Toyota's mistake

All big companies which enter Formula 1 think that they know how best to run their operations. They have been successful in other forms of motorsport and they think they know what they are doing. Sooner or later they all discover that F1 is harder than they think. Mercedes-Benz built a factory for Sauber in Switzerland before realizing that it was a waste of time and money. Ferrari has spent 20 years trying to win the World Championship. The Ligier team was never a big success.

All big companies which enter Formula 1 think that they know how best to run their operations. They have been successful in other forms of motorsport and they think they know what they are doing. Sooner or later they all discover that F1 is harder than they think. Mercedes-Benz built a factory for Sauber in Switzerland before realizing that it was a waste of time and money. Ferrari has spent 20 years trying to win the World Championship. The Ligier team was never a big success.

What do they have in common?

They are not in Britain.

Thus one must question Toyota's logic in basing its F1 project in Cologne. The company says that the team has been based in Cologne since 1979 and that moving would break up the team of 400 people employed there. They argue that it is better to pay outsiders to relocate to Cologne. This will not solve the problem.

The British motor racing industry has been successful because the companies involved are clustered together in a small area. It did not happen by chance. The clustering of specialist firms is not new. Electronic firms gather in Silicon Valley, aerospace companies are gathered around Toulouse, the home of the European space program.

The industrial cluster effect in motor racing has been studied by the Institute of Public Policy Research, an independent charity which aims to use research to contribute to public understanding of political, social and economic issues. The IPPR research was 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 and was published in a booklet called "Playing to Win". It revealed that the success of the industry was due to the clustering of specialist racing firms in an arc to the north of London.

The creation of the motor racing industrial cluster dates back to the 1940s when the 750 Motor Club encouraged young racers to convert road cars into racing specials. Those who built successful racing machines were asked to build replicas. Commercial opportunities arose in car building, engine tuning and componentry. As each company was established only for racing they were dependent on the sport and had to remain competitive to survive. Only the best did. Constant competition provoked continuous technological development and every aspect of racing car design was re-examined again and again to find improvement. Information and personnel transfer between the teams was constant. The concentration of the industry meant even Lola Cars in Huntingdon and Team Lotus in Norwich felt remote from the core of the business.

Teams which base themselves outside this cluster are at a disadvantage. They can attract engineers but they rarely keep them. It is a problem which Ferrari has been trying to solve for 20 years. Twice the Italians have set up satellite operations in Britain and twice these have failed. As a result Ferrari's chassis performance has usually lagged behind rival teams. Alain Prost recently announced plans to move his production to Britain in order to keep in touch with the British racing industry.

Toyota needs to think again.