BRITISH supercar manufacturer and F1 team McLaren is to axe 1,200 jobs, nearly a third of its workforce, due to the financial effects of the coronavirus crisis.
The restructure, which is still pending employee consultation, is expected to affect the automotive, racing and technology branches of the company, which currently employs around 4,000 people.
McLaren said that coronavirus has caused the sale of its cars to grind to a halt, and the continued delay to the beginning of the F1 season means that the racing branch of the business has lost millions in missed earnings.
According to Sky News, which initially reported the job cuts, one insider said that the restructuring was being undertaken to make McLaren “appropriately sized for the new reality.”
In a statement, the company said: “Due to the ongoing impact of the Covid-19 pandemic, as well as the new Formula One cost cap to be introduced for the 2021 season, luxury automotive, motor sport and technology company McLaren Group has commenced a proposed restructure programme as part of a wider business plan to ensure its long-term future success.
“Subject to employee consultation, the proposed restructure is expected to result in around 1,200 redundancies across the Group’s Applied, Automotive, and Racing businesses, as well as support and back office functions.”
The F1 cost cap, which is set to be introduced next season in order to create a more level playing field, has been lowered from $175m (£142m) to $145m (£117m) in response to the coronavirus crisis. McLaren’s racing operations account for 20% of its annual revenue.
It had been previously reported that McLaren’s application for a government loan had been rejected due to the fact that it had not yet exhausted its other avenues of opportunity. Talks are reportedly still in progress with Whitehall to procure some form of taxpayer funding. It has, like many other auto manufacturers, furloughed some of its staff under the government’s Coronavirus Job Retention Scheme.
The company is now looking to borrow around £275m against the value of its Woking HQ and classic car collection. The company’s shareholders injected £300m of equity into the business in March. Paul Walsh, the executive chairman, said that McLaren had “undertaken dramatic cost-saving measures across all areas of the business”.
The news comes amid rumours of similar job cuts from other auto companies. Nissan is reportedly gearing up to announce 20,000 job cuts across its international operations, a significant chunk being in Europe. France’s finance minister said last week that Renault could “disappear” if it did not receive some form of financial assistance, and FCA has asked the Italian government to back a €6.3bn (£5.6bn) loan from the country’s largest bank.
A sliver of good news comes for McLaren today after Boris Johnson personally intervened to give the go-ahead for Silverstone to host two formula one races this summer, despite the rule saying that people who enter the country must enter 14 days of quarantine.
The double header would take place behind closed doors, on the final weekend of July and the first weekend of August. The Prime Minister has told ministers to “make Formula One happen,” according to The Times. The first F1 race of the season is currently slated to be the Austrian Grand Prix at the beginning of July.