Examination of Witnesses (Question Numbers
123-139)
MOTORSPORT INDUSTRY
ASSOCIATION, MOTOR
SPORTS ASSOCIATION
AND LOLA
GROUP, COVENTRY
UNIVERSITY
15 DECEMBER 2009
Q123 Chairman: Gentlemen, welcome
to the last meeting of the Business Innovation and Skills Committee
this decade and the last but one of this particular inquiry into
the motorsport and aerospace industries. As you know, we are looking
at what more, if anything, needs to be done in public policy terms
to secure the future of the motorsport and aerospace industries,
high in engineering skills and an important part of the economy
in the UK, and of course we are aware of the very close relationships
between motorsport and aerospace which I am sure we will explore
during this session. You have all given us written evidence and
we are very grateful for that and appreciative of that. Can I
ask you to begin by introducing yourselves one by one and just
say a sentence or two about who you are in the broader context
of our inquiry.
Mr Hilton: Colin
Hilton, Chief Executive of the Motor Sports Association. The MSA
is the governing body of all four-wheel motorsport in the UK.
Mr Manahan: Andrew Manahan, the
Group Managing Director of Lola, an SME in Huntingdon, the oldest
manufacturer of racing cars in the UK which has recently diversified
into the defence and aerospace sector.
Mr Aylett: Chris Aylett, Chief
Executive of the Motorsport Industry Association, which is the
world's only trade association focused on the business of motorsport.
We have our international headquarters here in the UK, the majority
of our members are British based and we work closely with our
sports governing body.
Mr Dickison: I am Mike Dickison,
I am from Coventry University, I am responsible for automotive
R&D programmes amongst other things and I am also responsible
for industrial placements of students in the automotive and niche
vehicle industries. However, that is a relatively recent post.
Up until early this year I was in a vehicle consultancy company
for the whole of my career mainly dealing with niche vehicles.
Q124 Chairman: Thank you very much.
Obviously the Committee, which was in Silverstone three weeks
ago, was delighted by the announcement that the Grand Prix has
been secured for the UK, which has its own importance in securing
the industry in the UK we realise so we are very grateful for
that. That is the good news but it has been a bit of a difficult
time recently for the industry in many respects because of the
recession. Would any of you like to paint a picture of the impact
of the recession on the motorsport sector, both from a sport and
engineering perspective?
Mr Hilton: If I can answer for
the sport side. We have figures because statistics come back to
us and we were expecting about a 10% downturn. We have been pleasantly
surprised that towards the end of this year against last year
we were only about 3% down on licence holders, that is the people
who hold licences, and also on activities, which is the number
of people entering events across the UK. What we have seen is
a big shift in people moving down, so people who are normally
at the expensive end of the sport have gone for cheaper opportunities.
Also we have seen a huge hit on corporate activities—corporate
sponsorship and hospitality—and that is down about 50%.
So day-to-day stuff, hardly affected but the commercial end of
the sport has been hit hard.
Mr Manahan: From an SME's perspective
in the motorsport world which is not involved particularly in
Formula One, it has been catastrophic; the amount of sponsorship
that is now available in motorsport at our level. I am talking
basically about the jewel in our crown, our involvement in Le
Mans racing teams. From the perspective of an SME such as Lola,
and we do not manufacture under the umbrella of sponsorship, we
design and manufacture a race car for sale as a commodity to people
and teams, be they private or works, who want to buy one to race
it. It is a product like anything else. We have seen in everything
from the Le Mans series all the way right through to the recent
decline of the A1 Grand Prix very, very bad news for Lola on the
racing front.
Q125 Chairman: It has been very difficult
for you?
Mr Manahan: Very, very difficult.
Q126 Chairman: So have the reductions
in sponsorship and team budgets impacted you?
Mr Manahan: Very much so. That
is the driver for it. Pretty much anybody who is going to go motor
racing is either going to be funding it privately or through sponsorship
one way or the other. Most publicly you can see things like ING,
a financial sector company, pulling out of motorsport, and there
are quite a few big name sponsors who have pulled out of motorsport
at a very high level. But at a low level as well money is very
hard to come by for the lower formulae, if I can call it that,
to achieve sponsorship at this time too. We have seen it even
since the time we submitted the written evidence to this Committee
when there were still one or two motor manufacturers left in Formula
One at that stage and some of them have since gone down the road.
It is not the most politically acceptable thing to be seen to
be motor racing when you are having cars stockpiled and possibly
turning down or losing jobs in companies. So we have seen it certainly
on the ground being a motorsport manufacturer; we have certainly
seen a big effect in the racing industry.
Mr Aylett: Just to explain where
we see it, motorsport is split into two sectors in terms of its
income-earning, one is in the service sector and one is in the
engineering sector. Lola comments very clearly are about the engineering
sector. The interesting fact is how the consumer has reacted to
sports entertainment, whether people watch more television, and
indeed they have because Sky TV has had quite an up-take in that
because, sadly, people have more time to watch sport on television
but nevertheless sport entertainment has surged, and in that sense
it is relatively buoyant. Some of the figures in terms of attendance
have been very good this year, and I think Colin will comment
on that later. So in terms of the spectacle it has held up, it
has not collapsed; it has not boomed as the cinema world has done
but it has kept up as entertainment. That is quite critical in
terms of resolving the sponsorship problem because the sponsors
are involved because they want an audience, so maintaining the
audience is quite essential. In terms of the engineering side,
it is split into two, the commercial side of motorsport which
again Lola work within and then there is the hobbyist, if you
like, the people who just enjoy two-wheeled or four-wheeled sport,
and I refer back to Colin on both of those. So there are two levels
of the sport. In the commercial area, which is the one which creates
to some degree the high profile jobs, although right across motorsport
there are jobs, there are nearly 4,000 companies in the UK which
rely on this industry. The commercial side of the sport has probably
lost 15 to 20% of its sales value. In terms of the UK, whilst
we dominate the world of Formula One, which is a high profile
statement and is probably the one which attracts most commercial
sponsorship, so therefore unfortunately disproportionately as
a nation around the world we have been hit probably more definitely
than anywhere else. An estimate we have is that Formula One has
scaled down its employees from maybe 500 to 600 in a team and
they are in a process of reducing that to maybe 250 to 300 per
team maximum. So we will see in the order of a thousand to 1,500
jobs dropped out of Formula One alone. Formula One is only the
tip of the pyramid; each Formula One team has approximately 200
local suppliers so it will go down to those SMEs to some degree.
However, it is nonetheless holding up relatively well compared
to some other industries, I have to say.
Q127 Chairman: I suspect your time
will come later, Mr Dickison, unless there is something you want
to say now?
Mr Dickison: Briefly, our students
spend their third year in industry and we have students going
into Formula One teams and various motorsport teams, and we have
noticed that it is harder to get placements now and sometimes
it is on the basis of instead of being paid it needs to be voluntary,
so it is getting tougher. But we still have students going out
into the industry.
Chairman: I am sure these themes we will
explore later in the evidence session. I will move on to Roger
Berry.
Q128 Roger Berry: Since the onset
of the recession, many SMEs have diversified into other areas—aerospace,
defence and so on—to what extent has that enabled them to
weather the recession and to what extent has that compensated
for difficulties in motor sports?
Mr Manahan: It has been absolutely
and utterly essential. We would be dead without it, quite simply.
If we were relying on just the motor sport business to keep Lola
afloat—it is a very, very simple thing to say—we would
be dead. One of the things that motorsport has, and I have come
from more than 20 years in the defence and aerospace industry
to spending my last two at Lola, and something which actually
every single day never ceases to amaze me is how fast we do things.
It is a bit of a joke that in the defence and aerospace world
there is a 16-week rule; if you want to change something on a
drawing, put a little bit on a widget, anything, the answer will
always be, "16 weeks". Sixteen weeks is a lifetime in
the motor industry; 16 days is almost too late in motor racing.
The whole thing about motor racing is innovation and time, and
they were two things which from my experience I found sadly lacking
in the defence and aerospace industry. At this time, when we have
two active theatres going and urgent operational requirements,
it seemed to me a very good proposition to try to sell what we
had into the defence and aerospace sector, which has been very
successful for us. Everything from UAVs to radar systems to comms
systems and underseas systems in marine, and that is one of the
things I would like to think Lola pioneered a little bit and certainly
Chris and his organisation are extremely active in trying to spread
that message into the motorsport arena to try to get others to
follow suit, and it has been very successful.
Q129 Roger Berry: Have the motorsport
to defence initiatives and motorsport to aerospace initiatives
been instrumental in bringing this about, or would it have happened
anyway?
Mr Manahan: For me, I did them
because I happened to come from the defence and aerospace sector
but for other companies who have not got people running their
companies who have been in defence and aerospace, then initiatives
like Chris is running, are very useful and valuable and essential
I would say.
Mr Aylett: It is very interesting.
Time is one of the resources we are all running out of and really
gaining in value every day, every minute, and motorsport uses
its time very profitably and they do not realise how rare that
is in an engineering delivery sense—they really do not—because
perforce they would lose their customers without delivery on time.
Strangely enough, because they are focused, they are so very focused,
they never recognised their abilities to diversify, they did not
realise these jewels they had which Andrew has spotted. It probably
did need the MIA with Lord Drayson in Defence and Lord Astor but
we also pioneered motorsport to aerospace with the SBAC, motorsport
to marine with the BMF, and motorsport to defence with the DMA.
I think motorsport to defence has captured not the limelight but
the heat of the moment because urgent operational requirements
were made for motorsport, they are in field, instant demand, requiring
innovative engineering solutions, and that is the thing at the
moment. We are beginning to build good relationships in marine
but there is not quite the urgency. Aerospace we found hard, which
we will have to get back to, because we are an unregulated industry
but innovative and in a non-regulated form, so we are really tremendous
partners to aerospace because we can go off, test and develop,
but the legislation involved in aerospace, the accreditation,
the processes through safety, slow it down.
Q130 Roger Berry: You mention Lord
Drayson, to what extent has Government been involved? Could Government
have done rather more or less? Should it have done more or less
integrating these sectors together?
Mr Aylett: I have never sat in
one of these chairs before and I suppose one could answer that
financially Government has put not one penny piece in this programme
and that is probably a death knell for me asking for any further
support! They could say, "You are succeeding without it,
why would we bother?" In actual fact it was led by Lord Astor
and Lord Drayson, so they were the kind of sparring partners in
the other place, and they kicked it off, and then they left it
to the intuition of businessmen who needed to face up to business
opportunities. This is the pump-priming period and I have always
thought that if after just one year, maybe two, they have made
significant successes together with no money at all other than
that we have rented barns and done little table top displays,
the lower key we did it the happier we would be, but in actual
fact with Government support carefully planned through industry,
it would have made a significant effect faster. I cannot deny
that. But we did not ask and we did not get.
Roger Berry: Thank you.
Q131 Mr Clapham: When we look at
our competitors, are we unique in that diversification with aerospace?
Does it help us to keep the lead because we have some competitors
who are chasing close behind us?
Mr Manahan: Do you mean competitors
internationally?
Q132 Mr Clapham: Internationally,
yes.
Mr Manahan: Absolutely. Outside
I was having a chat with Mike. I was in Malaysia last week or
two weeks ago, looking at the investments they have put into the
composites aerospace industry. What Chris mentioned a while ago
about motorsport into aerospace, yes, it is more difficult, yes,
there are regulations, but they are achievable. One of the things
we did at Lola was to set ourselves up to get AS9100, which we
have achieved, and we will achieve NADCAP as well at some stage
once I can afford to do it. When I went to Malaysia I saw, quite
shockingly for me—I know I am Irish but I am a passionate
British industrialist—investment in the composites technology
for the future at state level which left me absolutely frightened
rigid. What I saw was an incredible and politically driven strategic
positioning of a South East Asian Muslim country I know but they
are taking composites into aerospace very, very seriously. Where
am I coming from? They do not have the front end yet, they do
not have the engineering, they do not have the design, they do
not have the tooling; when they do we are finished. I know this
sounds dramatic but when they get that, we are finished. Right
now we have, I would say, with a lot of help, a five year lead,
maybe more, but they will buy that, they will get it, they will
acquire it. Unless we invest in keeping our lead in that innovation,
in that design, in that expertise, we are finished in that particular
sector because we can never compete on production costs.
Mr Aylett: May I add a motorsport
to aerospace thought to Andy's excellent comment. Malaysia have
just acquired their Formula One team through the company that
they acquired called Lotus, so they are now going to get access
to the red hot kind of competition which Formula One is which
drives this innovation. The company called Hexcel, which I met
many years ago, do something like 2% of their turnover with motorsport
but 98% of the innovation comes out of that relationship. I always
remember that over dinner they said, "The things your chaps
are doing are way beyond aerospace in innovative terms",
and when you have access to that that will expand their interest.
I have to say that as I wander the world of motorsport the question
is more about our competitors. I came back from America yesterday
and they are in awe and very keen on knowing how to engage their
defence industry with their motorsport industry, but their motorsport
industry is not as advanced as ours so the engagement is going
to be rather more difficult. However, it opens up a marvellous
opportunity for Britain's motorsport industry to connect with
the American defence industry. Boeing, for example, and others,
are connected to our top level of motorsport. So there is a very
exciting opportunity for us with the American defence industry.
Mr Manahan: We have re-engineered
a radar systems we do a seven-piece petalised gap filling radar
system—and each one of those petals has to be handleable
by GI Jane as well as GI Joe and we have actually re-engineered
the composite (because they are composite radar panels) in Lola
via a UK company in exactly the manner which Chris is talking
about for Lockheed Martin.
Mr Aylett: I should also say that
those of you who know the company Cosworth, which is equally prestigious,
if I may say, to Lola, on our Motorsport day in Parliament, the
motorsport day, they were very keen on explaining that their defence
successes were almost entirely with US defence and almost none
with UK defence. They were not critical of it, they were just
saying they did not know why it was. That is another company which
could replace Andrew and say exactly the same, that they diversified
their success and their innovation and have gone into defence
very successfully. They make a very good case for the opportunity
which exists.
Q133 Ian Stewart: In my 20 years
as a Transport and General Workers' Union full-time officer, the
Working Time Directive was implemented. The Working Time Directive
was a health and safety piece of legislation. Why do you think
the motorsport industry should have an opt-out?
Mr Aylett: We put out a questionnaire
to the industry and we have a motorsport employers group in the
industry. I would not want to sit and discuss it in detail, as
a trade association I wanted to hear the employers' views. We
have a motorsport employers group from the top all the way down
to the smaller businesses. This is not a question whether it is
good or bad legislation, the practicalities of operating in our
particular sector and our particular skills base and the way we
make our money, simply predicates that we could not do anything
other than support an opt-out. For example, a 24-hour race, which
if you like is the foundation of the success of Lola, demands
that the workers are there for 24 hours, probably in unsociable
conditions—I say that gently for those who read this later—and
it is the same with Formula One and so on. They are paid well,
they volunteer, in fact not only do they volunteer, they line
up to volunteer to get involved in this because they want to understand
and gain from the skill sets which are attached to team working,
rapid delivery, rapid innovation. They are willing to do that.
Our difficulty is just simply technical.
Q134 Ian Stewart: A road haulage
transport driver may wish to drive for 24 hours because he makes
more money, but that is not sensible. What is the difference between
that scenario and what you are describing?
Mr Aylett: If I may say, and Andrew
can explain this, a team goes to Le Mans with, say, 10 mechanics,
they are looking after one car which is running consistently for
24 hours without a break. There is no tacho in the cab, there
are no stops for change of drivers, they have to run that car
on television to earn the money from the sponsors who pay for
the wages; they have to keep the car running. They cannot change
the technological team support for that car in the middle of such
an activity.
Q135 Ian Stewart: Are you saying
that because that is a 24-hour effort from the team they cannot
change technical team members? What would you say to the union's
assertion that this is just to stop more people being employed,
that the contrary to that would be better with more technicians
employed and involved in that 24 hours?
Mr Aylett: For example, without
going into the technology, if a data technician was working on
the data for a particular race—and it may be they have flown
for five hours, six hours to the other side of the world to deliver—they
cannot generally transfer that knowledge to another human being
in the middle of a competitive race. It is rather like half way
round a relay race saying, "This chap has run too far, find
another one to do the next 50 metres". It just would not
be a sporting competition in the way it has been conceived. There
is no question that you could re-write the whole structure of
motorsport to accommodate changes of mechanics, changes of engineers,
but there has never been a proposition that the sponsors would
support such a thing.
Mr Manahan: It could not be costed.
I agree with the extreme example of a road haulage guy who would
happily run 24 hours a day if it made him more money. Everybody
can see that is obviously an extreme scenario. I would agree with
everything Chris has said. If you take a look at any 24-hour race,
put it on television, you usually see two or three mechanics asleep
in the corner, so they do tend to shift to an extent on the 24-hour
race. But the way we have to run the company means we have to
be quite lean and contract-in staff when times are demanding and
shrink them down when times are not. Actually the contractors
which keep a lot of the SMEs going in motorsport are almost like
a band of wandering minstrels, and they will work all day and
all night. Nobody is advocating that we send them up chimneys
or anything like that—
Q136 Ian Stewart: And they work on
adrenalin? They are excited?
Mr Manahan: These people love
being in motorsport and they appreciate it is a little bit different—
Q137 Ian Stewart: Would it be more
costly to a company if they had more technicians employed during
the 24-hour period?
Mr Manahan: You are asking about
the 24-hour race or the manufacturing?
Q138 Ian Stewart: Earlier you were
describing a situation where there was a 24-hour race and therefore,
as Mr Aylett said, you cannot change the personnel.
Mr Manahan: Yes.
Q139 Ian Stewart: If you did change
the personnel, would that be more costly?
Mr Manahan: Yes.
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