Woking, England - British supercar specialist McLaren is cutting more than a quarter of its workforce as it battles to survive the coronavirus crisis.
Just a day after the UK government announced that car dealerships would be allowed to reopen from next Monday, the Surrey-based company said 1200 of its 4000 workers would lose their jobs.
The troubled carmaker has been racing to secure emergency funds to shore up its finances.
But its pleas for a £150m (R3.21bn) loan from the government have been rejected, and the company has been instructed to exhaust all other options first. Its road car sales have all but evaporated during the lockdown, while its income from Formula One and its Applied Technologies business, which supplies equipment to motor racing teams, has also disappeared as racing has been suspended.
The latest blow to the industry comes with Japanese giant Nissan expected to announce up to 20 000 job cuts this week, raising the prospect of redundancies at the UK’s biggest car plant in Sunderland. The announcement is expected as soon as Thursday.
McLaren becomes the latest big-name firm - after Rolls-Royce, British Airways and Tui – to cut jobs after furloughing employees under the government’s job retention scheme.
Chairman Paul Walsh, previously boss of drinks giant Diageo, said: "We deeply regret the impact that this restructure will have on all our people, but especially those whose jobs will be affected.
"It is a course of action we have worked hard to avoid, having 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."
Cost-cutting has included slashing the pay of staff who have not been furloughed. The fragile state of McLaren’s finances means it has been unable to borrow under the Government-backed lending schemes set up by Chancellor Rishi Sunak in March.
After seeing its direct appeal for a bailout loan snubbed by the Government, the company has been trying to borrow £275m by mortgaging its collection of classic cars - including those driven by legendary Brazilian racing driver Ayrton Senna.
The firm also intends to put up its swish headquarters in Woking, designed by architect Norman Foster, as collateral.
But this strategy has been resisted by some investors.
The firm’s shareholders, led by Bahrain’s sovereign wealth fund Mumtalakat, injected £300m (R6.4bn) of equity into the company in March.