McLaren Group, which encompasses both supercar maker McLaren Automotive and McLaren Racing, announced today that it would lay off 1,200 employees in the near future as a part of a major restructuring within the company, Reuters reports. McLaren says this is due to the sales slump caused by the global health and economic crisis, the lack of revenue due to canceled Formula 1 races, and the looming F1 cost cap that's set to kick in for the 2021 season.
The layoffs will hit McLaren Automotive's side of the business hardest, though the company didn't specify any potential impacts on cars in development like the Speedtail or the 765 LT. The marquee McLaren F1 team will lose the least amount of employees, with only 70 to be laid off in the plan, which has yet to be finalized. McLaren Group Executive Chairman Paul Walsh says that "dramatic" measures have already been taken to avoid layoffs, but the dire economic situation has forced the company's hand. 1,200 employees would be over a quarter of its workforce.
These measures include the possibility that the company may put up its Woking headquarters and many of the historic McLaren race cars kept there as collateral for a lifesaving loan—a measure the Williams F1 team has already taken. In addition, both of the team's Formula 1 drivers have taken voluntary pay cuts, along with much of the company's senior management including McLaren Racing CEO Zak Brown.
"We now have no other choice but to reduce the size of our workforce," Walsh said. "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."
McLaren's F1 footprint was set to shrink either way with the upcoming $145 million budget cap for 2021. Other teams with deep pockets such as Red Bull, Ferrari, and Mercedes will likely take similar action. McLaren, a less cash-infused midfield team, has more to gain by working under the new budget cap.
"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."
The team's best finish in the turbo-hybrid era has been third place at the 2019 Brazilian Grand Prix, but that podium was the result of a very unusual set of circumstances. The 3rd place finish was also obtained by Carlos Sainz, a driver who's set to leave the team for Ferrari next year. However, the budget cap will likely not hit McLaren as hard as other teams. Its budget was estimated at $269 million last year, while F1's biggest spender and 2020 champion Mercedes tossed out $484 million.
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