Questions from the floor

Q: (Joe Saward - Grand Prix Special)
Three of the four of you are involved in Formula One to sell cars. At the moment there's a bit of a financial crisis around the world; what do you think the real impact of that will be on Formula One and as a secondary question, how do you feel about not being in North America at all, the world's biggest car market?

Mario Theissen:
The second question first: obviously we are not happy about not being in North America. The US is the most important and biggest car market for BMW and I think for the industry as a whole. It has always been difficult to set foot into the US but Canada has always been a very strong Formula One supporter and the race in Montreal. I have seen the race in Montreal as an operational base to get a second race up and running in the US, and so we would, rather than drop the Canada race, use it or expand the operations in North America to have a Canadian plus at least one US race.

The other question? Financial crisis, economical crisis world-wide. Well, the answer is simple. Formula One is of this world and so Formula One will be affected as other industries are affected, as all the sponsors are affected. Basically every stakeholder in Formula One is affected and so we have to deal with it like any other operation.

John Howett:
I think we need to put things in context really. The first is if you look at some of the figures released for the British premier league in terms of teams' liquidity, the issues being faced by F1 teams are relatively minor. If you look at the advertising budgets of large corporations excluding car manufacturers, they are over $2-3bn a year, so I think one of the issues is to continue... because Formula One is so powerful and so strong, to actually work with the commercial rights holder to actually demonstrate the value of utilising Formula One as a marketing tool and I think we need to use more effort on that. Clearly as a car manufacturer we will come under pressure because a number of markets are depressed, others are fairly buoyant like Russia and China, but I think the strong companies who continue to invest in marketing, who continue to invest in technology, will become the winners. We should also look at the opportunity that this sort of situation presents, not only the pressure, so you can paint a very black picture or you can say there is a lot of upside here for Formula One and also for those well-managed Formula One teams and well-managed manufacturers. So yes, we will go through a hard time, I'm sure that we will all survive, we will probably come out with a strong sport.

Canada? We are sad because it's a great race, we like to go there. I think one of the targets of FOTA is to actually ask the commercial rights holder to really establish a strong foothold in North America, particularly the US, with a race which showcases Formula One well, and is, if you like, economically beneficial to Formula One as a whole. So I think this is one of the core discussions FOTA wishes to have because it is a very important market for our sponsors and for Formula One and hopefully in the next one to two years we can establish a proper race in the United States which is good for all of us.

Nick Fry:
On Canada, we are hugely disappointed - it's difficult to emphasise by how much. Honda is very successful in Canada, we make cars there, the local company there is hugely enthusiastic about Formula One. We have large numbers of guests from America and from Canada. We sponsor the event, we would like to see it back on the calendar as soon as possible and I support John's comments that I think it will be a major topic of conversation among the teams at the next meeting of the teams. I think we need to look at North America on a more strategic basis. As soon as we were down to one race on the continent, things inevitably were going to get difficult because the costs of transportation and appearing just once across the other side of the Atlantic were huge and I think really we need to look at how we're not just going to get back Canada but how we get back to America, potentially more than once, as it is such an important market.

On the other subject, I agree completely to the previous comments. The thing I would add is that we do need to work together as ten teams to make sure that the ten teams stick together, work together and survive. We've got a fantastically successful series, we've just come off the back of arguably one of the best weekends and we need to preserve that. Like Mario, I'm incredibly encouraged by the first round of meetings of FOTA but the first meetings are inevitably usually the easiest ones. It's when you get down to the nitty gritty it gets somewhat more difficult. There's a lot of diversity in the income and the levels of sponsorship, the parent company ownership of the teams. At one of the scale is probably a company like Honda or Toyota or BMW which are extremely successful in share price. Certainly Honda has done rather better or lost rather less than most of the others but we shouldn't be complacent and what we've got to do is to make sure that other teams which maybe aren't making money and do have sponsors that are hugely affected by the latest financial crisis do come through it and I think FOTA and the meetings with the FIA and with Bernie (Ecclestone) are the mechanism to try and make sure that happens. We really do have to pull together, we've got off to a good start but the difficult bit is yet to come.

Q: (Ken Kawakita - Sportiva)
Again, I would like to ask you about the recent economic crisis. The situation is very difficult to predict; how quickly do you have to react to this economic situation? You have been talking about cost-cutting and now it looks as if you've made a practical step but is the regulation about the long-term future quickly enough? Will you have to make a change a bit earlier than you expected?

MT:
We have heard right now that Formula One is a very strong operation and it's a big operation and it's very much technology-driven, so that means there is no need to panic, that's message number one. Message number two: you cannot change things of this technical complexity overnight, so we need to take a reasonable approach, an approach which satisfies all the needs including the need for all the teams involved to cut costs. On the other hand it has to be a viable route which means we cannot come up with a low cost engine within a few months. This would require huge additional expenses on the manufacturer side, so that means we have to look at a certain period of time and at a combination of measures which can lead us to the final target which is do-able in the short term and then prepare for the long-term future in a commercially viable way.

JH:
I think that the danger is that a knee-jerk reaction could be catastrophic. In the end, if we have pressure, we will be told that's the budget and we will survive. In the end, I suppose there are three core drivers of the cost: one is manpower, second is investment which fundamentally we have to pay for because it's capitalised and has to be depreciated and the third is the material used, what we actually use for each race. Very simplistically, if we get told this is the budget for competing this year, next year we will compete and we will do the best available job that we can within that. Obviously the social issue is what will happen to the motor sport infrastructure and it goes beyond teams. The UK, in particular, I think has a multi-million dollar motor sport industry which could be destroyed and that, I think should be something that people do worry about and take into consideration, but in the end, simplistically, if Toyota tell us that's the budget, we will operate at that budget and make the best professional decisions to handle that.

NF:
I see this in the same way as you would address the problem in any other business. It needs a range of actions, some are short term, some are medium term and some are long term. You divide those up: some things are impossible in the short run. It's not possible to design a new engine in six months, that's in the medium or long term, that's two years. People do have employment contracts and we have to respect that, that's another medium term one but I do feel that whilst we shouldn't panic, we need to do things for the short term and that means next year. It's difficult to say otherwise when you have five thousand people laid off recently at a car factory in France. How can that manufacturer turn to its employees and say it's not going to do anything. There's a requirement for some of the Formula One teams to have instant action. You've only got to look at the accounts of some of the Formula One teams to see losses over the last couple of years and that needs to be addressed. The bank manager is not going to lend any more money. I agree completely with what's been said: we shouldn't panic, we shouldn't do anything which is going to harm something which is very successful but on the other hand that doesn't mean do nothing. It means you've got to do a bit of everything and you've got to start now, and I think that's the message, rightly so, and we've got to come up with the appropriate response.

Q: (James Allen - ITV)
Question for Mario: with these spec engines that they're talking about now, where you're all given a set of plans and you go away and build the engine, how does that fit in with the idea of controlling the power, however much power you can get out of a fixed unit of fuel which was the idea that Max [Mosley] had in the early part of the summer? Is that still part of this plan or has that been moved off the agenda now?

MT:
You mean the plan of the engine working group or the plan of the FIA?

Q: (James Allen - ITV)
The plan that's being discussed at the moment between the teams with the FIA to have a spec engine, a spec drive train to bring the costs down. How does the technology of getting a performance differentiated by how much power you can get out of a fixed unit of fuel, how does that sit with having a spec engine?

MT:
I'm still not sure I really understand the question.

JH:
I don't think there has been any discussion between the FIA and teams of a spec engine. There's a lot of speculation and there's been, I think, some allusions in the press releases towards that, and I think a lot of the manufacturers are concerned about having a spec engine, because one of the core interests is at least having some differentiation in the power unit. And also you have to look at probably the current cost of the engine could be replaced by the cost of KERS. If you look at road car technology, a lot of the current and ecological developments are coming from the engine, not necessarily only - shall we say - a hybrid add-on. So direct fuel injection, multiple injectors per cylinder, lightweight materials, a lot of which are banned from Formula One. So I think we need to have a serious discussion without politics between the professionals to try to find a compromise which supports the small teams and actually gives the right result for the manufacturers and I think that can be achieved.

Q: (Ed Gorman - The Times)
Can I just pick up what John Howett is saying. Bernie Ecclestone has said this week that he wants a standard engine in Formula One, and he's talking about massive cost-cutting of up to 95 percent in drive train costs and what's evident from what all three of you have said here today is the huge difference in view. You're talking about incremental change, short term measures, importance of not making knee-jerk reactions but he is talking about absolutely huge changes in the philosophy of engines and the cost. Is he talking nonsense because it sounds like you have got a totally different view of how the future's going to develop?

JH:
I could say controversially that the negotiating stance historically in Formula One has been to put an extreme proposal on the table and then that encourages the teams to move in a direction, so we may just be, at the moment, purely in a negotiating tactic. I don't know. I haven't heard from Bernie directly, what his ideas are but I think we run the engine departments and we know the exact figures of what we're paying and where our resources are being used, so we must be better able to actually have a professional discussion on the right solution.

Q: (Ed Gorman - The Times)
Isn't it eventually going to come down to how much of an engine you have to build to be able to say it's a Toyota as opposed to just a standard engine? Isn't that essentially what it's going to come down to? Because he wants you to have a standard engine with a bit of face-saving stuff, so you can say it's a Toyota.

JH:
Then we have to decide whether Formula One is the right environment for various manufacturers to remain in and I think that's the discussion we need to have and whether it's the right core value that the fans wish to have and that you as the press wish to have. So there is, I think, an important facet in maintaining Formula One as the pinnacle of motor sport and how to achieve that will be the balance. I'm not rejecting cost-cutting at all. I just think we need to do it in a professional and correct way.

MT:
Total support.

NF:
Yeah, I support exactly what John says and without being semantic about it, I think we do have to define our terms. I think most of us are not happy at all with the idea of a standard engine which we would define as an engine, maybe even designed and made by someone else, similar to the old Cosworth DFV and that's not something that Honda, and it sounds like, Toyota and BMW would particularly support. In our case we are the largest manufacturer of internal combustion engines in the world, it's the core of the company. But on the other hand, a specification engine or a prescriptive engine, where the design was very, very tight, the materials were very tightly controlled, it was maybe a four cylinder engine which was much cheaper but we had the ability to put our brand identity on it in that we were designing it, we were making the thing, then that's a very different proposition and I think you would be able to reduce the costs very significantly by doing that. So I think the end result may not be massively different but the thinking behind it is very, very different.

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