Features - Financial
FEBRUARY 1, 1998
Motor Racing's Silicon Valley
BY JOE SAWARD
But by the 1930s the French had been eclipsed by both the Italians and the Germans and in the immediate post-war era the Italians were utterly dominant with Alfa Romeo, Ferrari, Maserati unbeaten in Grand Prix racing until Mercedes returned in 1954. After the Germans withdrew at the end of 1955 the Italians stayed dominant with Lancia-Ferrari and Maserati until August 1957 when Stirling Moss took his Vanwall to victory at Pescara. From 1958 onwards the British became the dominant force with Vanwall, Cooper and BRM being joined by Lotus, Brabham, McLaren, March and Tyrrell in the course of the next 15 years. The late 1970s added Williams and a string of less-successful teams but British domination became so great that even Ferrari moved the design and manufacturing of its cars to Britain.
But how did it happen - and why? And just how big is the British motor racing industry? Last autumn this became an issue in parliament as politicians argued whether or not Britain should support a European ban on tobacco advertising. Some said that this would put 50,000 jobs at risk. Others said the figure was only 8,000. What is the truth?
The motor racing industry is relatively young and so has not been much studied by academics. In recent years, however, the success of the industry has attracted several studies notably one by the Institute of Public Policy Research (IPPR), an independent charity which aims to use research to contribute to public understanding of political, social and economic issues.
The research, carried out by academics Dr Beverly Aston, a lecturer in finance at the University of London and Mark Williams, a fellow in Economics at Exeter College, Oxford, reveals a fascinating story of how British ingenuity was translated into economic success and why the motor racing industry is clustered in an arc to the north of London, running from Woking in the south-west to Huntingdon in the north-east.
The clustering of firms with specialist skills is not unusual in other industries: electronic companies have been gathering in San Jose's Silicon Valley for the last 20 years and in Italy there are enclaves of ceramic companies (around Bologna), leather goods (Milan) and knitwear. In Toulouse the European aerospace programme has attracted all manner of high-technology companies.
The researchers concluded that the success of the British motor racing engineering industry can be traced to 1945. At the time Britain was in a financial mess. The war with Germany had been won but the cost of rebuilding industry, shattered by the German bombing meant that there were shortages of all kinds of basic raw materials - not least of which was money.
But having survived the war many car enthusiasts wanted to have some fun. The government wanted to boost exports to help pay for the reconstruction and so many aspects of British life were restricted. Purchase tax of luxury cars was as high as 66%, hire purchase was restricted, petrol was rationed and imports banned until 1953.
At the same time a whole generation of young engineers, who had spent six years designing, building and operating advanced military hardware with which to defeat Germany, were looking for new challenges. The result was that car clubs became popular as racers advised one another on how to build their own racing machinery from kits or parts of old cars. It was do-it-yourself motor racing. The 500cc Club and the 750 Motor Club both played an important role in this although it was the 750 Motor Club which had access to the basic Austin Seven which the enthusiasts treated "as a grown-up Meccano set" with which to create racing and rally cars.
The clubs created commercial opportunities for those with the skills and the vision. The Cooper Car Company, for example, began building 500cc racers built from components of the Fiat Topolino and flourished in the years early 1950s. Eventually the company began to build "proper" racing cars.
The DIY racers of the late 1940s and early 1950s enjoyed one very important asset. While road racing in Britain was banned and the old pre-war racing circuits of Brooklands and Donington Park were new military dumps, there was no shortage of racing venues thanks to the large numbers of airfields which had been built in the course of the war for the thousands of aircraft which were used to bomb Germany. After the war these were left redundant. It was not long before motor racing enthusiasts discovered that they could race on the concrete strips which had been runways and taxiways. Silverstone, Snetterton, Thruxton and Goodwood are the best-known of the old airfields but there were many more, including Croft, Castle Coombe, Llandow, Rufforth, Boreham, Fairford and even Greenham Common. All these meant that enthusiasts could race easily and often.
As the sport grew so did the need for car constructors, component manufacturers, engine tuners and other businesses. As they were set up by racing enthusiasts with specific aims they tended to be dedicated to motorsport and thus had to be competitive to survive as they had no income on which to fall back. When engineers came along who felt they could do better than what was available they were often proved right.
Colin Chapman was a leading member of the 750 Motor Club with Austin 7-based cars which became so successful that in 1952 he established Lotus in stables behind the Railway Hotel in Hornsey. He began to build spaceframe racing cars and as success followed success so Lotus grew. Some of the most famous Lotus designers were also 750 Motor Club men, notably Maurice Philippe, an expert in aircraft wing structures who built his own sportscar - the Maurice Philippe Special - in 1955. Philippe would bring in other aerospace engineers such as John Baldwin.
Other 750 Motor Club members who worked for Lotus were Tony Southgate, John Miles, Mike Pilbeam and Len Terry. Pilbeam went on to establish his own Pilbeam Racing Designs in 1975 and has enjoyed a great deal of success, particularly in hillclimbing and sportscar racing.
Eric Broadley was another 750 Motor Club graduate who began building his own cars in the late 1950s. The result was Lola Cars which would become one of the biggest racing car production companies in the world. He too would recruit from among his friends in the 750 Motor Club, notably Len Bailey, the designer of the Le Mans 24 Hours-winning Ford GT40.
It was not only Lotus and Lola but also companies such as Chevron, founded in an old cotton mill in Bolton by 750 Motor Club racer Derek Bennett, and Mallock, the brainchild of Major Arthur Mallock who started out racing a converted Austin Seven.
The Austin Seven also provided a start in motor racing for Frank Williams.
The growth of the British club scene in the 1960s resulted in other ambitious projected, notably March Engineering established in Bicester in 1969 by former McLaren engineer Robin Herd, wealthy racer Max Mosley and former racer and Winkelmann Racing team manager Alan Rees. This would be largely responsible for the concentration of the industry around Oxford. This was underlined with the establishment of Arrows at Milton Keynes in 1977 and Williams at Didcot the following year and was followed by Toleman in Witney in 1981 and TWR, Reynard, Jordan and Prodrive in the course of the 1980s. These were, of course, juts the high profile companies and there are many more suppliers in the area. March proved to be a very forward-thinking company and employed many young engineers over the years, notably Harvey Postlethwaite, Nigel Stroud, Tim Holloway, Tino Belli, Adrian Newey and Nick Wirth.
As each racing car company developed talented so some of the youngsters were flew the nest to work with the opposition or to start up their own businesses. Before establishing Cosworth Engineering, for example, Keith Duckworth worked as a gearbox designer with Lotus.
More recently both John Barnard and Patrick Head learned their design skills from Eric Broadley at Lola. They have gone on to create their own "schools" of design. Head has been particularly successful in this respect, teaching a whole generation of engineers who have gone to work elsewhere, notably Frank Dernie, Neil Oatley, Sergio Rinland, Enrique Scalabroni and Ross Brawn.
In recent years Adrian Reynard has created a similar school of young engineers and many of these will be moving back to the organization as it embarks on its F1 adventure with British American Racing.
The most important of the engine companies was, without question, Cosworth Engineering, established in 1959 by former 750 Motor Club racer Mike Costin and Keith Duckworth specifically to tune Ford engines for the British club racing scene. These became the mainstay of the sport in the 1960s and the Cosworth DFV F1 engine enabled a number of teams to enter Grand Prix racing with a cheap and reliable engine package. Without the DFV the likes of Williams, Shadow, Arrows, Ensign, Fittipaldi and Wolf would probably never been formed. In time Cosworth spawned Brian Hart Ltd and Ilmor Engineering, both of which were founded by former Cosworth engineers (although Hart had also been a member of the 750 Motor Club).
Other engineering companies such as Hewland Engineering were lured into motor racing by commissions from the young racing car companies such as Cooper. They in turn spawned offshoots which went into competition with them.
It all cases it was a question of the survival of the fittest. Constant competition not only provoked constant technological breakthrough but also weeded out the companies which were not meant for success. As a result the industry was never able to stagnate. Every aspect of a racing car was examined constantly and from time to time another budding entrepreneur/engineer would say: "I can do better than that" and set themselves up in competition. The immediate post-war generation of DIY enthusiasts had to learn to live with advancing technology. Some could not cope. Today their names are largely forgotten but rather than Lolas and Lotuses we might in different circumstances be discussing the exploits of the Arengo or the Marwyn, the Beagle or the Parker Special.
Constant innovation and development meant that the team bosses were constantly looking at new areas of specialist knowledge which might help them to get ahead of the competition. It was natural that many of these would come from aerospace as there were a group of 750 Motor Club enthusiasts who worked together with De Havilland in Hatfield and later similar groups at the Royal Establishment at Farnborough.
When aerodynamics became more of an issue, after the introduction of ground-effect technology by Peter Wright in the design of the Lotus 78, aerodynamicists became men in great demand. The current crop of French windtunnel experts - Jean-Claude Migeot and Henri Durand being the most famous - came out of the European Space programme in Toulouse.
In Britain Williams got ahead of the opposition thanks to work in the Imperial College windtunnel in London, which had been used by Frank Dernie. This led to the establishment of a small school of Imperial College aerodynamicists, which included Tino Belli, John Davis and most recently Stewart Grand Prix's Egbahl Hamidy.
The arrival in F1 of carbonfibre composite technology drew in other expertise. McLaren used the skills of British Aerospace's Arthur Webb and later Steve Nichols was hired from the Hercules Aerospace company. Williams responded by hiring Brian O'Rourke from the aviation giant Northrop. There was also demand for stress analysis engineers such as Paul Bowen, who would eventually become chief designer at Arrows.
The rush to carbonfibre composites created another market because few teams could afford to do such expensive work in their own in-house facilities. And so they searched for companies to build their chassis for them. Advanced Composites of Heanor in Derbyshire became the market leader racing car chassis, producing an astounding 700 between 1981 and 1995. This included no fewer than 100 F1 chassis for customers Alfa Romeo, Brabham, Ligier, Arrows, Toleman, March, Onyx, Fomet, Larrousse and Pacific. The other 600 chassis included 292 Indycars for March Engineering, Penske, Kraco and Galmer, 49 sportcars for March, TWR, Schuppan, Brun, Mazda and Konrad and 53 Formula 3000 chassis for March. Inevitably, Advanced Composites spawned its own competition in the area, notably Astec, which is part of the TWR empire.
Since then Grand Prix teams have been working towards having not only their own composite departments but also their own windtunnels. There has also been considerable expansion in the electronics and hydraulic engineering sectors while current expansion is in advanced software development such as computational fluid dynamics.
The concentration of all aspects of the industry is such that even as far out as Lola in Huntingdon and Lotus at Norwich there was a feeling of remoteness from the core of the motor racing business. Information and personnel transfer between the teams was constant and so the learning process was accelerated.
The concentration of the industry is now such that the FIA President Max Mosley believes that anyone seriously wanting to compete in top level motor sport needs to be based in Britain.
"The existence of a whole infrastructure of companies with motor racing as their core business means that anyone who wants to set up a team has to come to Britain," he says.
The IPPR study concluded that there were a total of around 630 different companies involved in the engineering side of motor sport in Britain, employing between 25,000 and 30,000 people. Of these perhaps 8,000 are directly involved in Grand Prix racing. If Grand Prix racing were to depart from England - which another academic study recently concluded was an impossibility - there would, however, be many more job losses among the network of F1 suppliers.
The RAC Motor Sport Association, in a separate study, concluded that the industry employs a total of 50,000 people including not only the engineering staff but also all aspects of the organization of the circuits, the clubs, the racing schools, the marketing companies now associated with the sport, the hospitality, the publishing companies, the journalists and photographers and all the other support personnel.
Professor Garel Rhys of the Cardiff Business School concluded as long ago as 1992 that the industry was turning over £1 billion and generating around $60 of export income.
The IPPR study concluded that by 1996 this had increased to somewhere in the region of £1.5 - £2bn.