Taxpayer to bail-out Honda F1 team?

29/01/2009
NEWS STORY

According to a report in today's Guardian, the Honda F1 team has approached the Department for Business, Enterprise and Regulatory Reform (BERR) in a bid to receive a taxpayer backed bail-out aimed at supporting the Brackley outfit.

As the global financial crisis worsens, all manner of companies have approached the British government in the hope of receiving financial aid, indeed, this week Business Secretary Lord Mandelson held talks with a number of car manufacturers.

Among the measures being discussed are a government backed "wage subsidy" aimed at encourage the car manufacturers to put workers on shorter hours rather than making them redundant. Several factories in Britain are already on extended shutdowns, including Honda, Nissan and Jaguar Land Rover.

As the financial crisis worsens people are not buying new cars, and to make matters worse banks have stopped lending money. Therefore, on Tuesday, in a bid to boost the industry a 2.3bn loan guarantee scheme was announced. However, the car manufacturers claim they still need more government support.

Now, according to the Guardian, under the same premise, the Honda F1 team has approached BERR calling for financial aid.

"We have had meetings with BERR over the future of the team on several occasions over the past month," a team spokesperson told the paper.

Asked whether the team would qualify for the support package, a spokeswoman for BERR said: "There is no reason why Honda Racing couldn't apply.

"We expect any company in the automotive industry or in its supply chain with a turnover of 25m or more to qualify if it has a viable project to deliver the objectives of the support package. All applications will be considered on a case-by-case basis."

The spokeswoman added that the government's key criteria - if a company is to qualify for a loan - are, a turnover in excess of 25m, being at the cutting edge of innovation, reducing carbon emissions, and creating jobs.

While nobody wants to see the 700 employees at Brackley lose their jobs, it is certain that there would be a negative public reaction to such a move, indeed there is growing concern at the bail-out for the car industry as a whole.

However, while some might see the car industry eventually turning the corner - no pun intended - the Honda F1 team is involved in a high-profile, money obsessed sport. If an F1 team in difficulties needs taxpayer support, why not a football club?

Furthermore, while the car industry might return to some sort of normality, who is to say that the Honda F1 team is going to suddenly reverse its fortunes. Having landed itself where it is with the backing of Honda, who is to say things will be any better with the hard pressed tax payer footing the bill?

While most of the companies concerned are foreign owned, many also believe that it would be more cost effective to close down plants and pay the former employees a decent 'wage' for the rest of their lives rather than pour more and more billions into companies which seem doomed to fail anyway. As the recession bites, if the car industry, like the banking industry, is bailed-out, this will set a worrying precedent which will leave the government unable to say no to anyone... at least until the pot runs out.

However, the admission that the Honda team has made the approach to BERR is confusing. Just a few weeks ago, CEO Nick Fry claimed to have twelve bids on the table having whittled this down from thirty. It was subsequently revealed that Fry was involved in a management buy-out while earlier this week a team spokeswoman said that the much talked about January 31 deadline is not set in stone.

We hear that the mood at Brackley, despite the media spin, is one of gloom, as this strange saga continues, one can understand why.

No doubt Fred 'the shred' Goodwin will soon be on the phone to Nick Fry offering his 'expertise'.

Suddenly the VMK bid doesn't seem quite so silly.

Article from Pitpass (http://www.pitpass.com):

Published: 29/01/2009
Copyright © Pitpass 2002 - 2023. All rights reserved.