McLaren Group, the Formula One team owner and maker of supercars, is cutting 1,200 jobs as it seeks to weather the impact of the coronavirus crisis on the automotive industry.
The job losses amount to more than a quarter of the Surrey-based company’s 4,000 workforce and will be spread across the company’s Formula One, road-car and applied technologies operations.
The group blamed the cuts on the cancellation of motorsport events, the suspension of manufacturing and car sales, reduced demand for its technology solutions, as well as the new Formula One cost cap due to be introduced next season.
McLaren has already furloughed a significant number of its employees as the Formula One season and sales of supercars ground to a halt amid the spread ofCovid-19.
“We deeply regret the impact that this restructure will have on all our people, but especially those whose jobs may be affected,” said Paul Walsh, the executive chairman of McLaren Group.
“It is a course of action we have worked hard to avoid, having already undertaken dramatic cost-saving measures across all areas of the business. But we now have no other choice but to reduce the size of our workforce.”
The cuts, first reported by Sky News, come as the group seeks to raise £275m from investors, backed against the value of its classic car collection and its state-of-the-art Norman Foster-designed headquarters building in Woking.
McLaren has burned through £257m in the year to 20 April, with production at its Woking plant suspended since March.
The group’s existing shareholders pledged £300m of equity investment in March as McLaren sought to shore up its finances as the pandemic hammered its balance sheet.
The carmaker reportedly failed in its request for a £150m emergency loan from the government.
“This is undoubtedly a challenging time for our company, and particularly our people,” Walsh said. “But we plan to emerge as an efficient, sustainable business with a clear course for returning to growth.”
McLaren is tentatively hoping for the restart of the Formula One season . The race series accounts for about 12% of the group’s revenues through prize money and advertising deals.
“McLaren Racing has been a proponent of the introduction in 2021 of the new Formula One budget cap which will create a sustainable financial basis for the teams and lead to a more competitive sport,” Walsh said.
“While this will have a significant impact on the shape and size of our F1 team, we will now begin to take the necessary measures to be ready to run at the cap from 2021 onwards, in order to challenge again for race wins and championships in the future.”
McLaren is due to start the first deliveries to customers of the 765LT supercar in October, which comes with a recommended price tag of $358,000. Towards the end of the year they company will also start deliveries of the Elva, an ultra-exclusive open-top speedster, which will cost a reported £1.4m, before options such as a 24-carat gold engine heat shield are included.
“We have already invested in developing a new lightweight, hybrid vehicle architecture that will commence series production at the end of this year with the first deliveries to customers now sure in early 2021,” he said.
The Japanese carmaker Nissan is also expected to announce job cuts in the coming days, with as many as 20,000 jobs globally at risk.