McLaren is planning to cut a quarter of its workforce across all three of its divisions as it feels the effects of the Covid-19 pandemic and begins to prepare for the F1 cost cap.
The grand prix team, road car and applied technologies divisions will each face job cuts as the company makes efforts to cut costs, with 1200 of 4000 total staff expected to be made redundant.
The team has already furloughed staff under the government’s job retention scheme during the pandemic in order to reduce spending.
“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, executive chairman of the 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.”
“This is undoubtedly a challenging time for our company, and particularly our people, but we plan to emerge as an efficient, sustainable business with a clear course for returning to growth.”
Formula 1 teams have already agreed to back plans for a lowered budget cap of $145m, down from the original $175m figure. Restructured prize money distribution and adjusted CFD time are among the changes touted to take hold from 2021 as F1 looks to cut costs. The size of teams will shrink.
“McLaren Racing has been a proponent of the introduction in 2021 of the new Formula 1 budget cap which will create a sustainable financial basis for the teams and lead to a more competitive sport,” said Walsh.
“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 had already made a request to the UK government of a £150m loan that was rejected. The carmaker subsequently explored raising funding by using its classic car collection and Woking base as security.
Existing shareholders have already provided significant investment to stabilise finances during the pandemic, with £300m already put up as the company continues to try and raise funds.