Rolls race: Germany’s plan to court the UK’s engineering icon

Rolls-Royce Eyes Major Investment in Next-Generation Jet Engine

Rolls-Royce is planning a significant investment of £3 billion to develop a new Ultrafan engine prototype designed for narrowbody aircraft.

International Collaboration and Competition

At a recent ceremony, a German government official signed a partnership agreement with senior Rolls-Royce leaders, celebrating a joint commitment to advancing the future of aviation. Dietmar Woidke, president of Brandenburg, expressed enthusiasm about the deal, which highlights the region’s growing reputation as a hub for small jet engine innovation, thanks to substantial investments from Rolls-Royce over the past decade.

Now, Brandenburg is aiming for an even greater role, hoping to attract more of Rolls-Royce’s advanced engine development work—and potentially draw key industrial assets away from the UK.

Germany’s Strategic Push

German officials have recently intensified efforts to secure a larger share of the UltraFan project, offering attractive subsidies to encourage Rolls-Royce to expand its Dahlewitz facility’s involvement. The Dahlewitz site, near Berlin, has already been instrumental in developing the UltraFan’s innovative gearbox.

This push comes as Germany faces mounting pressure from a surge of Chinese automotive imports, threatening its traditional manufacturing sectors. Meanwhile, Rolls-Royce is weighing its options, balancing the desire to keep development in Britain with its responsibility to shareholders.

Industry insiders note that while Germany is already involved in the UltraFan program, the extent of its future participation remains uncertain. A shift of investment and expertise abroad would be a significant setback for the UK’s industrial ambitions and could result in the loss of valuable technological know-how.

Return to the Narrowbody Market

Rolls-Royce is considering re-entering the market for single-aisle aircraft engines, a segment it exited over a decade ago. This absence caused the company to miss out on the success of popular models like the Boeing 737 and Airbus A320. However, the scalable design of the UltraFan demonstrator offers a pathway back into this lucrative sector.

Government Involvement and Industry Impact

Under CEO Tufan Erginbilgic, Rolls-Royce is seeking substantial government support for the UltraFan project, with senior UK officials, including Sir Keir Starmer and Chancellor Rachel Reeves, making high-profile visits to the company’s Derby headquarters. The UltraFan engine promises to boost efficiency by around 10% compared to current models and can be adapted for both narrow and wide-body aircraft.

Experts also see potential military applications for the new technology, such as enhancing air tanker performance or enabling more compact fighter jet engines. In an era of global uncertainty, maintaining sovereign aerospace capabilities is increasingly vital.

Germany’s Aerospace Ambitions

Germany has played a pivotal role in the UltraFan’s development, with Dahlewitz engineers collaborating on the gearbox and producing the Pearl series of business jet engines. The German government is now lobbying for an expanded role in future UltraFan components, a move that could be controversial in the UK, where sites like Derby currently handle critical design and manufacturing tasks.

These high-value aerospace jobs are spread across the UK and are crucial for exports and research. Losing them to overseas facilities would have significant economic and political repercussions.

Aviation as a Strategic Industry

According to Sander Tordoir, chief economist at the European Centre for Reform, Germany’s traditional industries are under threat, making aviation an increasingly important sector. The German Aerospace Industries Association reports that aerospace employment rose to 120,000 in 2024, up from 105,000 a decade ago. Airbus remains a cornerstone of the German aviation sector, but the country lacks a homegrown manufacturer of complete commercial jet engines—a gap it is eager to fill.

Challenges for the UK

Despite recent government contracts for nuclear and military reactor projects, Rolls-Royce’s globalized structure means the UK has limited leverage in negotiations. With public finances under strain, the UK may struggle to match the incentives offered by Germany, where defense and infrastructure spending is on the rise.

Analysts argue that the UK government should make a strong case for keeping these high-productivity jobs at home, even as Rolls-Royce operates as a global, publicly traded company with diverse interests.

Looking Ahead

While UK officials maintain that the country remains a leader in aerospace and values Rolls-Royce’s contributions, the competition from Germany is intensifying. Rolls-Royce, for its part, emphasizes its longstanding partnership with Brandenburg and its intention to continue building on this successful collaboration.