Continued low oil prices and reduced demand for its products is leading Rolls-Royce to cut 10% of its marine workforce by the end of this year, with half the 600 job losses coming from the company’s manufacturing base in Norway. 

The worldwide glut in oil is hitting the company’s North Sea customers hard. The price of Brent crude dipped below $56 bbl. in early April and this week was at $64, still far below the $100-plus averages from 2011 until they began to collapse in late 2014.

Rolls-Royce employs around 6,000 people in 34 nations in its marine business, building and servicing engines, drive and stabilizer systems, and other equipment, mainly for the offshore oil and gas industry. The company says the other 300 layoffs will be spread across its global operations, but it’s not clear how many could be in the U.S., according to Jonathan Webster, vice president for marketing and communications with the company’s North and South America marine operations.

“Exact details are still being finalized and will be communicated as part of the local consultation process in each market. These roles will mainly be in commercial marine, operations and headquarters, including management roles,” Webster said. “While the reductions will be global, around half will be in Norway. It's not known yet what material impact, if any, there will be on U.S. locations.”

Rolls-Royce has marine commercial service facilities in Galveston, Texas; St. Rose, La.; Fort Lauderdale, Fla.; and Seattle.

The job cuts will save Rolls-Royce 25 million pounds ($38.75 million U.S.) going into 2016. But the company says the move will have only a “broadly neutral” effect on 2015 profits.
“We are transforming our marine business and while we are making good progress on cost, the effect of low oil prices means we have to continue to look for further efficiencies,” Mikael Makinen, president of the Rolls-Royce marine division, said in a prepared statement. “It is never an easy decision to propose reductions in our workforce, but it is a sign of the challenging market in which we operate. We will work closely with employees and their representatives as we manage this change.

“The future prospects for the marine business remain bright,” continued Makinen, “and we are focused on maintaining our position as a technology leader, but we must drive further cost reduction today so that we are ready to grow tomorrow.”

It’s a second big hit for Rolls-Royce after 2,600 job cuts were announced in November for its aerospace division. Before the latest layoff warning the company was already striving to consolidate operations in the U.S., Europe and Asia.