News of further job cuts at the Rolls-Royce Ansty plant has come as another blow for workers at the site. Sadly it wasn’t a complete surprise as the firm had announced some 2,600 job cuts recently and workers were waiting to hear where the axe would fall.

It’s correct to say that Rolls-Royce faces a number of major headwinds in terms of military defence expenditure cuts, a perceived global slowdown, appreciating currency, and sanctions on Russia which will impact on its business there.

But it needs to be noted that the cuts announced at its Coventry Ansty plant go beyond simply reducing capacity and indicate that RR is actually shifting some of its turbine activities out of the UK – in particular to its operation in Virginia, in the United States.

This will enable the firm to reduce currency exposure re sterling and potentially tap into a lower cost environment. But in so doing questions are left hanging over the viability of what’s left at Ansty, and whether RR has been completely open with its workers given the steady flow of bad news for the site over the last few years.

RR management recently said that the firm’s free cash flow will decline to around £350m this year, a figure that is less than half the previous forecast. Despite that, RR remains in a robust position. The forward order book at half year stood at over £70bn. Net cash at the interim stage was £1.2bn. This position may have deteriorated in the second half but there are no worries about the state of RR’s balance sheet.

Nevertheless, Rolls Royce recently said that profits would be flat next year. This suggests that all is not well with the global economy, and that conditions are deteriorating. The firm has also said that US and EU trade sanctions placed on Russia are having a serious adverse impact, with order delays and cancellations for Rolls Royce especially in its Nuclear and Energy / Power Systems divisions.

Currencies have also ‘gone the wrong way’ for the firm. A one percent movement in the average US$ rate affects underlying revenue and profits at RR on an annual basis by £15m and £2.5m respectively, while a one percent movement in the average rate of the Euro impacts on underlying revenue and profits on an annual basis by £40m and £4m respectively. RR expects that this adverse currency momentum is likely to continue.

In addition, the firm has been damaged by defence spending cuts in the US, UK and Continental Europe, a one off product quality charge in the marine business, lower volume, and higher restructuring and research and development costs.

All RR can do is to improve efficiency, hence the job cuts. That may or may not be inevitable given the current environment, but the shifting of jobs overseas is alarming. The firm no doubt has a logic for doing this in terms of hedging currency risks and seeking lower energy costs, but it should be remembered that RR still gets substantial backing from the UK state via military orders and through the state’s holding of a ’Golden Share’ in the firm which effectively protects it from hostile takeover.

We’ve seen a steady drip drip drip of bad news from RR on Ansty. Back in 2013 some 378 jobs were cut, with another 140 announced last week. That leaves 300 or fewer workers at Ansty and there must be serious question marks about the viability of the plant. RR needs to come clean on its view of the plant longer term and to be much more transparent about communicating with its workforce.

Meanwhile, every effort needs to be made to retain the highly skilled RR workers losing their jobs and help them find new work in those parts of the regional economy – whether aerospace or automotive – that are growing. While RR has a good track record of helping workers find new positions within the firm, this is far less likely in the context of major job cuts at the firm.

The success of the region’s wider manufacturing base should mean that many of these workers will be able to use their skills in other companies. Agencies such as the Learning and Skills Council and Jobs Centre Plus may have a key role to play again in helping workers move on quickly.

* Professor David Bailey works at the Aston Business School.