Mueller: Gene Haas Formula One Entry Teleconfrence
THE MODERATOR: Welcome to today’s teleconference. In a few moments we’ll patch you into a press conference featuring Gene Haas, founder of Haas Automation and Chairman of Haas Formula, and Guenther Steiner the team principal of Haas Formula. Both are available today to answer questions and provide more detail on their plan to bring an American team to Formula 1.
GENE HAAS: This is something, this project we’ve actually been working on for a number of years, and Guenther has actually been in the background for a while. He’s had various proposals starting back say three years ago or so. As things evolve, eventually I saw a relationship with, obviously, racing and machine tools that I wanted to pursue in Europe. Most of the sales in the world are going to be overseas in the next four or five years, and my basic goal here is to change Haas Automation from just a machine tool builder into a premium brand. I think Formula 1 will provide that, especially in the overseas markets.
There are a lot of fans from China to South America to Europe to Eastern Europe, to the Asian, Japan, Malaysia, that we really want to become a household name in. I think that with the same techniques that we’ve achieved in NASCAR as far as selling machine tools, we have a very good market penetration in the United States and the associating the Haas brand with Formula 1, I think, will launch us into a premium brand.
That really is the ultimate goal is to take the image of Haas Automation and turn it into a brand that is desired, high quality, and known throughout the world. Ultimate goal would be to double our sales for Haas Automation.
So couple of questions people have asked about is how will this affect Haas Automation? And I think it’s going to be positive, and as an indicator, I’m using the relationship with NASCAR we have here and promoting our brands in the United States; we have a very, very good market share and good market penetration. The idea is simple to do that and replicate that same marketing overseas.
So that is basically the premise of it. Let’s say Guenther has been in the background for a number of years providing a lot of the technical expertise of how we would accomplish this, so I think the combination of Haas Automation building machine tools in California along with promoting our brand through NASCAR fits perfectly into a marketing strategy of entering Formula 1 as a constructor to enhance our brand name into a premium market.
That is basically the reason why we’re doing that. So I’ll open it up to you.
Q. Guenther, have you looked into any existing facilities that may be up for sale in England to base some of your team?
GUENTHER STEINER: Obviously, we have looked to do this, but then again you go back, you’re not an American team, and the inhabitants, we didn’t want to take that route. So we decided or made up a plan that we do it ourselves, but not completely on our own. We’ll have partners which we will work in Europe with. But to buy a current team, it didn’t fit what we wanted to do because it needs to be the base needs to be the United States.
Q. Gene, do you have a name for this team, and what are your next steps as far as the building process of the team?
GENE HAAS: The team is going to be called Haas Formula. There are a lot of things going on right now. We were in expansion mode at the Kannapolis StewartHaas Racing campus where we were adding a building. So what we’re going to do there is take a portion of that building, and that will be the Formula 1 headquarters right here in Kannapolis. So that’s the first thing that we’re working on. As a matter of fact, they’re just putting up the roof on the building now, so we figure that’s another few months away.
The next thing to do is to sit down and have some very serious negotiations with our partners. I think as everybody knows, there are currently three engine suppliers for Formula 1, Renault, Mercedes and Ferrari, so we have to narrow down the partner that we’re going to work with. And that’s a very important part of it is figuring out who can provide us with the technical expertise that we’re going to need.
We’re going to do something very similar that we did in NASCAR which is to try to partner say like with a Hendrick Motorsports where we can rely on them for a lot of the technical expertise. Because, let’s face it, we’re new at this. There is going to be a long learning curve, and to sit there and say we can understand what’s going on with these cars in a year or two is not reasonable. It’s going to take us a while to learn, and we’ll lean heavily on a technical partner to help us.
Q. How will you use your European facilities that Haas already has as far as maybe satellite places to move things in and out? Secondly, is 2015 a reality or do you really think it’s going to take longer than that to get theprogram going?
GENE HAAS: Well, we have an office in Brussels that we use for Haas Automation, and that facility is available. I don’t know if it logistically makes any sense. So those are the things that we’re going to have to figure out. But ideally, going forward, the main office for the Formula 1 would be here in Kannapolis, and maybe a smaller office somewhere in either Germany or Italy for assembly and disassembly of cars. It also would depend upon who our technology partner ultimately is. So that would be the logistics that we’d use.
Like I say, nothing’s cast in stone, so we’re going to be flexible about it. We’re going to do what it takes, and we’re going to be efficient at it. Those are really the only parameters that we have.
Q. Will you start in 2015 or 2016?
GENE HAAS: Well, I’d like to do 2015, simply because I think the first year’s going to be a difficult year no matter what happens. It’s a very big challenge, and like I say, part of that learning curve is just simply getting to the track and sorting out the logistics of going from race to race. The sooner we learn that, the sooner we’ll be done with that. So I would say we’d like 2015, but depending upon who we select with our partner, I don’t know if they can provide all of the infrastructure and technology that we’d need.
So I think it’s one of those things that we’re going to have to find out in the next few weeks. Hopefully within I would say within four weeks or so we should have an idea which year we’re going to pursue.
Q. Obviously, since you’ve had this in your mind for a while, have you also started thinking about drivers in the back of your mind? Have you thought about different people, looked at different people? What is going to be the hiring timetable for picking out somebody to drive?
GENE HAAS: Ideally, what I think we’d like would be to have an experienced Formula 1 driver. Probably someone who is familiar with the current engine package rules. They change quite a bit even from last year. Then going forward we’d certainly like to have a young American driver. That would be the ideal situation. But at the moment we haven’t really narrowed it down. I know we’ve had quite a few people talk to us or send in applications about they’d be interested. But we haven’t we don’t have anything at the moment. Other than the fact that we’d need an experienced current Formula 1 driver that maybe becomes available in the next six months to a year, and maybe a younger driver that has a lot of potential. Hopefully that would be an American driver.
Q. Guenther, I assume Adrian Newey isn’t available. I was wondering who is on your short list for a designer?
GUENTHER STEINER: I think I cannot say who is on the short list. We are in contact with people. But it’s also we just got the license awarded last week, and until you have the license you cannot really employ anybody or anybody would come and work for you because they don’t know if you’ve got the license in the future.
So it’s like where are you, and now, as we said before, the real work starts now. We need to get the people. We need to define if we start in ’15 or ’16, and we need to pick our partner. Out of that will also the main not only technical people, logistical people, all the people come from where we go. And that’s why it takes a little bit of time to get there, and we have spoken with people already.
Q. I thought I read that Bernie Ecclestone said it would cost a billion dollars over four years. Is that an accurate figure? Is that what you’re expecting to have to invest in this?
GENE HAAS: It’s going to be billions and billions. So every week it goes up by another billion.
Q. How much can you afford?
GENE HAAS: We have a budget. There are a lot of unknowns in it. But we have budgets for what the enginepackages will cost and those numbers are well known. I think a lot of the exponential rise in cost is something that maybe was in the past. If you go back to say like somewhere maybe five to 10 years ago where the rules were anything goes in exotic aero packages and exotic wind tunnels, these were the things that were driving the cost up. Then with the recession in 2008, things changed.
Actually, the rules have become much more favorable. Like say there used to be maybe eight different suppliers of engines. You had every major car manufacturer building their own engine for Formula 1. There is no doubt that they’re spending $200 to $300 million dollars just to build an engine for a single car. Today, like I say, there are three current engine suppliers and they’re required to make their engine packages available. So we’re going to take advantage of those rules.
We’re going to lean as heavily as we can on partners. Our job is not to reinvent the wheel. Our job is to race cars and win races. So the reinventing technology maybe that somebody else has that we can purchase is probably more of what our strategy will be. Don’t exactly have the numbers, but the numbers I’ve seen are reasonable, and, yes, it’s expensive, but I think that we’re going to have our own way of doing things. Too many teams I think just go out there and throw money at it where we won’t be doing that. We’re not going to be throwing money at it.
I think myself and Guenther we both understand racing. We understand that typical businessmen going into this business simply say I just want the best. And the best doesn’t always mean best the for him, it’s the best for the guy that’s supplying him as far as how much money he can charge, but we’re not going to be foolish like that.
We’re going to spend our money wisely. We’re going to do it with an American flair for design and efficiencies, and that’s how we’re going to control our costs. I don’t we’re not going to be a European-led team. We’re going to be an Americanled team and we’ll do it the way we think is the most efficient.
As a point, I’d like to point out that Haas Automation builds machine tools in California, the most expensive state in the Union as far as taxes. We’re doing it in a place that nobody thinks you can build machine tools efficiently, yet we do that. We do have precedent in terms of making a good product at a reasonable price, and I would hope that we can, going forward, that I can put those same parameters to work in Formula 1.
Lot of people say it can’t be done, but like I say, we do things that other people say can’t be done all the time, so we’re not afraid of that. That’s something that I’m looking forward to. That’s one of the challenges of trying to run an elite racing team without spending billions of dollars?
Q. Gene, the story about the dog that chases the car every day and chases the car and chases the car, finally it catches the car. The next question is what is the dog going to do with the car with the enormity of it? As you now embark on this stage, just the enormity of all of this and how has it hit you? You caught the car, so how are you going to handle this? Secondly with the FIA’s decision in delaying the license for you a few weeks, how does that impact you for getting ready for next year?
GENE HAAS: The FIA delaying a license is pretty normal. They’re a big organization. They have lots of technical people. They have lawyers. They don’t make snap decisions. So I think they analyzed us quite a bit. OK, is this team for real? Can they get it done? You know, they’re not there to create problems for themselves. They want teams to show up. They want teams to race and to race competitively. That is their ultimate goal.
When I took on this task it was like, yeah, when you first look at it you go, wow, this is a heck of a challenge. How are we going to do this? But I went to a few races and I tell you, it’s interesting. I’ve been in the Cup garage for a long time, and they’ve got wheels and they’ve got tires and they have engines, and they have lots of computers, and guess what? That’s what they do in Formula 1. I think there is a lot of magic and mystique to that.
If you were just an ordinary businessman going into this thing, you could easily be misled and know how to do this. I came back with it’s a challenge. It’s definitely difficult to do. But it’s very similar to what we do now. So I can’t imagine that this challenge is going to be impossible. We do this every day. We bring four Cup cars to the races almost every week, and they show up and they compete. People have been questioning how we do that.
I don’t go out there and personally build the cars or anything. But we have competent people that get that done, and that’s what it’s all about. Trying to find the right people to do the right job and not be hoodwinked into hiring people that promise you the moon and can’t deliver.
Most of the people that I work with are fairly ordinary people. I think that’s somewhat my attitude. I’m very realistic about what we can accomplish. I think after being to a few Formula 1 races, I thought there was a lot of similarity to what I saw in the Cup garage as far as technical expertise. Even though people will say it’s much beyond that, and in a lot of ways it is. I mean, I’m not saying that.
But like I said, the new rules, I think are more in our favor. I think FIA is trying to make the series more cost effective because they realize that spending huge amounts of money doesn’t necessarily make the product better for ultimately the fans. So they’ve tried to get away from that. I think those rules actually lend themselves to the way we do things of trying to have a similar packages that everybody runs. The economics has done the same thing. A lot of the car manufacturers for whatever reasons have decided they didn’t want to participate in Formula 1 because of the fast changing pace and the amount of money that went into it. So now we’re down to three basically engine suppliers. I think that works well for us so we don’t have to make this as complicated as it needs to be. And that’s what’s going to work for us. This is not going to be a European just throw money at things and go racing. This is going to be an American, wellrun, efficient organization, the same organization that you see at Stewart-Haas Racing is what we’re going to have. The same organization we have at Haas Automation which gives us the ability to build machine tools in the United States, where there are virtually nobody left in the United States even building machine tools. We do what people say can’t be done.
I think it’s just another face of that way of approaching the problem. That’s what we’ll do, and that’s what we’ll accomplish.
Q. You mentioned the rule changes and such. But why do you think it’s been so long since we’ve seen an American team compete at the Formula 1 level?
GENE HAAS: If you go back over the history of Formula 1, there have been a lot of Americans competing. You go back to the days of Dan Gurney and Mario Andretti and a host of other names that have competed in Formula 1. But I think when you go back a long, long time ago, those are in the days when there were like 20 different engine builders and everybody was building their own chassises. I think there was a lot more confusion going on. Thele rules weren’t really laid down.
If you ever watched some of the older movies like Grand Prix and whatever, they actually had actual footage of some of the Grand Prix races. They had people watching in the streets. They watched the cars go by at 180 miles an hour. Things have changed a lot since the last Americans have been involved in there. I think you get the impression that sometimes people think that the European way of racing is so much more advanced than the Americans. But we’re the most advanced country on the planet.
So I can’t imagine why we can’t do this. I don’t see any reasons why we can’t. It’s just basically racing. Parts are more expensive, the coffee is a lot more expensive, certainly, but I think we can bring a more rational way to do this. Why other Americans haven’t done it, I don’t know. Maybe to some degree people American’s thought we don’t have to worry about the European markets anymore. Let’s face it, manufacturing for a long time thought those people overseas, we have big markets here; we don’t need to worry about exploring stuff there. And we know how that all worked out. Obviously, by letting foreign competitors into our country, we gave up huge amounts of market share, and now we have to fight to get it back.
I think European markets are very important, Asian markets are important, every market is important. In the same way that we thought maybe we didn’t need those European markets and we don’t need their racing, that that’s all changed. I think those markets are very important. I think the Formula 1 Racing as they keep highlighting, it’s the Formula 1 World Championship Racing that goes all over the world. That to me is interesting. To compete in a world market and win is something that is very hard to do. That’s going to enhance the brand name of Haas Automation, which, like I say, is the ultimate goal here is to try to improve our standing in the world so we can sell more products in the world.
Q. Guenther, do you share that philosophy of not pouring money at it? Because when Red Bull came here initially there was a lot of money thrown at a lot of things and not so much the racing. Is that one of those live and learn type of situations where you can take some of the pitfalls that were learned there and kind of not make the same mistakes going forward with the formula Haas organization?
GUENTHER STEINER: I think to go back to what you said, there was a lot of money thrown on to it and not in racing, that’s right. So you know the position that the company takes, and Haas Automation doesn’t take that decision to throw money to what is not to racing. Absolutely, I agree with that philosophy because between Gene and Joe Custer and myself, we’ve come up with that philosophy that you can do this different.
I’ve been in Formula 1. I’ve seen waste. That is the good point of me. I’ve seen how it was done. I wouldn’t say always waste, but you can always do things better. But you need to take one step backward to make two forwards. Because you live and learn, as you said, and you can do it better. Absolutely, I agree with that and what we’re going to do is we partner up with somebody, and use their expertise.
The regulations have changed in our favor. Appendix 6 of the Sporting Regulations has changed. You can use more parts of what the (Indiscernible) is using. We don’t have to reinvent the wheel, as Gene said, because the wheel is there. We just do what is important to it and that’s how we see it to be efficient, how we go forward.
Q. The technology of Formula 1 racing, a few years back we did a tour media event over at Wind Shear at the wind tunnel, and they talked a lot of the F1 teams use that. Is that still the case? Is there an advantage of having the wind tunnel here, or is that something that’s maybe not so much it was at one time? How does that factor in, I guess?
GENE HAAS: Well, like I say, going back to the 2008 year, that’s when there was a lot of apprehension about how much money was being spent on aero. The cars were developing appendages that were coming out of the fronts and the sides, and they were worrying about air flow from the front nose and how it affected the wing. So there was a lot of experimentation and money being thrown at things. There was CFD, computer analysis of aero. And these were things that were just really, really running the costs up.
But if you go back say five or six years ago, the cost of computers is probably a hundred times what it is today. So now CFD is a lot more reasonable. It’s not the ultimate, but the rules are changed.
They had changed the rule to limit the amount of wind tunnel testing you could do. I think what they wanted to was they wanted to eliminate fullscale wind tunnel testing because they didn’t want people building hundredmilliondollar wind tunnels.
Now we have a wind tunnel and that is an advantage. Unfortunately, it’s a fullscale wind tunnel and that’s a problem. So what we’ll have to do with our wind tunnel because we already have one, the investment has been made and it’s a wellrun operation, we’ll have to change that wind tunnel over to run scale model wind tunnels which Formula 1 allows. Very stringent, they have a number of hours you can run. But there is an even more stringent number of hours you can run on a full scale.
So what we’ll do is we’ll have to spend some money on the wind tunnel to modify it to run a scale model, but at the same time, we’ll also have the ability to run verification of a fullscale model too, which a lot of our competitors can’t do. So we’ll have some advantages there.
Like I say, I don’t have to go out and buy a wind tunnel so I don’t have to pay the hundred million dollars because I’ve already got one, so that’s an advantage right there. I’m already saving money, and I haven’t seen started?
Q. A few years ago 15 miles from here there was an illfated F1 program, US F1. I’m wondering what shadow that’s cast over your program in terms of reputation that the Americans bring to the table, negotiating with Bernie, sponsors, etc.?
GENE HAAS: Well, I think that cast a long shadow because as was pointed out we’re the first American team to enter F1 in 25, 30 years. US F1 obviously tried that five years ago, and I don’t know exactly why they failed, but they had a different set of rules. There was a lot more complications of those rules. I respect that they tried.
I don’t think that they made a fullhearted attempt. But for whatever reasons, they failed at it. I think it just lends to the story line that Formula 1 is extremely hard to do. It’s extremely expensive to do, and Americans can’t do it. I’m here to prove that we can do it, and we can do it with a budget and we can be efficient at it and we can win at it. That’s what I’m going to try. I’m not saying that I’m better than anybody else. I just have a different way of doing it, and people that I work with think differently. That, I guess, is going to be the secret to our success in this business.
I wouldn’t be doing it if I thought I was going to fail. But I’ll try it even if I do fail, but that’s the challenge of it all. The challenge of it all is proving other people wrong. That would be the greatest satisfaction is being able to go out there and do what other Americans haven’t done, which is, I guess, the definition of success.
Q. Your start in NASCAR was kind of a slow start. Really didn’t blossom until Tony joined your organization. What did you learn from your NASCAR experience that you think will apply to F1?
GENE HAAS: Well, there is always that learning process. The learning process is a long process. It’s kind of the school of hard knocks. You have to go through it. You have to do it. There really is no way around it. But we have done it.
Now in Formula 1, we’re not making the same mistakes. We’re not going to go out there and basically go to people and say how do you do this? You teach us. I think that the people thing is probably the most important. We can distinguish between people who know what they’re doing, and people who dream what they’re doing. So we’re going to go out there and by selecting those people, and we know who they are. We’ve got them. We have them over at Stewart-Haas Racing. You can tell the difference between people that can get things done and ones that can’t.
Quite frankly, it’s probably the hardest thing in the world to do, to look at someone and look at their resume and figure out does this person really know what they’re doing? That is very difficult. Ultimately this will be a people organization. It always is. We have to put together a team that can accomplish that. That’s probably the secret to success here is just the people that we put together are hiring the right people and getting that done.
Q. You’ve got nine months to design and build a car the hardest thing is getting qualifying people together. ( The question was there is a very short turnaround in the testing, how do you go about getting everything together?)
GENE HAAS: Guenther, tell me how are we going to do this?
GUENTHER STEINER: I think first of all we tell everybody in the next four weeks or around four weeks if it’s ’15 or ’16. For sure if we do it ’15, we would have the answers by then because by now we would know what we’d be doing. But I think we need to define first our technical partner and then see and go from there. But we will announce in the next weeks, four to six, I would say, what we are doing. Then it’s only eight months to go. So we need to do it rather soon.
But we want to make the right decision. We don’t want to jump and say wow, we got this one wrong and then fade. As Gene explained before, he did it with the NASCAR team. Everybody learned about it. We will speak with people, and then we’ll make a qualified decision.
And we’ve got the option to start in ’16 if we think it is not doable in a good professional way for ’15. I think that is what was the question because I didn’t understand all of it.
Q. What is important is getting a group of people together because the biggest struggle for anybody is to have a team that’s together with F1 with experience and specific knowledge?
GUENTHER STEINER: Yes, that is one of the things because as many people in F1 have six months before they can leave the company and they can go to work. But we will rely heavily on partners to get this done if we get it done for ’15. So we’ll have this problem, but not we are not reinventing the wheel. We are not doing everything ourselves. So that is what you always have to think. But still the challenge to get the right people is not small. We understand that.
GENE HAAS: Adding to that, I think the challenge here basically in my mind is getting to the racetrack with a car that runs. We’re not here to reinvent the wheel. It would be insurmountable to say that we’re going to build a chassis by ourselves and engineer it, figure out how to do it and hire all the people in nine months.
So obviously we’re going to have to compromise on what we do as far as the construction of the car, and we’re going to have to try to acquire whatever we can, but our main focus is going to be coming to a racetrack prepared. I think when I look at a lot of the other teams, they spent so much of the time working on the cars, and then they have DNFs and they fail to start or they’re outside the time to be competitive. I don’t really care too much about the technology of the car in the first year. Our main purpose is going to be arriving at the track and racing a car. No matter how we do that, that’s our main focus here. Not the technical expertise of the car. We’re going to try to buy as much as we can of that, but the main focus would be the logistics of getting a team, as you say, to the racetrack.
I like their pit stops. They don’t put fuel in the car, and they’ve got 3 to 4 seconds to do that. If we’re a second or two off that, maybe we’ll be a little bit slow, but we’ll definitely change the tires on the car. We’ll definitely come down the pit. We’ll definitely show up for the races. That’s the main focus here. Not do we have the best aero package in the world. No, we probably won’t. But we can rely upon our technology partner at least for engines, transmissions, the KERS systems, suspensions, steering wheel, all of those things are going to come packaged to us. So our main thing is just focusing on the construction of the aero and chassis and getting to the races.
Q. You’ve been talking about the need for a technical partner. Does that extend to chassis design and build as well?
GENE HAAS: Yes. At the moment we’ve talked to a number of people. Obviously there are really only two engine suppliers available at the moment, Mercedes and Ferrari. The other chassis supplier would be Dallara who is obviously experienced in building IRL cars. We’re not looking to start our own shop immediately. We need to have people that have people on the ground, actually making carbon fiber parts and making tubs and so on and so forth.
So we’ve had some preliminary talks with Dallara, and they’re ready to go. They have a complete facility. They have experience. They know what they’re doing. They’ve been involved in racing forever as far as I know. They’ve been around a long time. So those are the kind of partners that we’d be partnering up with. At the same time, we want to learn. We’re not going to go over there and say build us a chassis. We intend to put our own people in there to learn these processes, because ultimately our goal is to become a constructor. That is our goal of Formula 1 is to have a driver’s series and a constructors series.
The constructor series is the part that we have to put together. I don’t think our car is going to be the Haas Formula car entirely. It’s going to be based on a lot of the technology coming from our partners to begin with. But as time goes on, we’ll learn. We’ll figure it out. The car will eventually evolve into our own car, and quite frankly, I think we can beat the Europeans at their own game.
Q. Formula 1 fans in this country have suffered some disappointments in their recent past. Some are understandably skeptical about your efforts. Do you understand the skepticism?
GENE HAAS: Well, there is obviously skepticism in anything that anybody’s trying to do that hasn’t been done before. The only way I can allay it is to go out there and do it. Like I say, we’ve competed in manufacturing machine tools in the U.S. when everybody else has virtually left. We took a small NASCAR race team that should have probably disappeared over the years and we won a championship with that. I think we have flexibility.
When things don’t go right, we go in a different direction, and we do whatever it takes to get things done. I can’t tell you about the other people that fail. I don’t know why they fail. I can’t guarantee that I won’t fail, but you have to try it. I’ve been pretty successful at taking on projects that other people say you can’t do. Maybe that is the beauty of it is the more people say you can’t do it, probably means they haven’t really tried very much. That might be the secret to it, is to find impossible things to do and then using current technology.
Like I say, we understand the business of putting things together and cars and people and the logistics of doing that. It seems insurmountable. I agree with you. But it can be done. There’s been a lot of teams that are running in the back in Formula 1 that have been exrace car drivers and businessmen who have no experience building Formula 1. They’ve struggled, and I understand that. But like I say, I have a wind tunnel at my disposal. I build machine tools. I race cars. I think I have maybe a more proper mix of the right materials to go Formula 1 racing than some of the other teams that have struggled with the same goal.
Maybe where they failed, I can figure out how not to fail. But I firmly believe that we have the right tools to go forward on this and be successful at it.
I tell you, the biggest reason for doing it is because if I didn’t do it, I’d feel worse about it. I think it’s a great way to help not only StewartHaas Racing and Haas Automation, but it’s something I know something about. So often people decide to go in directions that are just totally foreign. You’re successful at building TVs so you start a movie studio or something like that. I’m basically still doing what I’ve done 34 years ago, which is building machine tools and racing cars and putting the two things together to make a successful company, and that’s all I’m going to do here.
Q. A few hours ago Stefano Domenicali resigned from Ferrari, and Norbert Haug left Mercedes. Obviously, you can only have one team principal, but you talk about partners. Any consideration considering their connections to Ferrari and Mercedes maybe hiring them as consultants?
GUENTHER STEINER: I think I’ve heard from Stefano this morning. I haven’t spoken to him yet. But we’ve got good relationships with both of these companies. We visited them a few weeks ago. But what has changed in this company is it’s not one man making the decision. It’s a management team. We spoke with both management teams.
So not whatever happens I mean, Stefano resigned, and for sure he’s a friend, so is Niki Lauda a friend, so there are relationships.
But we are dealing at the level of a corporate here, so we don’t see any downfall hiring them as consultants, no. But I think now he’s doing German TV. So basically he’s doing DTM commentating, and Stefano I have no idea what he’s going to do in the future or if he is has figured out something. But I’m sure we’ll speak with him in the next days, and never say never, because they are both good people, good men, and they’ve been around a long time and their experience, for sure, has got value. But the answer, I don’t know yet.
Q. I’m having a hard time getting my mind about racing in Australia, bringing a car back to North Carolina for work, and then going back somewhere for another race. I know you want this to be a North Carolina based team, but surely most of the work during the season will have to be done in Europe or am I just completely off base?
GENE HAAS: No, you’re right. Obviously, a World Championship involves going around the world, so that is the first part of it. But you have to keep in mind, I think the Kannapolis campus will basically be for manufacturing and engineering. We’re going to try to do most of the engineering there and building of the pieces.
Once you build a chassis, you’re pretty much kind of stuck with it. You’re only allowed a certain number of chassises. So the chassises then are put on airplanes. Formula 1 provides the transportation for your chassises and spares and stuff to go to the different races. I think the way it works is that they actually do a lot of logistics. We’re going to go to Australia, then we go to Bahrain and then we go to China. So rather than flying these 747s back and forth, you take all your parts and you fly to Australia, then you go to your next race and you rebuild your chassis probably at the location.
It’s not like Cup cars where you hit a wall you have to change a clip or anything. These cars typically don’t hit the wall. And the idea is that you’re racing a car that when the car comes back, basically what you’re stuck with is taking the suspension apart, checking parts over, replacing any worn bushings or whatever you find there and then bolting it back together. Then when you go to the next race, if you want to make any aero changes, you would have those parts shipped over.
So I think if you think about it in terms of NASCAR, it wouldn’t make sense. But the way they do it, it makes a lot more sense in terms of the logistics. The idea is you don’t take a car that you fly back and forth to the races. You take a car that goes from the next race to the next race, only changing the parts that need to be changed.
They have the regulations with engines. Your engine has to last for six races now, and your gear box is similar. So the idea is that you’re not here to constantly be rebuilding your cars. The idea here is to go from race to race to race changing only what is necessary.
The other thing is that I think they charter a couple of 747s and they put all the teams and all the parts and everything on them. They don’t want to be flying those back and forth all over the world. They only want to fly them from the closest point to the next closest point. So I think if you looked at what they do, it’s actually very logical in terms of conserving energy and time as far as the teams go.
GUENTHER STEINER: Can I answer that one a little bit better to explain. For example, the cars this year went from Europe to Bahrain for the test, the first test. They stayed in Bahrain, they tested again, and then they threw direct from Bahrain to Australia, from Australia direct to Malaysia, then to Bahrain for racing and now they’re on the way to China. They never go back.
So in Europe they don’t see the cars as well. So it doesn’t make a lot of difference logistically, but the European season you need to have base because you work out of haulers in Europe. It doesn’t make a difference if you come from America or Europe in that sense.
Q. Gene, you said at the start that your focus is on marketing Haas Automation across the world. How much does Formula 1 need you to focus on marketing Formula 1 in the U.S.? How much of a focus will that part of it be?
GENE HAAS: Well, I think it’s maybe a byproduct. I spend a lot of time trying to figure out marketing. I build machine tools, and most people don’t even know what machine tools are so that’s a problem. But when it comes to our customer base, everybody wants to buy a premium brand. I think that’s what the goal here is is to associate ourselves with premium brands. I’ve always in the back of my mind have thought that Formula 1 is the premium brand in the world of racing. We’ve done very well with associating machine tools in racing.
You know it may be similar to Red Bull and drinks. Red Bull is known for having a successful Formula 1 team, and I think it sells a lot of Red Bull for them. So in the same vein, I want to kind of create my own unique product association with Formula 1.
It’s expensive to do it this way, but the other alternatives would be more media, buying more media or trade shows. Quite frankly, I’m never going advertising more and going to trade shows more will never, ever increase your brand awareness. What I want to do is create a premium brand for Haas Automation so that when someone in a foreign country who is in the market or in the machine tool metal working market hears my name is going to think that these guys are in Formula 1. I know from Formula 1 that they must be a good product because only the best compete in Formula 1.
I want to associate that kind of thought process with the people that potentially could buy my product.
I’m sure most people are betting that we will fail. That’s why it’s going to be successful because if we don’t fail, then we’ve done something that other people haven’t. That will definitely help sell Formula 1 in the U.S.
I think Formula 1 is very interested in the U.S., because the U.S. is the biggest economy in the world, and they don’t have much of a presence here. I think that even a simple business plan would say if you’re going to have a premium brand, you need to have the United States in your marketing plan. So I would think that we’ll certainly help Formula 1.
We won’t help Formula 1 if we fail, that’s for sure. So if we succeed and we’re good at it, I think we’ll bring a lot of new fans to the Formula 1 base, and racing is changing. We know that NASCAR is looking for new fans all the time. I think obviously we have the Indy 500, one of the greatest races in the world. Formula 1 I think will bring more people into watching racing, which I think is good for all kinds of racing. The more people that watch it, it’s a great sport to watch. It’s good entertainment. As we become more of an entertainment society, watching things on TV, motoracing lends itself very easily to that kind of packaged product.
So I think bringing Formula 1 or at least helping it become noticeable in the U.S., however we do that, is going to be good for Formula 1. It will be good for all forms of racing, and I think it’s a good entertainment product that different associations and NASCAR and Formula 1 can help sell their product, and that’s good for the teams.
Q. Gene, how will this effort potentially help your NASCAR effort? What are the challenges, because I think there are probably those NASCAR fans that would say this is going to detract, or the challenges take away from your NASCAR effort, and you’ve certainly had success in the championships. How is this going to help and what are the things that you have to watch out for so it doesn’t hurt your NASCAR program?
GENE HAAS: Well, I look at it as Stewart- Haas Racing having a racing campus. One side of it we’re going to have the NASCAR teams. On the other side of it we’ll have the Formula 1 teams. I think it works beautifully. We already had the land. We’re going to have the buildings right next to each other. There are a lot of similarities between both forms of racing.
Like I say, both teams will use wind tunnels. Both teams use a lot of CFD computers. Both teams will need a sevenpost rig which we actually have at Stewart-Haas Racing. So I think there are a lot of similarities there. Probably one of the biggest things that we can take from Formula 1 is what we learn in aero. Formula 1 teams are much more into aero packages, especially when it comes down to things you’d never think about like brake ducting and radiator intakes, and how the air comes out of the back of the wing and so on and so forth. These are things the NASCAR teams are just starting to touch on now that the bodies have been very much regulated in terms of how the aero goes over them.
But a Formula 1 car produce somewhere around 4,000 to 5,000 pounds of downforce, a Cup car maybe a fourth of that or so. So there is a lot to learn in terms of aero packages. So I’m hoping knowledge from one side can transfer over to the other. On the other hand I think that building cars in NASCAR is a lot simpler than Formula 1.
We have inventory management systems over at Stewart-Haas Racing that allow us to time out parts. I mean, there are literally thousands and thousands of parts that go into a NASCAR car. And all of those synergies, you know, you can’t use the same transmission forever. You can’t use the same bolts forever. That’s why you’ll see on the track sometimes teams in the back, things break. Well, why did they break? Did anybody keep track of how many times you used that part? You have to have systems in place to keep track of that. We have those at StewartHaas Racing. So I think a lot of those programs will help.
So I think there are a lot of positive synergies between the two things. Will it detract from one side to the other? I don’t know. I wouldn’t say detract. I think it will enhance because we’re doing something different. We have a lot of team members that work on the NASCAR side that have an interest in how does Formula 1 work. They haven’t even seen a Formula 1 car. So, I think this will spark an interest. Yeah, look at that. Look how they do things. There’s got to be something here I can learn.
We have a lot of really smart people at StewartHaas Racing that are constantly looking for new ways to beat our competitors. I can’t think of anything in Formula 1 that would detract from that. I think we’re going to have a racing campus there with NASCAR teams and Formula 1 teams. When it all comes down to it, we’re just racing. That is the common denominator. So I don’t think it will be a detraction. I think it will actually help both sides.
Q. Gene, you’ve been asked about one of your current NASCAR drivers. I’ll ask about two that have or will have IndyCar experience. If there is any interest from sponsors to put Kurt Busch or Danica Patrick in an F1 car, would you consider it?
GENE HAAS: I think the biggest problem with NASCAR is you have such a grueling schedule, basically 40 races. Those guys are working every weekend. I just don’t see how you can be in NASCAR and be in Formula 1. Formula 1 has half the races, but the technical expertise of going to the races is just demanding, very, very demanding.
I tell you I have a little bit of knowledge about Formula 1, just looking at what intimidates me the most is the steering wheel. In a Cup car you have a round wheel with a button on it. In Formula 1 car you have buttons on the front, on the side, in the back. They have eight paddle shifters. You don’t learn that in a day. So I think just the thought of jumping into a Cup car or jumping into a Formula 1 car from a Cup car would be very, very difficult.
But I tell you this much, Formula 1 guys have a difficult time driving Cup cars because they require a whole different set of disciplines. So I don’t know if there’s I don’t know too many drivers that have been successful going between NASCAR in Cup racing, and I certainly would never expect any of our current lineup of drivers to want to be able to do that. That would just be, I think almost it would be impossible to really accomplish that and survive.
Q. Gene, you mentioned earlier the time scale of being ready for 2015. Do you think it’s more likely you’ll be ready for 2016? And has the FIA given you express permission to delay your entry?
GENE HAAS: The FIA has basically told us we have to elect which year we want to participate in, and I think there is a timetable sometime around June to do that. I think 2015 is too close, and I think 2016 is too far, so that’s kind of where I see it. If we wait till 2016 we’re going to start delaying and start strategizing and end up spending even more money because we’ll just be basically in a neutral position until maybe the middle of next year.
Right now we’re in the middle of next year for the 2015 series. So what we need to do is come up with a plan where we can arrive with a car, I’ll use the word customer car, that’s not acceptable in Formula 1, where we can arrive with a car that’s based on our partners’ technology is within the rules of the FIA. And that’s what we really need to do. That’s what our goal is is as simple as that. We’ll have to beg, borrow or steal whatever we can to arrive at that first race so we can compete.
It’s more important to arrive at the first race and have a car with the wheels that don’t fall off, and we have a team to get that car on the track and be competitive than it is what we bring to the track. So that’s really what the goal is.
It’s a tough decision and something we’ll have to figure out in the next few weeks. It won’t be easy. But, obviously, it’s crucial. If we say we’re going to be there in 2015, it’s going to be a crunch, but if it’s a decision we make and if that’s the decision we make, that’s what we’ll do.
Q. One of the key factors is the speed. Now you’ve talked about that a lot. So do you have (No Microphone) drivers?
Q. How quickly you can develop the car and the parts and pieces associated with it?
GUENTHER STEINER: I think you’re asking about simulation systems. For sure, the NASCAR team one is in place, but we need to evaluate what is the best for us, again, and speak with people. I wouldn’t say they are readily commercially available, but they are available and we can do that.
I think the second part of the question was the continuous development and how we would handle that. I think we’d handle it like all the other things we need to develop. We cannot just make a car and then stay still. I think they have a very good goal to use the Wind Shear wind tunnel if it’s operational in scale by then and we can use it in scale model in configuration because it takes some time to convert it. Otherwise we use our partners we choose to develop the car in the first place.
Q. When you speak of partner, a partner would have to be either a Ferrari or Mercedes customer or partner; is that is that right?
GUENTHER STEINER: Correct. Because also they can supply only four three other teams except their own one, and they’ve got already four cars, but they don’t have their own car, yes, this is the two we are speaking about.
Q. There had been earlier talk about how many years of a commitment FIA wanted or Formula 1 had wanted. Did they express that to you and do you have a longterm goal as far as what your participation will be?
GENE HAAS: Well, the FIA had a minimum commitment of two years, but they were looking for us to be there through 2020. Absolutely we have to be there for the first two years, but they really made us kind of commit to the fact that we’ll be there for basically a period of at least six years.
Q. Guenther, very excited to see you back in Formula 1. It’s been too long. You more than anybody in this room know what a grueling schedule is like. When Gene asked you to come along as team principal, how long did you have to think about the fact that you’re putting your life on hold again before stepping back into that mine field?
GUENTHER STEINER: I think for me this is a passion as well. It’s part of my life. I do Motorsports for more than 20 years. It doesn’t take long to think about this. It’s exciting. It’s a different way to do it. I wouldn’t say a new way. It’s different. It’s a good way. I think that’s where the sport is going anyway because they are talking about cost cuts, and everybody will have to go that way eventually cost cut. So if you start off with a white sheet of paper not having the cost driving it down, but not getting it up there, it should be easier.
I know the cost cut has not been signed. We are all aware of that. Eventually that will end up. I don’t know how high it will be. But to go back to your question, no, I was happy when the opportunity arose, and I hope everybody enjoys us here in America that an American team is back.
In Formula 1 there was a lot of doubt about the Austin Grand Prix in the beginning. It would not happen and it would not be good, which it is the most exciting Grand Prix at the moment for the guys in television like you or all the teams, it’s Austin. Everybody loves to go there. Nobody liked to go to it in my time, but everybody loves it.
I was out there in Austin the last few years and spoke with a lot of people from the teams, they all loved it. So I think we can get more of this and enhance this American experience with the team.
Q. Gene, if I may ask, already you may be aware, certainly I’ve been looking at my Twitter feed this morning, your fan base is already growing as far as the Formula 1 team is concerned. And the American Formula 1 fans in our experience very passionate, very knowledgeable. They’re longing for a Formula 1 team to make a real impression in Formula 1. One of the biggest problems we’ve had in Formula 1 historically has been access to the team, and availability of personnel and drivers to come forward and talk to the fan base. Will you be doing something different for the American audience?
GENE HAAS: I tell you, when I had gone through the pits I noticed exactly what you’re talking about, how the experience differs from NASCAR to Formula 1. I think we’re going to be very open within what the rules allow. There is very little access to the pits by the fans. I guess you can walk down pit road, but it seems like the FIA has different ideas about fan access than what NASCAR has. That in itself is a problem.
I’ve always found, I tell you, when I’ve been to these races and I was there with Guenther, they’re people just like everywhere else. We’ve been into the Ferrari hospitality suites and the Mercedes suites and they’re just normal people. I think they probably would open up to that.
I’m not sure why they restrict the access as much as they do. Maybe it’s the drivers that want it, but it’s certainly not something that we’d subscribe to. We kind of like the NASCAR way of doing things.
But on the other hand, I have to admit that the Formula 1 where you have the racetrack and then you have the pit wall, and then you have the pit lane, and then you have the garages and then you have the haulers is kind of unique. Every track is like that. I kind of like that idea and the structure that they put in the garages is, I think, favorable. But I think what we’re looking at is just the way these two different racing venues have evolved over the years. Hopefully things will change as time goes on.
I tell you, reading about Formula 1 over the years, Formula 1 changes a lot. Every year just major rule changes, a lot more than we ever see in NASCAR. Like you point out, NASCAR is more open to the fan base. Maybe it has something to do with the fact that they go all over the world and there is apprehension about some places you need more security than others. But with Formula 1 they seem to have a way of putting rules down that are applied everywhere.
Q. Will you be looking for additional sponsorship in addition to Haas Automation?
GENE HAAS: Well, initially Haas Automation will sponsor the team. Like I say, the goal here is to improve the branding of Haas Automation throughout the world. That is my primary goal. I don’t want to dilute that at the moment. But as time goes on, we’ll see how that works.
Obviously, we have a business plan to make this a profitable enterprise over five years, and that will require some sponsorship to come in to do that. Initially Haas will bear that responsibility, but that will also be wellspent money in terms of improving product recognition. As time goes on, to run it as a Formula 1 team that actually does make money and can compete. So those are the long range, and short range plans that I have.
Q. Gene, I just wanted to ask you what gives you the confidence that you can succeed where US F1 failed?
GENE HAAS: Well, I think the differences between Haas, CNC, Stewart Haas Racing, Wind Shear is what makes us different than US F1. US F1 is a startup that had no resources whatsoever. It didn’t have a racing team. They took on a huge challenge.
Like I said, I admire the fact that they took that challenge, but on the other hand, I’m partners with Tony Stewart in a very successful NASCAR racing team. I have a machine tool company that has the capability of building the most sophisticated machines in the world. We built five axis machines. We built all the machines that we need to even make our parts. I have a rolling road wind tunnel, Wind Shear, 180 mileanhour wind tunnel. So I have a lot of the resources and basic infrastructure that I think is necessary in order to succeed at this. I think US F1 didn’t have that.
Obviously, I would have liked to have built it, but the fact of the matter is they didn’t have it. I think I have at least 50% of the parts available right now to do what we need to do. So I think I’m a little bit farther ahead on the curve than US F1 was. I feel confident that we can fill in the remaining bits of the puzzle and be successful at this.
Q. Gene, just interested to know if you actually like the sport of Formula 1 or do you like the fact that Formula 1 acts as a significant global marketing vehicle?
GENE HAAS: I like Formula 1 from a marketing aspect of it. I think it reaches the World Championship, that is just a fact. NASCAR is more of a domestic series. When I’ve been over to Europe, and I go to Europe a fair amount of time, people don’t know what NASCAR’s all about. Sometimes they like to watch it. It’s very difficult to watch because you have to have the feeds to get it.
So from a racing standpoint, nobody in the rest of the world or virtually nobody knows what NASCAR is and that’s a bad thing for NASCAR. They have a good strong domestic base, but in this day and age, I think you’ve got to be global in everything you do. That’s where Formula 1, I think, has a big advantage. It’s probably the most watched motorsports venue in the world.
Even though the United States is certainly going off in different directions as far as media entertainment, motorsports racing in the rest of the world is still very well followed. I think it’s right up there with soccer and football and those kind of sports.
So I definitely think that Formula 1 has a worldwide impact which I find is great, and that’s going to help with my initial plan which is to sell more product in the rest of the world.
Please note this transcript is from RACER and feature image is also courtesy of RACER.