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

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. It has nothing to do with Covid, let’s be very clear.

“Covid created a crisis, but the issue in hand has nothing to do with it.”

Erginbilgic, who was speaking at Rolls-Royce’s UK manufacturing site at Derby in a global address broadcast to staff, parts of which were seen by the Financial Times, also said “every investment we make, we destroy value”, adding that “[financially] we underperform every key competitor out there”.

The British engineering group is best known for its engines for Boeing and Airbus long-haul aircraft and RAF fighter jets, and propulsion systems for the Royal Navy.

Last night a spokesman for Rolls-Royce said that Erginbilgic “had been speaking with all our people about the need to significantly improve performance. He was honest about our financial underperformance compared with our peers, laid out his priorities for all of us and stressed the need for everyone within the business to work together in order for Rolls-Royce to succeed.

“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.”

I think that the point is to make world class engines. Last I checked, RR still do that.
A recent new program chose RR when other options were available.
I won't pretend to know what the fiscal issues that are referred to entail, but focusing on core competencies would seem to be the important message to send.

Now what could the "AE" possibly stand for ... ? :O
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They once had been in hot water before and returned stronger than ever with the Trent back then.

Harry Stonecipher syndrome?

“When people say I changed the culture of Boeing, that was the intent, so it’s run like a business rather than a great engineering firm.” - Harry Stonecipher, 2004.

A business does have to stay solvent to exist, but it requires careful adjustment, or the cure ends up being at least as bad as the disease.

I think you'll find the point is to turn a profit for their shareholders. With the shareprice having stagnated post-covid and post-brexit that is clearly proving difficult to do.

Allow me to translate: "YOU need to work harder so that I can receive a larger bonus".

But were still unable to make much money. They are completely dysfunctional with the world revolving around Derby - every decision is made in Derby and Derby comes first. Keep expensive people in Derby rather than cheaper people elsewhere. Send technicians flying the world from Derby rather than having local offices properly staffed. Keep the boys on their ex-pat assignments turn after turn without building local credibility and longevity.

It was a previous Chairman of RR who said that RR is a small Derby engineering form trying to do business globally. Its mindset is local, not global and the only purpose of overseas is to keep Derby in work. Everything is subservient to Derby and Derby is where the problems all lie.

That said, Singapore cut the umbilical, and has been highly successful - arguably more so than Derby as its not got the baggage.

What happened to their fan blade issue?

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.

Somewhat ironic given that the products in question are burning platforms.

This is the issue. I worked my socks off for a well known IT company in the 90's and Noughties. Weekends, evenings, nights, bank holidays, Christmas you name it.
What did I get? After 9 years and burn out I got made redundant.
My days of doing that are over.

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. :p
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)

They wisely ditched Hyfil in the early 1970s.

Technically Allison Engine but close enough...

In todays news which would not be a surprise to anyone who works there, it was stated in the Times that the Civil Aerospace business hasnt made a profit for years. This really isnt a surprise as it was the worst kept secret in the company.

When a certain Senior Exec (responsible for the design flaw which killed the 787 engine) was getting annoyed at being hauled over the coals reguslarly by those at HQ, he issued an email whoch stated in no uncertain terms that there was to be no information on 'performance issues' given to the HQ staff unless said information had been vetted by him first. Of course it leaked and he forgot that the company didnt revolve around him and not everyone reported to him so it becam widely known that civl were in a bigger mess and were hiding the issues. Did that individual suffer ? Nope - promoted, and the organisation that provided the real data to HQ was disbanded.

“every investment we make, we destroy value”

this was the stand-out for me - they buy/start a business and then it goes downhill...................... not a great advert for management..........

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. It's a tricky balance to strike but like all companies with defence and security arms, the factors underpinning "shareholder value" extend beyond headline financials and the new CEO won't be able to apply red-in-tooth-and-claw business principles without suffering consequences from HM Government.

[The fact that engine issues have just grounded the UK's fast jet training fleet probably isn't endearing R-R to the government right now, so it might not be the best time for the company to go looking for more commercial freedom, although one might also argue it to be a consequence of protectionism lowering engineering standards... a tricky balance for the Government too!]

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.

As an outsider, who has worked in many areas of commerce since I was 22: Those that mention the old thinking are probably on the nail. I have seen this in so many different companies. They just do not move into the 21st Century. Most famously Kodak, whose own technician developed the very first digital camera. This is why old companies die and get taken over.

The old guard always come to think that the company/political party/charity/whatever it is - is worth more, and is more important, than it's customers/voters or the people it was set up to serve. They always claim otherwise because they have not stood outside and looked in the windows.

I sit to be corrected.