415 replies to this topic

[potmotr]

McLaren cutting a quarter of its 4000 workforce. Story broken on Sky News just now.

 

Cuts across the automotive division and F1 team. 

[Pete_f1]

What with them mortgaging stuff they are looking a bit shakey

[potmotr]

Not good: https://news.sky.com...kforce-11994843

[cbbcisace]

70 from the F1 team and the rest from the other divisions....

Edit: roughly 10% of its f1 team then

Edited by cbbcisace, 26 May 2020 - 11:45.

[ConsiderAndGo]

Terrible for Mclaren. Won't be the last either. Thoughts will all those affected. Horrible

[TomNokoe]

This is a big deal. Can't fully get my head around it. 1200? Wow

[vee10]

How can they justify signing Ricciardo?

[Lennat]

vee10, on 26 May 2020 - 11:54, said:

How can they justify signing Ricciardo?

 

It's not like he will be getting anything close to his current Renault salary anyway...

[Risil]

Scary stuff. McLaren have diversified but apparently only into other industries (luxury cars, private racing, engineering consultancy) that have been hit by the pandemic.

 

Hope everyone who's been made redundant can bounce back -- it must be a very talented and skilled workforce but it's a grim time to look for work. 

[Risil]

vee10, on 26 May 2020 - 11:54, said:

How can they justify signing Ricciardo?

 

I'm not sure how to say this in good taste but if you don't have a top-level driver for your F1 cars, the people at the factory really are wasting their time.

[vee10]

Risil, on 26 May 2020 - 11:59, said:

I'm not sure how to say this in good taste but if you don't have a top-level driver for your F1 cars, the people at the factory really are wasting their time.

 

They could have quite easily stuck have with Norris and a junior, it's not like they will be in the championship hunt anyway. 

 

People have lost their jobs any money saved could have a saved a few of them.

Edited by vee10, 26 May 2020 - 12:02.

[vee10]

Lennat, on 26 May 2020 - 11:58, said:

It's not like he will be getting anything close to his current Renault salary anyway...

 

 

Oh yeah I remember him saying he will drive for free.

[H0R]

If only there was someone with, lets say 275 M quid around willing to step in and save some jobs ...

[Hakki069]

Horrible for mclaren. Makes you wonder about Willams too?

Ricciardo might begin to regret this move especially if Mclaren are forced to leave F1 and Renault stay.

But tbh for every car manufacturer and all F1 teams included. The future is so uncertain at the moment.

1200 people 25% of its work force is a heck of alot

Edited by Hakki069, 26 May 2020 - 12:30.

[FirstnameLastname]

vee10, on 26 May 2020 - 11:54, said:

How can they justify signing Ricciardo?

Driver salaries are not covered by the cost cap. McLaren want to run as close to the £145million cap as possible to give them a chance of challenging again. No point in having huge numbers of employees when you can’t spend any money on developments. Trim down the team and invest the dosh in development.

[FirstnameLastname]

Some of these teams have 20+ people working on the front wing design (for example) cutting 2 or 3 people from that group isn’t drastic - more teams will surely follow suit. And deploy that tactic across the whole team structure to ‘trim the fat’

When Renault bought their team back, they went about increasing Staff numbers because they felt they needed to have the same amount of staff as leading teams - not necessarily because all those staff hired were cost effective.

[pacificquay]

Only 70 redundancies from the F1 side which is a necessity of the cost cap. The signing of Ricciardo is perfectly justified

[danmills]

Mclaren staff numbers are much higher than Williams, you'd think on paper everyone would be affected but some of the smaller teams have floated around with less for decades.

[FirstnameLastname]

danmills, on 26 May 2020 - 13:16, said:

Mclaren staff numbers are much higher than Williams, you'd think on paper everyone would be affected but some of the smaller teams have floated around with less for decades.

Racing point just started heavy recruiting... a lot of folk about to fail their probationary periods I guess

[ralphrj]

danmills, on 26 May 2020 - 13:16, said:

Mclaren staff numbers are much higher than Williams, you'd think on paper everyone would be affected but some of the smaller teams have floated around with less for decades.

 

Not by as much as you would think. The most recent filed accounts (2018 for both teams) show McLaren having 714 vs 635 for Williams.

 

The vast majority of McLaren's employees will be working at the car company rather than the F1 team.

[BertoC]

These are not good news, but expected unfortunatly. I think these cuts on the racing team were coming either way with the budget cuts on 2022, and the ones on the road side are easily replaceable when things are back to normal.

But of course things can easily escalate to the wrong way. Let's hope not.

[noikeee]

What did people expect with a F1 budget cap and a massive recession incoming?

Mclaren are in a better position than many other F1 teams btw. I maintain that I'm very skeptical of Williams and Haas surviving this crisis, and fully expect Enstone and Brackley to lose the manufacturer big bucks. Mclaren like Ferrari build road supercars, that is surely a much more sustainable business in a huge recession than manufacturers that sell everyday common cars. Unless there's a surge in car sales as people move out of public transport back to the personal car to avoid mingling with others as the pandemic goes on. Still, the common people will no longer have surplus money to buy new car models straight out of the factory - except for the rich, who can afford to keep buying shiny new supercars.

Edited by noikeee, 26 May 2020 - 15:16.

[Chillimeister]

noikeee, on 26 May 2020 - 15:16, said:

 except for the rich, who can afford to keep buying shiny new supercars.

 

It would appear that McLaren don't share your conclusions, unfortunately.

[noikeee]

Chillimeister, on 26 May 2020 - 15:30, said:

It would appear that McLaren don't share your conclusions, unfortunately.

I suspect the reasoning is all business is going to be bad this year. My conclusion is other businesses are going to be hit even harder.

[mclarensmps]

Another thing to factor in is that McLaren pushed through a massive growth period in the beginning of their automotive set up to introduce a host of new models to compete in various segments. Now that they've done this, they will probably want to lean out their Design and R&D. Couple that with lower demand for the foreseeable future, it unfortunately makes sense for them to do this right now. 

[ralphrj]

noikeee, on 26 May 2020 - 15:51, said:

I suspect the reasoning is all business is going to be bad this year. My conclusion is other businesses are going to be hit even harder.

 

Other companies might be hit harder (for example, Daimler might incur €billions of losses) but whether they will survive is down to their ability to raise cash to keep the company from insolvency. Whilst Daimler will miss their profit targets there is no danger of them going bust.

 

Ferrari have just raised €650million with a new 3 year unsecured bond paying interest of 1.5%. The issue was 5 times oversubscribed. They have zero concerns over their long term future.

 

McLaren are trying to raise £250-300million using their heritage collection as collateral but are being dragged into a legal dispute with their existing bondholders who say that McLaren already put the collection up as security. This follows an injection of cash just a few months ago where McLaren has borrowed money at an eye watering 15% annual interest. They are deep in debt and in serious distress. I expect it comes as a shock to their fans but the reality is that if they can't raise cash soon (and lots of it) they are going to go bust.

[jonpollak]

Good thing the Indycar team is not affected.
Jp

[SonGoku]

Well, at least they have paid top dollar for Mr. Smile.

[ARTGP]

SonGoku, on 26 May 2020 - 17:32, said:

Well, at least they have paid top dollar for Mr. Smile.

 

 

As far as I know, Ric hasn't been paid a dime. It's a 2021 contract after all....If he did manage to take his full pay, a year in a advance, he's the best damn agent in town   .

His contract payouts will be irrelevant if Mclaren file for bankruptcy.

Edited by ARTGP, 26 May 2020 - 17:37.

[frosty125]

No doubt McLaren are struggling with liquidity after a long period of extensive investment in the group.

Hopefully once F1 revenue returns in part and so do the car sales the pressure will not be so difficult.

[SonGoku]

ARTGP, on 26 May 2020 - 17:35, said:

As far as I know, Ric hasn't been paid a dime. It's a 2021 contract after all....If he did manage to take his full pay, a year in a advance, he's the best damn agent in town   .

His contract payouts will be irrelevant if Mclaren file for bankruptcy.

 

As if 2021 is going to be a good year for car makers, they will feel this crisis for years.

[frosty125]

frosty125, on 26 May 2020 - 17:39, said:

No doubt McLaren are struggling with liquidity after a long period of extensive investment in the group.

Hopefully once F1 revenue returns in part and so do the car sales the pressure will not be so difficult.

I also forgot to mention that I doubt the shareholders will let the group go bust because of a liquidity crisis, it would mean giving up on all what they have put in already and no possibility of a return on that investment.

[ARTGP]

frosty125, on 26 May 2020 - 17:44, said:

I also forgot to mention that I doubt the shareholders will let the group go bust because of a liquidity crisis, it would mean giving up on all what they have put in already and no possibility of a return on that investment.

 

Aston Martin went bankrupt 7 times already and look like they are headed towards the 8th time. Investors can and will give up.

 

Any good investor got where they are by not having all of their money in a single company, so if Mclaren go bankrupt, it's a minor loss to each investor, not a complete loss of all of the money they have into stock markets

[djparky]

Feel for those affected by this, more fall out from the CV thing. And its not just those employees, its also the suppliers into the team that may get affected as well

[Paco]

vee10, on 26 May 2020 - 12:02, said:

They could have quite easily stuck have with Norris and a junior, it's not like they will be in the championship hunt anyway.

People have lost their jobs any money saved could have a saved a few of them.

Exactly, there’s even a couple great drivers that would do a great job for 1-3m I would imagine like Hulk, Pascal even yadda yadda. Hard to see guys getting paid why 20-25mil and laying off 1200, 70 from the team.

I get the team leaning down if they need to anyway with the cost cap so might as well get use to it as quickly as possible with the limited development rules the next 14+ months but from the other optics seems odd to do so and signing a expensive driver. Unless he is a pay driver from a sponsorship...

At an average of let’s say 60k, his salary represents 1/3 of those lost jobs 1200) probably... for what, an extra 1/10th or 2 in what’s going to be a challenging year with limited corporation options for the AMG powerunit resulting in running a less then idea chassis & aero.

As an owner, that’s gotta be one very tough call to make knowing what was happening at the full company.

Edited by Paco, 26 May 2020 - 19:36.

[Paco]

Sad how th cost cap is going to cost so many F1 jobs of a lot of very talented people.. this is just the start... hope they don’t lay off more at end of year not cause of the lockdown but cause of the reduced budget allowance.

[KWSN - DSM]

Not good for McLaren, have to admit I am very surprised they had 4000 employees under their umbrella of companies - This likely the harbinger of what will happen to the other teams.

 

[Disgrace]

Concerning is just how quickly this happened, if this should be our reality for some time to come.

[Hakki069]

Paco, on 26 May 2020 - 19:32, said:

Exactly, there’s even a couple great drivers that would do a great job for 1-3m I would imagine like Hulk, Pascal even yadda yadda. Hard to see guys getting paid why 20-25mil and laying off 1200, 70 from the team.

Makes you wonder why a team like Ferrari didn't renew a big earner like Vettel contract. And opted for a cheaper driver in sainz.

Mercedes and Daimler are in a tough position. How on earth do you renew Hamilton contract at 40-50 Million at times like these? Daimler since last year announced cutting jobs. Probably even more now since covid-19.

But anyway certainly not good times for Mclaren

[SparkPlug86]

KWSN - DSM, on 26 May 2020 - 19:37, said:

Not good for McLaren, have to admit I am very surprised they had 4000 employees under their umbrella of companies - This likely the harbinger of what will happen to the other teams.

 

 

That's probably the crux of it... they probably had too many heads for the roles in the company to begin with and this 'cost cutting' would redress the balance make the company more efficient whilst saving on staff costs.

[Mohican]

Hakki069, on 26 May 2020 - 19:59, said:

Mercedes and Daimler are in a tough position. How on earth do you renew Hamilton contract at 40-50 Million at times like these?

Simple. You don’t.
Hamilton’s negotiation position is badly damaged by a) the Covid crisis, and b) Vettel being available. Neither of them will be paid anywhere near what they are used to.

[Fastcake]

Terrible news, but this is likely to be most companies in most sectors in the upcoming months. Everyone is in trouble right now and it'll take years for business to return to normal again.

 

McLaren just needs to survive until demand picks up again. The good thing about the supercar industry is that half of it is just the brand and having something new to shift.

[BobbyRicky]

noikeee, on 26 May 2020 - 15:16, said:

What did people expect with a F1 budget cap and a massive recession incoming?

Mclaren are in a better position than many other F1 teams btw. I maintain that I'm very skeptical of Williams and Haas surviving this crisis, and fully expect Enstone and Brackley to lose the manufacturer big bucks. Mclaren like Ferrari build road supercars, that is surely a much more sustainable business in a huge recession than manufacturers that sell everyday common cars. Unless there's a surge in car sales as people move out of public transport back to the personal car to avoid mingling with others as the pandemic goes on. Still, the common people will no longer have surplus money to buy new car models straight out of the factory - except for the rich, who can afford to keep buying shiny new supercars.

 

HAAS is probably in a better situation than Mclaren liquidity-wise. A small luxury-car maker like Mclaren with no real liquidtity is going to suffer a lot. Luxury car sales will drop (as they did in 2008/2009). The ones that survive are the companies with enough funds to be able to survive a drop in sales. Mclaren is not in that group.

[Fastcake]

Paco, on 26 May 2020 - 19:32, said:

Exactly, there’s even a couple great drivers that would do a great job for 1-3m I would imagine like Hulk, Pascal even yadda yadda. Hard to see guys getting paid why 20-25mil and laying off 1200, 70 from the team.

I get the team leaning down if they need to anyway with the cost cap so might as well get use to it as quickly as possible with the limited development rules the next 14+ months but from the other optics seems odd to do so and signing a expensive driver. Unless he is a pay driver from a sponsorship...

At an average of let’s say 60k, his salary represents 1/3 of those lost jobs 1200) probably... for what, an extra 1/10th or 2 in what’s going to be a challenging year with limited corporation options for the AMG powerunit resulting in running a less then idea chassis & aero.

As an owner, that’s gotta be one very tough call to make knowing what was happening at the full company.

Who's getting paid $25m here? Ricciardo certainly isn't. And Norris is getting pocket money.

[William Hunt]

Fastcake, on 26 May 2020 - 20:18, said:

Who's getting paid $25m here? Ricciardo certainly isn't. And Norris is getting pocket money.

 

Since when is 2 million $ per year 'pocket money'? 

You must have a really high salary then if you call this pocket money.

 

Ricciardo is rumoured (if the source is correct) to have a base salary of 10 million $ a year + a commission per scored point so he could earn a total of 20-25 with that commission yes...even 10 million $ is a huge salary. The salaries in F1 are totally out of proportion with the rest of society (that goes for soccer players or CEO's as well) and especially in a time with such massive inequality.

I do think you can't justify paying someone that kind of money when you are firing 1200 people at the exact same time, it's gross...and no he is not worth that, nobody is worth such a salary, it's a sign of decadence...
 

Edited by William Hunt, 26 May 2020 - 21:37.

[Hakki069]

I do think it's time for a driver salary cap..

I don't see why this hasn't been passed through already. Surely a driver wage cap helps not only the small teams but the big teams too.

[pdac]

pacificquay, on 26 May 2020 - 13:07, said:

Only 70 redundancies from the F1 side which is a necessity of the cost cap. The signing of Ricciardo is perfectly justified

 

I may be wrong, but I think these redundancies are being done BEFORE they have taken into account the effect of the budget cap. If I am right, expect more people in the F1 side to lose their jobs.

[MikeTekRacing]

William Hunt, on 26 May 2020 - 21:35, said:

Since when is 2 million $ per year 'pocket money'? 

You must have a really high salary then if you call this pocket money.

 

Ricciardo is rumoured (if the source is correct) to have a base salary of 10 million $ a year + a commission per scored point so he could earn a total of 20-25 with that commission yes...even 10 million $ is a huge salary. The salaries in F1 are totally out of proportion with the rest of society (that goes for soccer players or CEO's as well) and especially in a time with such massive inequality.

I do think you can't justify paying someone that kind of money when you are firing 1200 people at the exact same time, it's gross...and no he is not worth that, nobody is worth such a salary, it's a sign of decadence...
 

not sure what point you're trying to make.

 

Laying off 1200 has nothing to do with the salary of one individual. 

the F1 team is ran to be successful, not to offer jobs to as many people as possible. This is not a welfare program, it's a performance program. 

 

These stars attract a lot attention, money alongside with their top class performance. 

[Anderis]

The idea that teams should pay lesser salaries to a driver in order to save jobs is unfounded.

 

If they are going to fire people, it's because the reality has changed in a way that these people can no longer make profit for the company. In huge simplification: the consumption has collapsed because of Covid 19 and the demand for luxurious goods such as sports cars will go down, therefore McLaren will sell less of its products and this "less than before" can be produced more effectively by fewer employees. Redundancies within the F1 team would likely come from the budget cap as well.

Saving another $10m from a driver's salary will not suddenly make it worth to keep these people.

 

A driver, on the other hand, can make a lot of profit for the team, by contributing to a better WCC position (prize money), attracting sponsors, investors through marketability and better on track results.

Edited by Anderis, 26 May 2020 - 22:47.

[Paco]

Mohican, on 26 May 2020 - 20:11, said:

Simple. You don’t.
Hamilton’s negotiation position is badly damaged by a) the Covid crisis, and b) Vettel being available. Neither of them will be paid anywhere near what they are used to.

Max is the only guy who lucked out in this situation as he signed before all these new realities. Bet Lewisjis kicking himself for not signing longer but then again that could have been the nail on Mercedes F1....

McLaren look a bit foolish now and if I was a staff member let ago by those percentages a month after signing Ric to a large sum contract id be upset for sure. Wonder if they could mount a class action? Oi, going to be a long 6 months for McLaren.