McLaren is set to slash 1,200 jobs across their technology, automotive and racing businesses in light of the coronavirus crisis and in response to the introduction of a budget gap in Formula 1 from 2021 onwards.
The Woking-based company has confirmed its plans on Tuesday that it would make around 1,200 employees redundant. McLaren communcated that the decision was triggered by the the crisis caused by the coronavirus outbreak and the budget cap that is set to be introduced in Formula 1 next year.
Although there is still no official confirmation, but it is understood that the sport’s main participants have agreed to further lower the cost cap. Originally set at $175m, the budget cap that will limit the team’s expenditures from 2021 onwards will be lowered to $145m. This cost cap will be then further reduced to $140m in 2022 and $135m for the period of 2023-2025.
In order to ensure the company’s long-term future, McLaren will slash jobs across its different departments. It is believed that 70 of the 1,200 people who are set to lose their job will be from the company’s Formula 1 operation.
McLaren confirmed the changes in a statement on Tuesday: “Due to the ongoing impact of the Covid-19 pandemic, as well as the new Formula 1 cost cap to be introduced for the 2021 season, luxury automotive, motorsport and technology company McLaren Group has commenced a proposed restructure programme as part of a wider business plan to ensure its long-term future success.”
“Subject to employee consultation, the proposed restructure is expected to result in around 1,200 redundancies across the Group’s Applied, Automotive, and Racing businesses, as well as support and back office functions.”