Tuesday, November 18, 2008

Commentary: Downsizing Difficult, But Necessary

These are trying times for those who work in the motorsports industry in Charlotte, North Carolina.

NASCAR is downsizing, with new rounds of employee layoffs announced on a daily basis. And for the tens of thousands of people whose livelihood depends on the roar of racing engines, the monthly mortgage payment seems suddenly less secure.

Furniture Row Racing announced recently that it will cut back to a part-time schedule next season, trimming its employee roster by roughly 25%. Wood Brothers Racing cut its Sprint Cup and Craftsman Truck teams by a reported 25 people this week, and both Stewart-Hass and Hall of Fame Racing handed out multiple pink slips of their own. Dale Earnhardt, Inc., terminated more than 100 employees recently, and there have been cutbacks at Hendrick Motorsports and Joe Gibbs Racing, as well.

The Wood Brothers, DEI and Hall Of Fame layoffs can be directly attributed to an inability to attract sponsorship in these tough economic times. Furniture Row’s cutbacks came after discouraging forecasts on the housing and retail fronts. Not every team is laying off employees in response to a looming financial crisis, however. Some are simply tightening their belts after realizing that they’ve been living too high on the hog for too long.

While a sagging economy is to blame for many of the layoffs scything their way through this sport, seven-time Cup Series champion Richard Petty says he and his fellow team owner share some of the blame, as well. Petty said, "We've all overspent. We had it so good we just kept going forward without saying, 'What if it goes bad?'"

Many of King Richard’s fellow owners admit – off the record, of course – that bad business decisions have exacerbated the current economic downturn, and that they are now paring-back operations that grew larger (and flashier) than necessary.

As little as a decade ago, teams won races with only a small handful of mechanics and fabricators. They built the cars, then loaded them on the transporters and followed them to the racetrack, serving as race day mechanic and over-the-wall crewmember, all in one.

Today, those same jobs are handled by dozens of specialists, who generally do one thing and nothing else. Top teams employ hundreds of fabricators to build the chassis and hang the bodies; dozens of specialists to handle gears, shocks and tires; and “travel teams” who fly in on race weekend to maintain and service the cars. A prominent Sprint Cup Series owner admitted to me recently that 18-20 fabricators are involved in the construction of each of his racecars. Asked how many he absolutely needs to do the job, he sheepishly replied, “six or eight.”

NASCAR’s new Car Of Tomorrow has swelled the corporate payroll, as well, as teams attempted to develop the new racecar while continuing to race the old model. Now that the COT has been fully implemented -- a year ahead of NASCAR’s original schedule -- there is less R&D being done, fewer cars being built, and less need for all those engineers and fabricators.

Jack Roush said recently that most of those laid off at Roush-Fenway Racing have been fabricators. “If you look at where we were a year ago, we were running two different kinds of cars,” he said. “That required a staffing increase for most of the teams.” Now that the COT has been refined and implemented, those workers are no longer needed.

The last few weeks have been extremely difficult, and there is more hardship to come. Every pink slip handed out is a real person; with a real family, a real mortgage, and real bills to pay. Let's not lose track of that sad fact, even as the sport undergoes what many believe is a long overdue correction in course.

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