The unavoidable pain forced by Formula 1's better future

The news that McLaren is expected to shed around 70 staff from its Formula 1 team as part of 1200 job cuts across its Group sent shock waves across the motorsport and automotive world this week.

At a time when many people's lockdown thoughts are shifting towards the new normal, and what happens next when the show gets back on the road, it brought a grim reminder that there are not just sunlit uplands ahead.

Indeed, it was no surprise to hear McLaren team principal Andreas Seidl talk about the "massive and painful" task his outfit now face in getting below new spending limits that are needed to ensure F1's survival.

For against the backdrop of welcome confirmation on Wednesday that FIA president Jean Todt's 'New Deal' package will be put into place, cutting costs and levelling the playing field to secure F1's long-term future, there is no escaping the fact that in life there can be no gain without pain.

The arrival of a $145 million budget cap and further cost cut measures are welcome for the majority of teams that have been unable to match the big three in spending power and have fallen back in competitive terms.

And even for the bigger outfits, including manufacturers, it's a positive. Knowing that spending is now going downwards and there is a fixed budget target for the next few years is welcome news at a time when all car makers are going to pull back on spending and won't want any investment in F1 to be heading in the other direction.

But one of the biggest heartbreaks for the top teams about the arrival of these ultimately positive measures is that the only real way to cut expenditure is to reduce the headcount, and that means letting staff go.

And it's this difficult aspect that has been the elephant in the room for many team principals amid the budget cap talks.

In fact, when you analyse in detail what Ferrari team principal Mattia Binotto said earlier this year when an interview was published explaining why his outfit was against reducing the budget cap below $145 million, it was mostly about protecting jobs.

"The $145m level is already a new and demanding request compared to what was set out last June," he told the Guardian.

"It cannot be attained without further significant sacrifices, especially in terms of our human resources. If it was to get even lower, we would not want to be put in a position of having to look at other further options for deploying our racing DNA."

Some cold decisions will need to be made about which departments are singled out for the biggest cutbacks; and that could mean even some brilliant staff who are among the very best in the world need to be let go

The stance was simply that pulling the limit under $145 million would open the door to Ferrari having to lay off a lot of valuable staff at a time when the job market will be an especially tough place.

And F1 teams are certainly not like some corporate giants who view staff numbers as just that: numbers. F1 teams operate like communities; everyone is in it together and every person within an organisation contributes to its success.

The growing competitiveness of the big teams in recent years is down to an expansion of staff, as more specialists have arrived to exploit in ever more detail each individual element of a car. These tiny percentages of gains that may be unnoticeable in isolation all ultimately add up when things are brought together out on track.

For any business, expanding staff numbers is an easy thing to do; the challenge comes when numbers need to come down and harsh decisions have to be made.

On the one hand, there is the competitive headache. For if teams are having to cut hundreds of jobs in a bid to get below the budget cap, then it is a tough ask to work out exactly who and what areas get the chop.

Some cold decisions will need to be made about which departments are singled out for the biggest cutbacks; and that could mean even some brilliant staff who are among the very best in the world need to be let go.

But there is also a human level to it all, because teams are built up with family-like bonds. Everyone is in it together and there will be incredible pain in having to let some people go at such a difficult time.

"If a company is losing a few dozens of people in a racing team, I don't think it is dramatic. The thing that would be dramatic will be to lose four teams," FIA President Jean Todt

It was little wonder then that Binotto referred to an 'ethical duty' that Ferrari had to its staff, and why it is looking at other racing activities (such as IndyCar) in a bid to give a future to those who cannot stay on board its F1 operation.

There is no avoiding the fact that the pain and the heartbreak that F1 teams are going to have to go through over the next 18 months as the budget cap arrives, and gets further reduced for 2022 and beyond, is something that needs to happen if F1 is going to survive longer term.

The growth in costs and personnel in recent years was unsustainable even before the coronavirus pandemic struck. And, had measures not been put in place, then the likelihood was that things were only going to get even more expensive in the future.

Ultimately it would have reached a point where the spending arms race imploded the series; for the cost of competing at the top would have been out of reach to all but one or two teams.

If those unable to match those outgoings could not even dream of winning or achieving any success, then there would be little reason to carry on. And imagine a trio of major companies - like Renault, Honda and Red Bull - all coming to the conclusion that F1 was no longer for them.

Suddenly there would be thousands of staff all out work and the shockwave of three teams going would threaten the very future of the category.

The mindset from F1's bosses is clear though. However painful it may be that more than 1000 F1 staff may be forced to find new jobs over the next 18 months, it is unfortunately part of a necessary sacrifice to ensure a future for many thousands more.
But if the future is made brighter by these painful cuts, and more manufacturers and teams arrive in the future, then that could open up yet more jobs in the future anyway.

As Todt himself said earlier this year: "If a company is losing a few dozens of people in a racing team, I don't think it is dramatic. The thing that would be dramatic will be to lose four teams."

That was the thing that had to be avoided completely, even if it means some unpleasant times that we all would have liked to avoid in the short term.