Ok, had a lot of people ask for our take on the McLaren Auto job cuts so thought we would share.
First off we know a lot of good people at McLaren, F1 and auto side and no doubt some of these will find themselves jobless in what is likely to be a very tough job market, we feel for them and wish them the best of luck.
However that being said the decision to cut costs and as a result cut production could well be the golden bullet McLaren have needed for some time.
Its no secret that the main McLaren shareholders have been angling for a return on their investment in some way, either by an ipo or sale to a third party (equity or corporate) and is has been this strategy that has in effect forced McLaren to try and be what it is not – a mass production operation. Over the past 2 years McLaren’s strategy has been expansion of build numbers at the cost of everything else most notably quality control. This isn’t altogether surprising, if you make a bold statement of new models and build targets (which was quite clearly window dressing for a sale) but without the capital to back it then it can only end one way, a degradation of quality with the resulting loss of brand. Prior to coronavirus Mclaren was in delicate (but not disastrous) shape.
Add in the worst automotive ipo in history (Aston Martin) and things looked bleak, shareholders wanted out but not at any cost, they wanted value not a fire sale but with a public statement of model and number expansion McLaren was in a corner. Then we got coronavirus.
As a result of the largest economic event seen since WW2 McLaren and its shareholders have decided (we hope) to hit the reset button. If this round of cost cutting is a genuine indication of this then despite the pain of hurting employees it could be the out the company needed.
Ditch Track 25, that was madness to overtly announce so many models and build numbers, McLaren is in the supercar market, to adopt a GM strategy of market share was lunacy, we see why they did it (sale) but that ship has sailed, drop Track 25 completely as a statement. No more marketing lead build numbers, build what you can and what can be sold and spend what you have on QC so dealers dont get lumbered with rebuilds. The dealers will thank you for that we are sure.
With cars coming out not needing remedial work the dealers will be able to do a better job on after care, at the moment they are firefighting and I know some are bored of it, have the cars come out without needing rebuilds, the owners will love you for that, yes there will be niggles and issues, all cars do but McLaren owners are actually pretty tolerant, they love their cars and can cope with quite a lot, they just feel that they shouldn’t need to.
At this point I’d go on about being open to independents but I’ve done that for years, its serves no purpose banging on about it but please look at some of the parts costs and breakdowns. Turbo wastegates are prone to wearing out, £60 from a Mitsubishi dealer, £1100 new turbo from a McLaren dealer, that’s just wrong. Driveshaft boots – it’s a rubber boot, it cant last forever but it’s not available as a separate item you have to replace the whole driveshaft at £800, you can see how owners get frustrated. As an independent we work round these issues but dealers arent geared for it and the result is the owners having to spend more on wear and tear maintenance with the resultant guffaws from other supercar owners.
Oh and the big nuclear bomb at 15 years of age? Mclaren state every airbag must be replaced, that’s £14k! It maybe a few years away but this is the sort of data that long term owners, the sort of owners you want to help support the brand, are looking at.
Our hope is they take this chance to shrink back a bit from the arrogant market claims, the cars themselves are utterly unchallenged in each sector, the 720 flattens everything, it really does. The 570 runs rings round its peers but due to depreciation it now competing with 5 year old R8s! No offence to the R8 its lovely but the 570 jumps all over it in terms of power and handling. And a 12c at £60k? That’s bog stock 911 money, I dont even I know where to begin on that comparison.
I’ve no doubt the 765LT will take the whole game further, our own 720s is running 800bhp with just a remap and better exhaust so the 765 is bound to shock the world, but only if it doesnt come with a ‘but’. The first 720s were blighted with windscreens breaking, roofs not fitting, bodywork that was awful, error codes, limp home modes and these not only got built but then passed QC. ALL of these issues are and can be fixed. Our own 720s spider has been problem free (oil pump leak and shock leak in delivery, that’s it). Since then zero issues.
Rather than chase those numbers chase the output quality, the 765 with all its abilities that arrives to a customer without any issues, or error codes and bodywork that fits wont depreciate and leave a bad taste, it might even go up in value! When the owner posts on social media how good his car is there wont be a disaffected Ferrari owner harp on about ‘but’ – there is no ‘but’
The best thing I did as a business was shrink, I spent too many years chasing biggest and we suffered in terms of reputation and quality, when the opportunity arose to sell part of what I had built I cherry picked what I wanted sold the rest and decided that biggest was absurd, best was not only better but more achievable, that was 10 years ago.
I appreciate that they are in no way comparable I’m never going to sell and even if I did it wouldn’t be worth anything so who cares, you can’t have that attitude in big business but a little bit of it can do wonders for the wider picture.
And that’s the last point, any business that is sold is ‘valued’ and for the most part this is quite formulated except for one thing – brand and goodwill, this is still a guess and as such it has the largest affect on the ultimate value. Look at Apple, a massive proportion of its “value” is its brand not the actual product inventory, or stock, or buildings. If Apple built 1b phones a year it would generate a huge value, but if 500m of those 1b needed to go back to the shop 2/3 times before they worked?
It’s a crap time at the moment, firing staff is horrible and I feel for every one of them, but use this difficult time to concentrate on the bits you are weak and the QC will enhance the brand more than any desires to make x number if cars per year.
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