Rolls-Royce is currently in the middle of a turnaround plan aimed at cutting costs and increasing profit

Brexit: Rolls-Royce urges UK employees to remain

The chief executive of Rolls-Royce has told his British staff that the aerospace and industrial power engineering group is better off in the EU.

CEO Warren East warned that leaving could result in some investment decisions being put on hold.

"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," East said in a letter to the group's 23,000 staff in Britain.

Rolls-Royce joins many other big companies, including telecoms group BT and airline easyJet, in throwing its weight behind the campaign to remain in the bloc.

The company warned that an ‘out’ vote, or Brexit, could result in it delaying decisions like whether to invest in a new aero-engine testing facility at its plant in Derby, northern England.

"We're making investment decisions all the time about where to place different parts of our operation," he said.

"Uncertainty created by Brexit puts a lot of those decisions on hold and that pause is something that our US competitors don't have to cope with."

Rolls-Royce is one of Britain's biggest manufacturers but has fallen behind the US-based General Electric in recent years, with the American rival outperforming Rolls on the margins it makes from aero-engines.

The British company is now in the middle of a turnaround plan aimed at cutting costs and increasing profit, after its bottom line was hit in the last two years by cancelled orders from oil industry customers and a slowdown in demand for the high-margin servicing it provides for older aircraft engines.

Last year, it made a number of cuts in order to save between £150m and £200m annually which involved simplifying processes and systems and cut a number of managerial positions in March. 

Any delay to its investment plans, such as the new testing facility in Derby, which would be similar to a £65m facility recently built in Germany, could upset the pace of that turnaround.

"Uncertainty is what we can't cope with," East said.

In the letter to staff, East also said that whatever the outcome, Rolls-Royce would remain committed to Britain, which counts on Rolls-Royce for approximately two per cent of its exports.

Rolls-Royce employs 14,000 people in continental Europe, which it said accounts for a third of its revenues, and is home to many of its major customers including Airbus and Lufthansa.

Earlier this week, a survey of cyber-security professionals suggested that the UK’s ability to protect itself against cyber-attacks won’t change if the country opts to leave the EU.

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