With money disappearing at...
With money disappearing at every level of the market, American Honda vice president Ray Blank made the decision to pull the plug on U.S. roadracing activities for '09. They will still support the Erion Honda and Corona Honda satellite teams, however.
Honda Motor Company sent its own seismic shock through the racing world in general when it unexpectedly withdrew from Formula One in an announcement by Honda CEO Takeo Fukui. Pulling out of F1 would save the company at least $600 million according to Fukui, and while he noted that Honda's IRL auto racing and MotoGP efforts would continue, all other activities would be "scrutinized." American Honda's Ray Blank was in his hotel room in Japan when he thought to himself, "We pulled out of F1 racing. Do I have any hope of being funded to do this? I don't think so."
Blank and his colleagues at the other OEM subsidiaries had been negotiating--through the MIC, in order to avoid any legal anti-trust issues--with Edmondson for a final set of rules. The last set of proposals were circulated during the second week in October, while the industry was congregating at the Intermot show in Cologne, Germany. Blank saw the proposal and thought, "this makes sense and it's a compromise and we'll probably be able to do that. Based on that, I think we could have moved full speed ahead with all of the arrangements."
Unfortunately, the "final" rules released on November 20 were not what the MIC had agreed to. Now the rules were leaning towards Superstock, not Superbike. As the process dragged on, and the two sides exchanged verbal broadsides, the economic world was imploding. A banking crisis had frozen the credit markets. Money was tight and getting a loan for a motorcycle or any other discretionary purchase was getting more difficult. The results started showing up in the sales reports in August and accelerated into the fall and winter. Suzuki's October year-to-year sales were down nearly 50 percent.
"The whole industry is experiencing severe economic issues and frankly the available resource to be able to spend isn't there," revealed Blank. "And it doesn't look like there's a whole lot of light at the end of the tunnel quickly. Some had predicted a mid-2009 turnaround. Since we're recreational products, when people are worried about losing their jobs, we get pushed down the food chain somewhat. And as that happens, we have less and less to spend on the marketing activities. Because, frankly, you have to question how much impact the marketing activities are going to have, given the marketplace right now."
One of the most impactful signs of deteriorating profitability is the value of the Japanese yen. In August the yen was 105 to the U.S. dollar and there were projections that it was going to drop. The belief among analysts is that a one yen depreciation against the dollar can reduce earnings by $450 million. When Blank exchanged dollars for yen in December, it was 88, a drop of nearly 20 percent.
"It starts to become pretty clear," Blank began, "that the speed that the world economy is traveling at, the impact that it has on the U.S., the GM bailout, the dropping yen, it's like 'Hold up boys, what are we going to do here?' It just spun up into a crescendo to...the point where we said, 'Can't do it.' We're putting the resource that was contracted and already dedicated in one form or another into Erion and Corona."
Yamaha's Ben Bostrom prepares...
Yamaha's Ben Bostrom prepares to take his first laps on the superbike version of the new '09 cross-plane crankshaft R1. The Yamahas were hastily put together for the Daytona tests, with basically stock engines run by Marelli engine control systems.
Given the stance Honda had taken against the DMG, the perception was that Honda pulled out because of a disagreement over the rules. Blank denied it, saying, "it's easy to speculate that we did it because we didn't like the rules. Did we get what we wanted out of the rules? No. But were they abhorrent? We could have lived with it. It elementally changed the landscape of Superbike racing. But frankly, DMG made a lot of concessions as time went on."
But what would have happened if a concrete set of rules had come out in early summer? Contracts would have been signed, commitments made. There would have been cutbacks, but everyone could have raced. When the question was put to Blank, about whether Honda would have continued had the rules been codified, he said, "That's a really hard question. We started to make a kind of combination of judgments in terms of preparation for 2009 that were more economic-based than they were rules-based." True enough, but not until well into the fall. And one other team boss put it bluntly when he said, "If they'd have had a set of rules we could live with, we'd be in." As it is, Kawasaki and Suzuki are on the outside looking in and not liking what they're seeing.
The Dunlop Daytona tire test was the saddest--for lack of a better term--ever. Of the factories, only Yamaha and Honda were represented; and Honda with just a cobbled-together technical crew for Hodgson. Yamaha had the strongest presence but weakest bikes. The engines in the new R1 superbikes were box stock, with just an aftermarket exhaust and Marelli control system, and it showed on the radar numbers. Neither Josh Hayes nor Ben Bostrom could come close to the 194 mph top speed of Hodgson's Honda.
Roger Edmondson made a trip...
Roger Edmondson made a trip to Japan in an effort to speak directly with the factories. It didn't go over very well with the U.S. subsidiaries.
The race teams weren't happy after word filtered through the garages that the "final" rules weren't quite finalized. Kit pistons would be allowed as a concession to Yamaha Japan, which had requested them during Edmondson's visit to Japan in November. If there was an allowance for cams and head work, Yamaha wanted a kit piston. It didn't hurt that Yamaha was the only factory that agreed to meet with Edmondson in Japan, a trip that most of the OEM American subsidiaries saw as a brazen attempt to go over their heads. "That just added another huge amount of money to the program," Ben Bostrom's crew chief Jefferson Burks said about the cost of development for working with kit pistons, adding, "I'm glad we haven't done a whole lot of development on the engine."