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Hope for Honda as costs set to fall?
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Hope for Honda as costs set to fall?
Posted By:   |  04 Feb 2009   |  1:08 pm GMT  |  0 comments

There is a deafening silence coming out of Honda at the moment. The initial deadline of 31st January has passed and now it seems that efforts are focussing on a management buyout. This, of course, requires capital funding, which is in very short supply in the world at this time.

Honda likes the idea of a management buyout because it will turn out to be much cheaper for them than simply shutting the factory down and laying off all the workers. There is some interest in the assets of the team, should they be sold off. I’m told that one of the America’s Cup yacht racing teams is interested in the new wind-tunnel which was commissioned just a couple of years ago.

But the picture seems to be that there are some players out there interested in F1 if the budgets can be brought down to a realistic level. There are people willing to play for £50 million a year, but none willing to play for £150 million. Cost containment is an area where much work is going on at the moment within the FIA and FOTA, the teams’ association and, from what I’ve learned in the past week, the next month will see some dramatic changes there.

What’s important to remember is that a team like Honda, which finished 9th in the world championship last season, will receive around £40 million from Bernie Ecclestones FOM company, its share of the TV and other commercial revenues. This is a pretty good start, if your total budget is only £50 million per year, but a drop in the ocean if you need £150 million to compete.

The hope for Honda is that over the next months the FIA is looking to slash the costs of competing to such an extent that it is realistic to go racing on a budget of around £50 million for an independent team.

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  1. rpaco says:

    I am sorry to say that the remnants of a previously over-financed but very unsuccessful team operating on a small fraction of its original budget is not going to achieve much at all.

    If one steps away and does a Harvey Goldsmith or a Jerry Robinson on the team it is very obvious that the vast funding they had was not spent wisely. Something was very wrong with the overall management that allowed the areas of development or the style of development or most probably the management and control of the development to amble along achieving so little. So either the engineers were on the wrong track or not performing or were prevented from doing so.
    The relevant management structure should have seen this and made the necessary changes, they had time so start over with new people, new projects. (several times)
    That the team management or ultimate control did not make the necessary changes in time, condemns them, and far from a buyout the best thing would be for an outside buyer to form a completely new management structure with none of the originals.

    Ironically it was probably the Japanese ethic that was their downfall. No one can be blamed, no one makes a decision, it is always a consensus and therefore nothing radical or decisive is ever possible. no one must loose face.

    I worked for a Japanese company for many years and often spent up to 3 frustrating days in a smoke filled room in a sales meeting, while the Japanese managers waited for us English managers to come to a consensus, something which was never going to happen. No Japanese even though senior to us, ever made a decision on his own. Even the MD needed a circle of yes men in support to make what to us was blindingly obvious choice. Thus I wonder if Toyota too, will suffer when something dramatic needs to be done.

  2. raz says:

    Very interesting read … I’ve gotta say Ron’s comment – ahahah. Just as funny as the comment he made about michael Schumacher taking his stop and go penalty in ‘the pit lane’ @ Silverstone 1998 on the last lap.. to which Murray pointed out ‘Well, where else are you supposed to take a penalty?!’ I think it would be great … Then that way the drivers won’t have the usual excuse of – oh my set-up was wrong, the tyres were bad, etc. Proper old-school F1! Just need the old-school tracks.

  3. ian says:

    With the new season drawing ever closer is there a set date Honda need to confirm their entry with FIA for the 2009 season?

    If Honda agree to the management buyout of the team you have to wonder if the long term future of the team will be guarranteed – capital funding I imagine in the current climate will be hard to find, and on top of that to find sponsors who will committ to the long term future.

  4. Dave p says:

    The only problem with all of this cost reduction will be that the big manufacturers will end up walking away for the exact opposite reason of the cost reductions intentions. When you compete at such a low cost, so that Force India or whoever can compete as well as Ferrari or Mercedes, how long before they think this is dimminishing their brand. It will look like a force india car is as good as a Ferrari – It is not what the big boys want to see. In a way it I think they are right. How can you show off your’e technical brilliance, if it is so limited that any 3rd party can do just as well.

    It also means that when they work hard on producing quality engines, Kers, etc.. when they are shared about to a degree that lower teams use them, but can compete too evenly, they look better than they are.

    I predict it will not go down well with the big boards in the long term.

  5. john g says:

    as much as i hate to admit it, the option to make more areas standardised makes sense. i believe that manufacturers should firstly be able to make what they want at whatever cost, and have this available to any other team at a capped price. FOTA can look these options and decide between them where they want to spend money, and where components to a standard spec can be used.

    but how far can you go before you reach essentially a ‘spec’ series. i don’t care about wheel nuts or wheels, but i want each manufacturer to be able to show off race car fundamentals like their engines, boxes, and aero to the maximum.

    I believe FOTA will come to a sensible agreement, they are the ones involved in making the cars and spending the money. I just hope that the FIA don’t interfere. most things that they come up force higher costs, and are detrimental to the sport. (grooved tyres and V8′s spring immediately to mind)

  6. speedmerchants says:

    JA writes: Ian, Honda has entered the 2009 world championship, it did so in November last year, as I recall, so strictly speaking it has a contract to compete with the FIA. IT is entitled to its share of FOM TV money for last year’s 9th place, which I believe is around €40 million.

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