Billionaire Haas has conquered NASCAR, but now he wants to do a selling job on the rest of the world
We know Gene Haas wants to build the first American Formula 1 team in decades. Why? Because he says it's a good advertising medium for his company.
But as someone who worked in advertising for a while, I’m having trouble with the numbers. Haas figures on spending at least a billion dollars of his own money with one central goal in mind: Sell more of the machines that his company, Haas Automation, builds. Haas owns the largest machine tool company in the western world, and he wants more business in the northern, southern and eastern worlds. Which is great.
Here’s how Haas explains it: “Most of the sales in the world are going to be overseas in the next four or five years, and my basic goal here is to change Haas Automation from just a machine tool builder into a premium brand. I think Formula 1 will provide that, especially in the overseas markets. There are a lot of fans from China to South America to Europe to Eastern Europe, to the Asian, Japan, Malaysia, that we really want to become a household name in.”
I’m not certain how many households in Malaysia buy machine tools, but let’s take his word for it.
First, though, let’s back up for a second: Haas builds mostly high-precision CNC machines, which stands for Computer Numerical Control, which means an operator gives the computer instructions, and the computer tells the machine what to do. Instructions such as telling it to cut a hole in a piece of aluminum that is, say, exactly 2.22 inches wide. Not 2.21 inches, not 2.23 inches: That would ruin everything.
Haas launched his company in 1983, and in 1987, turned the industry on its ear when he said he could build a quality VMC (Vertical Machining Center), a machine designed to perform such machining operations as milling, drilling, tapping, and boring, for under $50,000. A year later, he showed his machine, the VF-1, at the International Machine Tool Show in Chicago. It was an enormous hit, and Haas Automation was on its way. Worth noting: The Haas VF-1 still sells for less than $50,000.
By now, of course, Haas Automation sells a lot of other stuff, too. Need a big-bore CNC Lathe? They don’t get much bigger-bored than the model ST-45L, yours for $194,995. Would you like a Pallet-Changing 4-Axis CNC Horizontal? The EC-400P is $269,995. Can we add it to your checkout basket?
Let’s face it: These are not machines that the do-it-yourselfer has in his garage. These are serious, and seriously expensive, professional machines that require a major investment. And if I was investing a quarter-million bucks on one EC-400P, I’d probably do my due diligence and see what is available, at what price, in what length of time.
I’d buy it because I researched it. Not because I saw it on the side of a race car.
Beer, hamburgers, toothpaste, cell phones, soft drinks – sure, I can see how there could be a direct link between advertising and sales. I’m standing at the cooler in the convenience store looking for an energy drink, and I might pick up a Red Bull because I like Sebastian Vettel. But I’m not sure I’d make the same decision for my CNC machine based on a race car’s side pod. You’d think people who are in a position to spend the kind of money that Haas’ products cost would have already heard of him. And if they haven’t, you’d think there would be a direct-marketing program available for a lot less than a billion dollars that could target every potential CNC customer in the world, Malaysia included.
I had the same thought way back in 1999 when NASCAR team owner and driver Joe Bessey hired Geoff Bodine to pilot Bessey’s number 60 Power Team Chevrolet. What was Power Team? A company that brokered electricity from multiple sources to various municipalities. Why in the world, I wondered, would they want to sponsor a race car? Because some fan in the stands, in need of a few trillion kilowatts, would see the car, and call up Power Team? It was all made clear when I learned that Power Team was run by, according to one newspaper account, “Nancy Bessey, Power Team's frenetic, gum-chewing president, a lover of modern art, would-be sportscaster, and wife of a NASCAR race driver.” Nancy soon left Power Team. And Power Team’s sponsorship soon left NASCAR.
Haas told Motorsport.com that he believes his F1 program can be profitable by year five, but by then, he will need to pick up some additional sponsorship, rather than run it all out of his own pocket. I think he’ll be beating the bushes for help way before that.
That said, Haas insists that he will keep the F1 effort lean, and plans on doing the same thing that has made Stewart-Haas a winner in three of the first eight NASCAR races this season, which is affiliate with Hendrick Motorsports and pay them for their technology. Visit the Stewart-Haas NASCAR shop in Charlotte, and you’ll be surprised at how modest it is compared to what Hendrick or Richard Childress have. And that’s how he plans to jump into F1: Buy a Dallara chassis, bolt in a Ferrari or Mercedes engine, and head for the grid girls. But lean efforts seldom triumph in F1. Will households in Malaysia still think of Haas Automation as a premium brand even if their cars are back markers?
I think it’s great that Gene Haas wants to jump into Formula 1. And I think it’s great that he wants an American driver (more about that shortly). But to insist that F1 is the most cost-effective advertising medium for a very select, specialized, expensive product – well, I guess we’ll see.