Supercar maker McLaren is to cut 1,200 jobs, blaming the COVID-19 pandemic for a serious deterioration in business.
McLaren confirmed it was making around a quarter of its workforce redundant in statement to the Press Association on Tuesday.
McLaren is best known for its Formula 1 racing team, which finished fourth in last year’s world championship. The company also licenses its technology to other racing teams and companies, and makes commercial supercars such as the Spider. Job cuts will be spread across the business.
McLaren shut down the majority of manufacturing operations in April due to the COVID-19 pandemic, while pivoting some capacity towards ventilator production.
Staff had already been furloughed and asked to take pay cuts, but McLaren said this had not been enough to improve the company’s financial position. The Surrey-based automaker said it had been “severely affected by the current pandemic.”
“The cancellation of motorsport events, the suspension of manufacturing and retail activities around the world and reduced demand for technology solutions have all led to a sudden impact on the group’s revenue-generating activities,” McLaren said in the statement provided to PA.
Chief executive Paul Walsh said the company had “no other choice but to reduce the size of our workforce” and said McLaren “deeply regret” the cuts.
“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,” Walsh said in a statement.
Labour’s shadow business secretary Ed Miliband said the redundancies were “devastating news for our manufacturing sector and incredibly worrying for the workers involved.”
The auto sector has been battered by the COVID-19 pandemic, which has led to plunging use of transport worldwide and led to a global recession. Car sales across Europe fell by 76% last month.
Global shutdowns have been particularly painful for McLaren given its reliance on live motorsports, which contributed 12% of revenues last year.
As well as the pandemic, McLaren has been grappling with a new $175m (£142m) cap on race car performance spending in F1.
McLaren made a pre-tax loss of £28m last year on revenues of £1.48bn.