SerpApi.Org
Rolls-Royce has warned Andy Burnham that his Government must back a £3bn plan for new short-haul jet engines or put 40,000 UK jobs at risk.
Tufan Erginbilgic, the company’s chief executive, said on Tuesday that Labour should pledge financial support to help Rolls-Royce build engines for the next generation of jets being developed by Airbus and Boeing or risk it moving production abroad.
The Rolls-Royce engine programme would create 40,000 jobs, among the best-paid manufacturing roles in Britain, he said.
But while Rolls-Royce wanted to build the new engines in Britain, Mr Erginbilgic said it was also exploring funding agreements with foreign governments that could see the company produce overseas.
“We would like to do it in the UK because of our origin,” he said. “Do we have other options? Yes. We are a business, a global company. I am paid to do the right thing for the company.”
Germany in particular is thought to be keen to secure more work on the engines.
With the two manufacturers expected to select engines for the jets in the next two years, Mr Erginbilgic said the support package needed to be in place soon if Rolls-Royce is to win the contracts.
Rolls-Royce is understood to have been closing in on a funding deal before Sir Keir Starmer resigned as prime minister. This raised concerns that it may need to make its case again to Mr Burnham.
Mr Erginbilgic said he was encouraged by the appointment of John Healey, the Chancellor of the Exchequer, who he suggested was familiar with Rolls-Royce and its agenda, having previously served as defence secretary.
“Obviously there are some different people but the same Government, so in that sense I’m hopeful,” he said at the Farnborough air show.
Mr Erginbilgic said the plan to produce engines for planes set to replace the Boeing 737 and Airbus A320 presented the biggest opportunity for British industry in decades.
Missing out on the chance to build the new engines would squander an opportunity that might not present itself again for another 15 years, he warned.
‘Our competitors are fully funded’
Pratt & Whitney (P&W) and an alliance between General Electric and France’s Safran control the engine market for single-aisle airliners.
Mr Erginbilgic said they were benefiting from levels of government support that Rolls-Royce could only dream of.
“Everyone made this like, wow, this is exceptional. It is not. Competitors, some of them, are running the next generation programme fully funded,” he said.
“There are only three companies that can play in this space, and two are incumbents; they get government funding, three or four times as much as I do.”
Mr Erginbilgic said that in seeking to reenter a market that it abandoned 15 years ago, Rolls-Royce also faced a vastly bigger bill than its rivals.
“For us to enter this, we will have to spend much more than they will because I have to develop the product and industrialise it. So I am asking for some contribution.”
The former BP executive, who described Rolls-Royce as a “burning platform” after his arrival as chief executive, said the firm was continuing efforts to secure an industrial partner to help develop the new engine.
P&W, with which it previously worked, is seen as the most likely candidate, though he said discussions were ongoing with “multiple parties”.
“For us to enter into this, we will have to spend a lot more than they will because I have to develop the product and industrialise it. So I am asking for some contribution as governments normally do.”
