ROLLS-ROYCE CONSULTS WITH EMPLOYEES ON FUTURE E...

20 November 2008

Rolls-Royce consults with employees on future employment

Rolls-Royce announced today that it is consulting employee representatives
about a proposed reduction of 140 jobs at its Assembly and Test facility in
Derby, UK, which forms part of the Group's Civil Aerospace business.

Today's announcement represents the first stage in a more general programme
aimed at matching the Group's capacity more closely with the expected load in
its facilities. The Group currently employs around 39,000 people globally, of
whom around 60 per cent work in the UK.

Rolls-Royce has been reviewing the possible impact of current economic
uncertainties, delays on individual programmes, such as the Airbus A380 and the
Boeing 787, and the benefits of the Group's continuing focus on efficiency.
While it is too early to be specific about the precise implications for the
number and location of job reductions, the Group's current assessment is that
in 2009 it will be necessary to implement job reductions across the various
sectors and functions of around 1,500 to 2,000 on a worldwide basis, including
the reduction announced today.

These proposals have no effect on the Group's 2008 financial guidance and the
costs in 2009 are expected to be balanced by the savings achieved in the course
of the year, as is the case in 2008.

These reductions account for around four per cent of the total workforce and
will have an effect globally. As the precise scale and location of the
reductions become clear, Rolls-Royce will enter into detailed consultations in
the relevant locations. It is possible that in some areas there will be little
or no impact.

To put these proposed reductions into context, Rolls-Royce announced in January
that it would continue its focus on efficiency by reducing by 2,300 during 2008
the number of staff working in overhead functions, a programme that is now
largely complete. To minimise compulsory redundancies, the Group reduced its
temporary workforce and, where possible, relied on voluntary severance, natural
attrition and avoided recruitment. It has continued to recruit to support
growth in key areas of the business and, importantly, maintained its commitment
to apprentice and graduate recruitment. Rolls-Royce will adopt a similar
approach in 2009 so as to mitigate, as far as possible, the impact of the
proposed reductions.

Sir John Rose, Chief Executive, said: "We are determined to maintain our focus
on cost reduction and competitiveness as the world economy enters a challenging
period. It is too early to determine the precise effects of the global economic
downturn and programme delays. However, we wanted to give all our employees an
early indication of the likely scale of the job reductions we expect in 2009."

Note to Editors

 1. Rolls-Royce, a world-leading provider of power systems and services for use
    on land, at sea and in the air, has over the last ten years established a
    strong position in fast growing global markets - civil aerospace, defence
    aerospace, marine and energy.
   
 2. At the end of September 2008 Rolls-Royce employed around 39,000 people in
    50 countries. Around 22,100 are employed in the UK, 8,250 in North America,
    6,900 in the rest of Europe, 780 in Asia, about 480 in the rest of the
    world and a further 550 on a range of international assignments.
   
 3. Annual underlying sales were £7.8 billion in 2007. New product development
    is carried out on a global basis with 50 per cent of new programmes
    developed outside the UK. Overall 55 per cent of the Group's 2007 annual
    sales came from services revenues and less than 20 per cent came from
    Original Equipment sales to the civil sector. The firm and announced order
    book at 30 June 2008 was £53.5 billion, an increase of 17 per cent from
    December 2007.
   
 4. The Group has businesses headquartered in a wide range of countries
    including the UK, US, Canada, Germany, Scandinavia and China. This global
    presence allows the Group to access long-term international growth
    opportunities with its technology, presence, partnerships and people.
   
 5. Rolls-Royce invests in core technologies, products, people and capabilities
    with the objective of broadening and strengthening the product portfolio,
    improving efficiency and enhancing the environmental performance of its
    products. Capital investments made by the Group over the last five years
    exceeded £1.3 billion. Sales per employee have improved by more than seven
    per cent compound over the last ten years.
   
For further information please contact:

Nicky Louth-Davies 
Director of Corporate Communications 
Tel: [phone]
[e-mail]

Mark Alflatt
Director of Financial Communications 
Tel: [phone]
[e-mail]