Rolls-Royce Plc

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Rolls-Royce Plc

65 Buckingham Gate
London SW1E SAT
United Kingdom
(071) 222 9020
Fax: (071) 222 9020

Public Company
Incorporated: 1884 as F.H. Royce and Company
Employees: 61,000
Sales: £3.51 billion (US$5.09 billion)
Stock Exchanges: London
SICs: 3724 Aircraft Engines & Engine Parts; 3728 Aircraft Parts & Equipment, Nee; 3511 Turbines & Turbine Generator Sets; 3519 Internal Combustion Engines, Nee; 3559 Special Industry Machinery, Nee; 3799 Transportation Equipment, Nee

Rolls-Royce Pic is a British aero-engine maker supplying advanced engineering products for civil and military uses. The company’s two main divisions are its aerospace group, producing gas turbine engines for civil and military aircraft, and its industrial power group, which designs and builds power generation, transmission, and distribution systems worldwide.

The origins of Rolls-Royce date back to its founder, Sir Frederick Henry Royce, born in March 1863 in Lincolnshire. His rags to riches story began when as a youth he went to London to sell newspapers for W. H. Smith on a street corner. In 1872, the year of his father’s death, young Henry found himself in financial straits and augmented his newspaper selling job with work as a telegraph messenger. Five years later Royce got a job as an apprentice in a railway works near Peterborough, where he learned the basics of modern engineering. In 1880, he graduated to becoming a tester with the Electric Light and Power Company in London, and he studied the principles of electrical engineering in his spare time. In 1884 Royce and his friend Ernest Claremont began a small electrical and mechanical engineering workshop, F. H. Royce and Company, on Cooke Street in Manchester.

Business was slow and difficult at first. But before long, the company became known for its electrical dynamos and cranes. Sales for the company rose from £6,000 in 1897 to £20,000 in 1899. That year, the company’s name was changed to the Royce Company, and its capital base was increased to £30,000 to allow a new factory to be built at Trafford Park, Manchester.

By 1902, the nascent motorcar industry in Britain caught Royce’s eye. He bought a secondhand French Decauville, stripped it down to its parts, and studied the vehicle. Then he set about building his own. The result was a two-cylinder, ten horsepower model not much different from the Decauville. The first model produced from the Cooke Street works emerged in 1904, in time to catch interest from another Decauville enthusiast of the day, Charles Rolls.

Born in 1877, Charles Stewart Rolls came from a more privileged background than Royce. After studying at Eton and Cambridge, he traveled around the Continent in the early 1890s, developing an interest in the motor car, which was then becoming popular in France. In 1903, once back in Britain, Rolls became a motorcar dealer. He sold mostly continental models, but with his dealership in fashionable Brook Street, London, and a repair shop in nearby Fulham, Rolls was coming to know the British car market well.

Rolls’s interest in becoming a dealer of British automobiles led him to Royce’s new line. The two men met, and a deal was finally struck for C. S. Rolls and Co. to become the exclusive dealer for Royce. An agreement between the two men, dated December 23, 1904, stipulated all cars sold by their arrangement were to be called “Rolls-Royce.” Four models went into production: the twin cylinder, ten horsepower; the three-cylinder, 15 horsepower; the four-cylinder, 20 horsepower; and the six-cylinder, 30 horsepower. All the vehicle engines shared a series of parts—pistons and rings, valves, connecting rods, springs and bearings, among others.

In 1905, the first year of production, Rolls-Royce’s four types of vehicles ranged in price from £395 to £890, and were therefore purchased only by the wealthy. Expansion of the motorcar market at this time tended to focus on innovations in engine design. In 1905, Rolls-Royce introduced its eight-cylinder, V-8 engine, regarded by motoring enthusiasts as innovative for the smoother, quieter ride it allowed.

In 1906 Rolls-Royce introduced the 40/50 model, or the Silver Ghost, named for its metallic appearance and its engine that was “quiet as a ghost.” Orders for this and earlier models climbed steadily that year, and this brought about the expansion of the company to a new factory in Derby. To fund the new plant, a subscription of new shares worth £100,000 was completed on the stock market in December of 1906. The 1906 prospectus listed a new name: Rolls-Royce Limited. The subscription named Royce as chief engineer and works director, and Rolls as technical managing director. Ernest Claremont was appointed to chair the company.

The Derby factory opened on July 9, 1908 amid much pageantry. Proof that the new Silver Ghost was to be a success came in 1911 when the Indian government ordered eight new models for use by King George V and his entourage during the Delhi Durbar that year.

Around this time, Rolls began to distance himself from the car company as both his fame and outside interests grew. He resigned as technical managing director and became a consultant to Rolls-Royce in April 1910. Three months later, Rolls was tragically killed when his Wright biplane crashed. As a symbol of mourning, the intertwined “RR” logo on the Rolls-Royce radiator plate was changed from red to black. Soon thereafter Royce fell seriously ill from exhaustion, and he spent much of 1912 convalescing on the continent. In time, Royce took a home in the south of France and reduced his shop floor work at the Rolls-Royce factory in Britain to conserve his health.

Day-to-day responsibility of Rolls-Royce Limited then fell to Claude Johnson, who reaffirmed the long-time company commitment to producing and perfecting one model. For a company building luxury cars, the benefits of military procurement beginning at the outbreak of the First World War were not immediately apparent. But, in 1914, Rolls-Royce found itself in demand to produce chassis for armored fighting vehicles, and Rolls Royce cars soon became widely used as staff cars for the British Army.

During this time Rolls-Royce was also called upon to design aircraft engines to help with the war effort. The company’s association with aviation propulsion had begun earlier. In fact, the original 1906 agreement between Rolls and Royce had mentioned in the first paragraph that the company had a wide mandate to provide propulsion on land, at sea, and in the air. Furthermore, Royce had served as a consultant to the Royal Aircraft Factory at Farnborough. However, outside of this early interest in aviation, which Royce shared with Rolls, actual production of aero engines didn’t begin until the onset of the World War I.

In early 1915, Royce led a team of engineers, including A. G. Elliot, chief assistant, in working out a design. Within three days of the war’s outbreak, Royce was pouring over plans for a 200 horsepower aero engine. Some of the technology—crankshaft, connecting rods, geartrains—were borrowed from the Silver Ghost motorcar engine. But more pistons were required; 12 in all. And so was born the 60 degree VI2 engine that became the prototype for all machinery produced by Rolls-Royce after 1918.

Testing of a 225 horsepower aero engine had begun at Derby. By 1916, the engine went into production. It was named the Eagle and was put into wartime service beginning in 1916 at 250 horsepower in size. By 1918, the Mark VIII form had risen in size to 365 horsepower. Two other engines, the Hawk and the Falcon, had been designed by Royce from his home in the south of France and relayed to his production team in Derby for manufacture. In total, 5,000 Rolls-Royce aero engines were made during the First World War. By the late 1920s, the company derived more profit from continuing to make aero engines than it did from making cars.

Producing aero engines also had applications for developing motorcar engines. In 1924, for example, Rolls-Royce introduced front wheel brakes to its cars, as well as power assistance through a gearbox driven servo. The postwar years also signaled a departure from the company’s practice of producing only one car model. In 1922, the 3.5 litre, 20 horsepower model was introduced. In 1925, the “New Phantom” succeeded the Silver Ghost. While its larger seven litre engine had overhead valves rather than side valves, the chassis and the running gear were the same as those used on the Silver Ghost.

Over the next ten years, Rolls-Royce continued to manufacture automobiles for an increasingly exclusive and wealthy clintele. In 1931, the company purchased Bentley Motor Ltd., a consistently undercapitalized English manufacturer of high-performance automobiles. Royce, who was conferred a baronetcy in 1930, died in 1933.

Just before the outbreak of World War II, the Phantom II was replaced by the Phantom III. The new model was driven by a V12 engine, the most powerful yet. Without Royce to oversee its introduction, however, the Phantom III production had been expensive. This led in 1937 to the company’s consideration of rationalizing its design and production facilities to contain expanding operating costs.

Before his death in 1933, Royce had set about designing a new generation of aero engines that surpassed 1,000 horsepower in size. The result was the PV12, a 27 litre engine eventually named the Merlin. The Merlin was first used by the Royal Air Force in 1937. Two years later, the aero engine could maintain 1,000 horsepower to 16,000 feet. Impressed with its design and output, the Royal Air Force agreed to help fund the development of three fighter planes designed around the Merlin—the Fairey Battle Bomber, the Hurricane, and the Spitfire. All performed with memorable accuracy in the famed Battle of Britain during the Second World War. Innovations to the engine during this time ensured it could attain 1,000 horsepower at twice the original altitude, 36,000 feet, by 1944. The engine’s operating ceiling grew to 47,000 at the war’s end as well.

During the war, Dr. A. A. Griffith at the Royal Aircraft Establishment was recruited by Rolls-Royce to design an innovative contrafan engine for the company. Other inventions by Rolls-Royce engineers included the early gas turbine engine for aerospace travel designed by Stanley Hooker and Frank Whittle in 1940.

In 1945, Ernest Hives, general manager of Rolls-Royce, decided that the future of the company lay in continuing to produce aero engines, and that the next frontier would lay in gas turbine engines, signaling an immediate cessation to the production of the piston turbine engine. Activity during the Second World War had greatly expanded Rolls-Royce. Factories at Crewe and Glasgow, Scotland had been opened. By 1945, the company employed well over 50,000 people, and car production was moved from Derby to Crewe, so that the Derby facilities could work almost exclusively on developing the gas turbine aero engine, particularly for the civil aviation industry.

An early customer of the Merlin engine was the Canadair DC4M, a Canadian-built aircraft. The introduction of a military engine in a civil aircraft took some tinkering before it was done successfully. Rolls-Royce used its experience to judge just how different commercial engine expectations were from military ones.

In 1953, Rolls-Royce introduced the Dart propjet engine for the Vickers Viscount. This new engine had a centrifugal design and had taken over from the Merlin 60 series of engines. The last Dart engine was built in 1986, producing nearly 40 years of production. The last Merlin, on the other hand, was built 16 years after the first one.

Rolls-Royce also introduced the turbojet engine in the form of the AJ65 model, or the Avon. Beginning in the 1950s, it powered such aircraft of the day as the Canberra, Hunter, and Lightning. The company’s second wholly civil aero engine was the RB141, or Medway, launched in 1959. It served the BEA and BOAC airlines for a few years before it was replaced by the Spey, a smaller version. Besides being used in the BAC One Eleven, Fokker F28, and Gulfstream II and III, the Spey made its way across the Atlantic into the American LTV A7 military aircraft.

By the end of the 1960s, Rolls-Royce was facing increasing competition from American aero engine makers Pratt & Whitney and General Electric. To maintain its technological edge, Rolls-Royce introduced the Tay, successor to the Spey. Developing new aero engines, however, consumed much time and money. So much so that in February 1971 the company faced financial collapse and was subsequently nationalized by the British government.

To reduce costs, the company spun off its carmaking division into a separate company, Rolls-Royce Motor Cars Ltd., a subsidiary of Vickers Pic. The new company, operating under license to Rolls-Royce Ltd, continued the use of the Rolls-Royce name and the distinctive RR symbol.

At the same time, development of the RB211 engine under the engineering leadership of Sir Stanley Hooker, continued apace. By 1972, the RB211 went into production for use in the Tristar aircraft. It has since been utilized in Boeing 757s and 747-400s, the latest generation of civil aircraft, and through continued improvements provides 65 percent more thrust than the original engine model introduced in 1972. In 1987, Rolls-Royce announced that 75 percent of customers for the new Boeing 757 airliner had chosen the RB211 engines for propulsion.

On the military engine side of operations, Rolls-Royce took part in the three-nation Turbo-Union RB199 engine development for the Tornado aircraft during the mid-1980s. The company also provided Pegasus vectored-thrust engines for the British V-Stol Harrier aircraft, used primarily by the Royal Air Force.

Rolls-Royce engines have also been used in marine crafts. The year 1987 saw the 100th industry RB211 engine used in land-based and off-shore installations, mainly by the oil and natural gas industries in drilling operations. Furthermore, as of 1988, more than 25 naval forces worldwide were powering their vessels with Rolls-Royce gas turbine engines.

In May 1987, the British government refloated Rolls-Royce on the London stock market, securing more than two million shareholders in the process. Many were from overseas, primarily Americans.

By the end of 1988, a more hopeful business climate produced an order book for Rolls-Royce of £4.1 billion, compared with the £2.7 billion a year earlier. Sales for the company were slightly down, however, on 1987 figures, as was the operating profit at £333 million.

In 1988, the company launched the RB211-524L civil turbofan engine. In addition, Rolls-Royce signed an agreement to provide the European Fighter Aircraft, a three-member European military production project, with the EJ200 engine. The company had a 33 percent stake in the project.

After its refloatation, Rolls-Royce set about diversifying away from its sole emphasis on aero engines. To that end, in May 1989, the company merged with Northern Engineering Industries Pic (NEI), which designed and constructed capital plant and equipment, particularly for the power generation industry. The merger brought Terry Harrison, managing director of NEI, and Dr. Robert Hawley, managing director of operations at NEI, to the Rolls-Royce board.

That year Frank Turner, director of civil engineers at Rolls-Royce, welcomed the diversification from NEI which ensured the company would now derive 35 percent of its sales from non-aero engine business. He commented: ‘Through the sixteen years of state ownership, we were constrained … in obtaining approval for anything new. In effect, our gun arm was strapped. We found ourselves only able to react to the initiatives of our competitors, and then only when it was very late in the day.”

The company announced in 1989 the formation of a joint venture between NEI and Asea Brown Boveri, the Swiss-based engineering group. The venture, NEI ABB Gas Turbines Ltd, was to be based in Newcastle in northern England. In the same year, Rolls-Royce launched its next generation of technology, the Trent engine, to pick up where the RB211 series left off. The first orders went to wide-body aircraft, such as the McDonnell Douglas-11 and the Airbus 330. Boeing subsequently announced it would carry the Trent engines on its 767-X aircraft.

In 1990 Lord Tombs, chairperson of Rolls-Royce, spoke of the possible consequences of the approaching world recession, and disruption to the global airline industry from the unfolding Persian Gulf conflict, commenting that “the industrial climate in the UK is a very difficult one. Much … depends on the international economic situation after the resolution of the Gulf conflict and upon the health of the airline industry.” The next year saw a worsened economic climate for Rolls Royce. The worldwide recession deepened, and airline passenger travel fell, hitting the fortunes of airline carriers and causing a decrease in orders for aircraft. The mining and engineering industries also slumped, affecting the company’s fortunes similarly.

Sales for Rolls-Royce in 1991 fell 4 percent to £3.51, but pretax profits fell more sharply to £51 million, compared with £176 million a year earlier. At the same time, the company’s order book rose to a record £6.6 million. Additional orders were made for the Trent engines to go into new Boeing 777s bought by Thai Airways International and Emirates.

As Rolls-Royce looks to the future, an end to the world recession would naturally benefit the company’s engineering endeavors. Regarding aerospace, reduced defence spending worldwide will adversely affect the sale of engines to military aircraft companies. Growth in the civil aviation industry remains uncertain. While the commercial airline industry has recovered from the effects of the Persian Gulf conflict, it remains ailing under the weight of excessive debt loads and forced restructurings. Nevertheless, the company’s share of the civil aviation market grew from ten percent at the time of its refloatation in 1987 to 23 percent at the beginning of 1993. And its research and development side is gearing up to supply the market for second-generation supersonic travel anticipated to begin by the turn of the century.

Principal Subsidiaries

Deeside Titanium Ltd; Rolls-Royce Associates Ltd; Rolls-Royce Business Ventures Ltd; Rolls-Royce China Ltd; Rolls-Royce Far East Ltd; Rolls-Royce France Ltd; Rolls-Royce India Ltd; Rolls-Royce Leasing Ltd; Rolls-Royce Plant Leasing Ltd; Sawley Packaging Company Ltd; Stresswave Technology Ltd; Cooper Rolls Ltd; Rolls-Royce Turbomeca Ltd; Turbo-Union Ltd; Turbine Components Australia; Eurojet Turbo GmbH; IAE International Aero Engines AG; Cooper Rolls Inc.