way of the plains buffalo.
For DavidReidUK (I am guessing AE meas American Export, but that's a guess from seeing the C version depicted on a V-22)

Lonewolf50
That platform was a home grown disaster. BP picked up the tab due shall we say US legal practices. Interestingly when Piper Alfa went up somehow the settlement was less how shall we say large ! Interestingly with regards RR my wife employed one of their H&S managers as H&S Director and the comments which I just read hear re Derby centric sound about right. However she has since moved to another large defence contractor.

Cheers
Mr Mac

[WB627]

I'm sure P&W or GE would love to acquire RR, do they have someone on the inside trying to facilitate this?

[dera]

Originally Posted by petit plateau

The particular phrase was an accurate description of Nokia's situation. That they went on to make possibly the worst decision of all with respect to how to resolve it does not mean the diagnosis was wrong.

Yes, it was accurate, but a horrendous and destructive idea to communicate it in that way. He pulled the rug under all existing products, without having a replacement plan in place. He made a bad situation way worse.

And then of course finished the job with the whole MS disaster deal.

[Asturias56]

" do they have someone on the inside trying to facilitate this?"

probably a significant number of the investors?

[pax britanica]

Pratt (Raytheon) and GE are both part of massive US conglomerates. Would buying RR help them with Euro contracts but any take over would result in closing down projects RR has that comepte with the new owners product line , unless they ahve soemthign truly exceptional. So lots of job losses and another bit of UK Plc in foreign hands.Unlike the US companies with their immense Mil contracts thats not viable in UK in terms of supportign a global enterpise .The Amricans have 'Military Industrial Complex supporting a huge airforce and navy ours is more of the scale of a Saturday market , scale size of country relative size and sophistication of military .

Ways that might avoid mass reducndancies would included

Would a Chinese company be interested , they want to build airliners well the most complex bit is the engines and buying RR would give China Aviation inc a real leg up. Would it be allowed, we would probably have to ask the Cousins that one .

I dont think Airbus would buy it since OEMs have never really made engines

Tragedy if this goes further down the slippery slope

[Mr Mac]

PB
I am pretty sure UK Govt would not allow a Chinese take over of RR. Airbus also I don’t think would be interested partly because of not what they do, but also I am sorry Brexit. One of the reasons for this is Brexit so why knowing this would you buy it?

Cheers
Mr Mac

[Lonewolf_50]

Originally Posted by pax britanica

Unlike the US companies with their immense Mil contracts thats not viable in UK in terms of supportign a global enterpise .The Amricans have 'Military Industrial Complex supporting a huge airforce and navy

That MIC also buys, and has bought, Rolls Royce engines.
In other news, the switch from .45 ACP to 9 MM under a NATO standard went to Beretta. (Has it been 40 years, really?)
Our Army recently bought a Eurocopter/Airbus helo for training at Fort Rucker.
Our Navy recently bought a Leonardo helicopter for basic helicopter training.
I could do on, but I think you are being selective in your outrage.

I sincerely hope RR does what it needs to in order to remain RR and produce excellent engines.

[GrahamO]

Originally Posted by Easy Street

If R-R reduces or cuts its ties to the UK then it risks losing its guaranteed flow of defence investment, which is only justifiable on the basis of preserving domestic jobs, expertise and industrial capacity

Agreed, however the civil aerospace is the issue. They can keep the defence bit as its profitable and well run. The challenge is a 'new operating model' for civil aerospace and sadly a big chunk of dead weight is in Derby. I know its not nearly as simple as my suggestion, however shrinking Derby on future engine generations and building in Singapore might offset the dea weight. In RR the belief that Derby is the hub of the world is at the heart of the problem.

Take 'Digital' as an example - a large potential opportunity for data based revenues and services. Derby staff were literally giving it all away 'free with the engines' rather than treating it as a revenue stream for the future - because people in Derby only knew how to sell big spinning hunks of metal as they have done for decades. If you could have seen the Digital hub in Deby you would hav laughed. First, having a digital hub in Derby is like having a beach ball stand in the middle of the country. Few 'digital' experts will relocate to Derby - its not exactly a Silicon Glen or Valley. Then if you saw the building it was based in, your eyes would be out on stalks. I had the pleasure of a visit a few years ago and while the inside was very 'modern', the outside was literally a rotting brick building complete with leaking gutters and downpipes - and it HAD to be in Derny. Nobody would let it be in somewhere high tech, digital with a world class reputation - like Singapore !.

Defence makes money and can survive, as could the power business but it is repeated failures to break the Derby dead weight of civil that is at the heart of its issues. Make Derby competitive and RR have a chance. And it needs to start with the top 2 layers with the first line as they all need to go and no longer be shuffled around as 'its their turn'.

[Lonewolf_50]

Originally Posted by Mr Mac

Lonewolf50
That platform was a home grown disaster. BP picked up the tab due shall we say US legal practices.

My cousin worked for BP for over 20 years. Out of Houston.
He'd worked a few projects on Deepwater Horizon, but was not on it when that went down.
He quit BP less than a year later, and he was dead serious when he shared his reasons with me: it was due to how the company reacted, internally, to that cock up.

He had intended before that to work for them until retirement. He chose to look elsewhere based on how their corporate culture manifested itself.
Your apologia does not sit well.
Granted, the overreaction by the sitting Administration was a mess, but that's a topic for elsewhere.