page_title: Rolls-Royce Limited
section_title: RB211—the 1971 receivership and nationalisation
hierarchical_section_title: Rolls-Royce Limited / RB211—the 1971 receivership and nationalisation
caption_attribution_description: Rolls-Royce RB211 turbofan engine on display in Derby Silk Mill
context_page_description: Rolls-Royce was a British luxury car and later an aero-engine manufacturing business established in 1904 in Manchester, United Kingdom by the partnership of Charles Rolls and Henry Royce. Building on Royce's reputation established with his cranes they quickly developed a reputation for superior engineering by manufacturing the "best car in the world". The First World War brought them into manufacturing aero-engines. Joint development of jet engines began in 1940 and they entered production.
  Rolls-Royce has built an enduring reputation for development and manufacture of engines for defence and civil aircraft.
  In the late 1960s, Rolls-Royce became hopelessly crippled by the mismanaged development of its advanced RB211 jet engine and the consequent cost over-runs, though it ultimately proved a great success. In 1971, the owners were obliged to liquidate their business.
context_section_description: The amalgamations and disappearances of the 1950s and 1960s left a small number of major airframe manufacturers based in only a few countries. The competition for the very large contracts to supply their engines grew intense. Expensive research and development became vital. Real profits came from the maintenance contracts which might peak a whole human generation later. By the 1980s it was said that each generation of aero engines cost around 10 times that of its parent.
  At this time Rolls-Royce employed 80,000 people and it was Britain's 14th largest company in terms of manpower. It was generally known that problems had recently arisen requiring government support of the RB211 programme as one outcome of intense financial competition with Pratt & Whitney and General Electric for the original RB211 contract.
  In the new year of 1971 financial problems caused largely by development of this new RB211 turbofan engine designed and developed for Lockheed Aircraft Corporation's new L-1011 TriStar led, after several government-provided cash subsidies, to the recognition Rolls-Royce had no resources left and it voluntarily entered receivership 4 February 1971.
  There were said to have been acrimonious telephone conversations between US president Richard Nixon and the British prime minister Edward Heath but these were subsequently denied. Responding to questions as to how the situation could have arisen the chief executive advised that in their calculations they were guided by the success of their estimates in the launching of their Spey engine.
  Had the government simply nationalised Rolls-Royce it would have been unable to avoid the obligations to Lockheed.
  The situation was handled in the usual manner with the assets being sold for cash, in this case to the government, leaving the massive liabilities to be dealt with by Rolls-Royce Limited using the funds realised by the sale. However the government would not fix a purchase price for the assets until the situation became clearer because without a continuing business many of them might be worthless. In the meantime the government would use the assets to continue the activities of the aero-engine, marine and industrial gas turbine and small engine divisions that were important to national defence, the collective programmes with other countries and to many air forces and civil airlines. A new company (1971) was incorporated that May to purchase substantially the whole of the undertakings and assets of the four divisions of Rolls-Royce connected with gas turbine engines. The original company, Rolls-Royce Limited, was placed in liquidation on 4 October 1971.
  Asking their own government for support Lockheed warned that a switch to either Pratt & Whitney or General Electric engines would delay production by an extra six months and might force Lockheed into bankruptcy.
  The receiver negotiated with Lockheed which consented to waive damages allowing the plant to be shut down. The continuing support of the trade creditors was also achieved by the receiver in spite of threats to demand immediate payments in full and to withdraw supplies. The first asset sold was British Aircraft Corporation bought equally by Vickers and GEC. The receiver floated Rolls-Royce Motors in 1973.
caption: RB211 Derby museum display.
  Forty years after nationalisation its versions still powered around half of the long-haul airliners in service
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