Rolls-Royce tells British staff EU membership is best for company

LONDON (Reuters) - The chief executive of Rolls-Royce has told his British staff that the aerospace and industrial power engineering group is better off in the EU, warning that leaving could result in some investment decisions being put on hold.

"We have taken the public position that as a company Rolls-Royce believes our customers, suppliers and employees benefit from the UK's membership of the European Union and that it is in the company's interests to remain a member," CEO Warren East said in a letter to the group's 23,000 staff in Britain.

Britons vote on June 23 on whether to stay in the 28-member EU, with polls suggesting a tight race. Rolls-Royce joins many other big companies, including telecoms group BT and airline easyJet, in throwing its weight behind the campaign to remain in the bloc.

Rolls-Royce warned that an "out" vote, or Brexit, could result in it delaying decisions like whether to invest in a new aero-engine testing facility at its plant in Derby, northern England, East told the BBC in an interview on Wednesday.

"We're making investment decisions all the time about where to place different parts of our operation," he said.

"Uncertainty created by Brexit puts a lot of those decisions on hold and that pause is something that our U.S. competitors don't have to cope with."

Rolls-Royce, one of Britain's biggest manufacturers, has fallen behind U.S.-based General Electric in recent years, with the bigger rival outperforming Rolls on the margins it makes from aero-engines.

The British company is now in the middle of a turnaround plan aimed at cutting costs and increasing profit, after its bottom line was hit in the last two years by cancelled orders from oil industry customers and a slowdown in demand for the high-margin servicing it provides for older aircraft engines.

Any delay to its investment plans, such as the new testing facility in Derby, which would be similar to a 65 million pound facility recently built in Germany, could upset the pace of that turnaround.

"Uncertainty is what we can't cope with," East said in the interview.

In the letter to staff, East also said that whatever the outcome, Rolls-Royce would remain committed to Britain, which counts on Rolls-Royce for one pound in every 50 pounds of its exports.

Rolls-Royce employs 14,000 people in continental Europe, which it said accounts for a third of its revenues, and is home to many of its major customers including Airbus and Lufthansa. It also has 9,000 suppliers on the continent, it said.

(Reporting by Sarah Young, editing by Estelle Shirbon and Susan Fenton)