McLaren has announced 1200 job losses across its automotive, racing and technology businesses, as a result of the ongoing impact of the Covid-19 pandemic and the cost cap being introduced for the 2021 Formula 1 season.
McLaren said it has commenced “a proposed restructure programme as part of a wider business plan to ensure its long term future success”.
The proposed restructure, subject to employee consultation, is expected to result in around 1200 redundancies across the group’s Applied, Automotive, and Racing divisions, as well as support and back office functions. The number accounts for almost a third of McLaren's 4000-strong workforce. More details on which areas will be most affected won't be clear until employee consultations have been completed.
McLaren said that it, like many others, has been severely affected by the pandemic, citing the cancellation of motorsport events, the suspension of manufacturing and the lack of car sales globally, plus reduced demand for technology solutions, having led to a sudden impact on revenue.
In a statement, McLaren said: "We deeply regret the impact that this restructure will have on all our people, but especially those whose jobs may be affected. 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."
McLaren Group executive chairman Paul 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 Applied has also already refocused to strategically prioritise proven, high-growth revenue streams.
"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 due in early 2021.
"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."
Walsh continued: "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."
F1 teams recently agreed to impose a budget cap of $145 million (£119m) from next season onwards, with that figure decreasing on a sliding scale to $135m (£108m) for 2023-2025. That compares to initial plans for a $175m budget cap for 2021, with the substantially lower figure intented to help keep the sport sustainable following the Covid-19 crisis.