McLaren Group, the British maker of super cars and a top Formula One racing team, announced it’s cutting 1,200 jobs across all of its businesses, including the racing team.
As has been the case with so many other companies, McLaren’s been hit hard financially due to the coronavirus pandemic, which has not only wiped out much of the racing season but also crimped automotive sales worldwide.
The two-punch combo proved to be more than cost-cutting measures could overcome, officials noted. The lost jobs account for more than 25% of the company’s workforce of about 4,000 employees.
“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 have no other choice but to reduce the size of our workforce,” Executive Chairman Paul Walsh said.
It was a tough weekend for British auto companies as Aston Martin CEO Andy Palmer officially resigned and was replaced by Tobias Moers, who was the head of Mercedes-AMG. The company has been struggling for much of the past 18 months.
In the case of McLaren, it instituted a slew of money-saving measures – including salary cuts – and sought out additional funds to try to survive the slowdown. McLaren attempted to raise up to 275 million pounds, or $339.6 million, in bonds with headquarters and collection of historic racing cars as collateral. The car collection is reported to be worth an estimated $300 million.
That move came after the company’s request for a 150-million pound, or $181 million, loan from the British government was rejected. Government officials declared the company had not exhausted all of its other options. The company sought the additional funding even after receiving a £300 million, or $363 million, capital injection from shareholders.
McLaren, which is the second-most successful Formula One racing team in history, Ferrari is first, was the first team to furlough staff members. The team is expected to cut 70 people from its 800-employee team.
The group, which is majority owned by Bahrain’s sovereign wealth fund Mumtalakat, has been in growth mode during the past few years. Even this year, it seemed to be on track, opening the order book for the new 765 LT “Longtail,” its limited-volume supercar, which was unveiled for the first time at the beginning of March.
It was even flexing its technical muscles last month, highlighting its efforts in developing a powerplant for its supercars that could run on synthetic fuels instead of high-octane gasoline. The move would help reduce carbon emissions that are a focus of every European automaker due to looming regulations.