The McLaren Group announced that it will lay off 1,200 employees. They account for roughly 25% of the supercar maker's workforce.
McLaren, owner of the Formula 1 team, explained that the coronavirus pandemic “severely” hit their business. The McLaren Group revenue was shaken by the lack of motorsport events, the suspension of manufacturing and retail, and shrinking demand for technology.
The proposed layoff is part of the company's restructuring plan, which was a result of the ongoing impact of COVID-19 as well as the Formula 1 cost cap.
“We deeply regret the impact that this restructure will have on all our people but especially those whose jobs may be affected,” said Paul Walsh, executive chairman of McLaren Group, in a statement.
“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 the workforce.”
With this, the McLaren Group had to lay off 1,200 staff. It will take effect in all of McLaren’s applied, racing, and automotive businesses worldwide. Meanwhile, some support and back office roles will also be removed.
The decision comes after Formula 1 announced a new annual cost cap of $145 million for 2021, a decline from $175 million.
The McLaren Group is the latest manufacturer to announce layoffs due to the coronavirus pandemic. UK's Rolls Royce announced last week it was letting go of 9,000 of its 52,000 employees to adjust to the much-smaller aviation market.
Mass layoffs
Aside from the McLaren Group and Rolls Royce, other companies that are laying off their workers are Uber and HSBC.
In April, Uber announced its plan to lay off about 20% of the company’s employees, based on a report by The Information. The reason for the layoff is lower demand for ride-sharing services amidst the coronavirus pandemic.
Meanwhile, Uber Eats, the company’s food delivery arm, reportedly recorded an increase in the food delivery business.
According to The Information, the layoff that Uber is eyeing “could result in more than 5,400 of Uber’s 27,000 employees losing their jobs.”
Uber told USA Today: “The company is looking at every possible scenario to ensure we get to the other side of this crisis in a stronger position than ever.”
International investment bank HSBC also announced in April that it will be suspending plans of mass layoffs of tens of thousands of workers after its profits fell by nearly 50%.
HSBC said it will put on hold plans for mass layoffs and will increase the amount of money it is setting aside to cover bad loans after its pre-tax profit went down to $3.2 billion in the first quarter, which was a 48% decline compared to last year.
HSBC said it expected the first quarter credit losses to reach $3 billion last quarter partly due to the coronavirus as well as the ongoing decline in oil prices.
In a statement, the company said: “The outlook for world economies in 2020 has substantially worsened in the past two months.”
CEO confidence
Company executives have foreseen these layoffs. A survey held by the business research group The Conference Board revealed that about 54% admitted they may lay off or furlough employees, while 43% said they plan to reduce salaries, wages, or benefits.
Moreover, findings showed that four out of five chief executive officers said they will postpone investment decisions and 43% said they are likely to experience cash-flow problems.
“In late March, CEO confidence declined to levels not seen since the height of the Great Recession,” said Lynn Franco, senior director of economic indicators and surveys at The Conference Board.
