T.E. McHALE: Good afternoon to everybody. Welcome to the CART media teleconference. Thanks for being with us this afternoon. Our guest today is Al Speyer, director of motor sport for Bridgestone/Firestone. Al oversees his ...
T.E. McHALE: Good afternoon to everybody. Welcome to the CART media teleconference. Thanks for being with us this afternoon. Our guest today is Al Speyer, director of motor sport for Bridgestone/Firestone. Al oversees his companies involvement with the Championship Auto Racing Team series, the Dayton Indy Lights series and other forms of competition. Al, welcome, thanks for joining us today. AL SPEYER: Thank you, T E. I'd like to start out just by saying that our entire company and particularly our Firestone brand, it's been involved in CART now since 1995, is thoroughly pleased and satisfied with all of the activities that we have going on with CART. It's not all that long ago back in 1995, as we look at it anyway, we started with just five drivers in the series, and had a steady increase to 10 and '96 and 15 in '97; and '98 and '99 were increases as well. And we find ourselves in 2000 with the entire field, which everybody knows now is basically around 25 or 26 cars, and that's been a growth that we never really expected, but at this point in time, we have to look on it with great pride and achievement of what we've been able to accomplish there. We also are very happy this year in 2000 to be celebrating the 100th anniversary of the founding of the Firestone brand and specifically for us in motor sports, it's a special time for us because racing has played such an intrical part of the Firestone whole history, all the way back to the first documented race of competition for Firestone back in 1909 at the beginning, really, of last century. We race for a number of different purposes, primarily marketing and getting exposure for our brand, but also technology. Technology has led to a lot of differences in race tires over the years, particularly wider, low-profile tires, also the tread patterns in Indy and our Formula 1 rain tires are directly derived from our racing radials. The sidewall construction in racing tires is a big benefit in areas of performance and handling, and also in compounding of the tread, specifically some of the things we've done with both our unity and unity TAQ technology, with LL carbon, which is a stronger, basically higher-strength carbon black on the tread, has led to a lot of our racetrack performance, particularly the consistency we've been able to develop over long runs with our tires. I'd like to just review a little bit, the extensive CART-related activities we have to our 40,000 USA-based employees and our 80,000 international employees. We do internal communications constantly on all of the racing activities. As far as the media coverage, we've been very thankful for the exposure we've gotten so far. I want to thank everybody who has provided us with a lot of great comments, and all of the forms of media, both print, radio, TV and Internet. And we're very active ourselves in Internet. In fact, this year, we are striving to have a photograph of the winning driver on our Internet site immediately after the conclusion of each race. Quite active with many of the tracks, we've got track signage or official tire status with eight of the CART tracks on this year's 2000 schedule. And we also do hospitality at virtually all of the events on the CART schedule, both domestically here in the U.S., canada and the international races. We're happy once again this year to be the sponsor of the Firestone Firehawk 500 in Motegi. That activity includes a major press conference in Tokyo the week before the race. We bring in some of the CART drivers to further the story of CART racing internationally in Japan. We're also quite pleased to be continuing our sponsorship of the Indy Lights series. We started that in 1991 with Firestone, more recently have switched that over to our Dayton brand. We firmly believe in CART's efforts to further develop a latter system for driver training, and quite happy with our overall activity with Dayton Indy Lights. We're also happy this year to be able to pick up the title sponsorship of the CART-related (ph) Buckle Up Baby Program, and also a major sponsor of Runway Madness, where last year we were able to auction off one of our race tires signed by all of the CART drivers for about $22,000 for a very good cause. Finally, I'd like to mention one new element of our program this year and that's the Firestone Firehawk mascot with a racing player, and it's adding some excitement to our program. We're quite happy with it. I think to put it in perspective you should ask Max Papis the influence the Firehawk has had on him because he celebrated with the Firehawk at spring training. We're sure that led to his good luck in the opening event at Homestead just over a week ago. Finally, talking a little bit about our tires, our major challenge in the off-season has been meeting the production capacity demands of supplying the entire CART field. Again, to put it in perspective back in 1995 when we had five full-time CART drivers, they were using about 4,000 tires amongst those five teams. This year with all of the cars, we're going to be producing over 23,000 tires for CART competition; that's an increase of 19,000 tires, or almost 500% when you add in the testing tires we do and experimental. So it's been a major challenge for our production facilities. It's largely been maybe behind the scenes, not out in the forefront of what we've talked about, but I'd like to take my hat off and our entire company, to our production facilities for all of the efforts they have put in to meet the demand we've got today. As far as prepared remarks, that's essentially what I have. And T.E., if you want to help with questions I'll put the ball back in your court. T.E. McHALE: Thanks. Al told you a lot about Firestone. Let me just give you a quick backgrounder on Al before we start taking questions. Under Al's leadership the Firestone racing program has won four consecutive championships in Championship Auto Racing Teams competition. In the last two years the Firestone program won 37 of 39 CART races against rival Goodyear. Al directs a large team of professionals that design, produce and provide tires and on-site engineering assistance for dozens of major auto racing events around the world. He also oversees a number of marketing initiatives that use motor sports activities to increase sales of Bridgestone/Firestone and Dayton brands consumer tires, and for the last three years he has served as president of the CART sponsor's council, an organization composed of marketing and public relations professionals whose businesses participate in CART competition. He is a graduate of Syracuse University and Al has been with Firestone since 1974. And with that, we will begin to open the floor for questions.
Q. In the construction of the tires for CART and since Bridgestone does the ones for Formula 1, other than the grooves on the tires, what differences are there and what similarities are there in the construction of the tires? AL SPEYER: The regulations for Formula 1 that require the grooves in the tires, essentially mean that the tread compounds used in Formula 1 are quite a bit harder than the like compounds we would use in CART for either a road or a street course event. But the biggest difference is really the fact that CART also races on a variety of ovals, anywhere from a shorter one-mile oval to a super speedway, and the oval tire constructions and tread compounds are totally different than any other construction race tire, really, anywhere in the world. And that oval track technology is probably the most challenging for a tire company. Those sidewalls and constructions have to be much more durable, really for the continuous high speeds averaging 230 or more miles an hour. So it's really the tracks that we race on in CART provide some unique differences from what we have in Formula 1.
Q. Granted you can't go into a great deal of specifics, but in CART this year, how many tire compounds are we looking at, both for ovals and road courses, and are you tailoring them for each of the tracks again this year? AL SPEYER: Yeah, we had -- again, to go back to last year as a reference, maybe is the best way to answer that. We had some where over 20 different combinations of constructions and compounds in CART last year and have reduced that roughly in half for this year to around 10 or 12 for the tracks we're going to. Again, looking at CART having four basic types of courses, the street course being the slowest average speed, road course next and the short ovals and the super speedways, those four different types of tracks are all different category tires. And we would hope for next year to reduce that complexity again by at least a half. But there are some very unique tracks within the CART whole distribution of circuits and we want above anything else to make sure we're providing tires that are giving the drivers and the teams the proper handling characteristics and grip that they need. So we've been able to simplify quite a bit to get down to maybe 10 different groups this year and hope to look at cutting that about in half again next year.
Q. Now, do you see -- granted, you would like to have competition in this, but do you see an increase in the safety factor in the tires by being the only supplier in that you're not involved in a tire war? AL SPEYER: Well, safety has always been and always will be a primary concern of ours. What we've really been able to do this year is focus a little bit more on compound durability. The structural carcass durability or integrity to us is always the primary concern. When we had competition, ultimate speed and grip level were our next priority. That's not a priority now at all. Obviously, ultimate speed is not what we're after. So we have been able to take a view towards hardening up the compound. But given the timing of when Goodyear announced their departure in fact, when we already had quite a few plans laid in, I'd really more characterize this year as we have kind of frozen the tire development to essentially have the same basic tires we had last year, and now we're working on further simplifying it for 2001.
Q. Over this last weekend, I heard it described that Michelin was an engineering company and Goodyear was a marketing company. How would you characterize your company? AL SPEYER: Oh, I think we've got the proper mix of both, technology and marketing. As I described earlier, our racing program is not simply about the on-track activities, which I think have been very well documented of our success of our tires and technology. But we've also managed to intertwine that on-track success with -- as I mentioned, the hospitality of bringing dealers out to our meetings, the advertising we do and probably one of most successful achievements Bridgestone/Firestone has had is integrating all of the racing activities to hit all aspects of our business, and not just one. So I would like to think that we have got both the marketing and the technology ends covered, not just one.
Q. Will you continue to focus on the open-wheel series rather than branching out into sports cars or road racing? AL SPEYER: Yes. For the current period right now, open-wheel racing is our sole focus, and again, if you have to reference back to just a little over five years ago when we got started on our most current campaign, we never expected to be in the position we are as sole supplier today. And it's really a capacity issue for us right now that we haven't make many more racing tires short-term. Longer term, and I say longer term, I'd say three to five years out, we're going to look at all of the opportunities out there. But there's certainly no short-term plan in the next year or two to do anything but focus on our current areas of activity.
Q. I'm curious, how much of the Formula 1 technology do you bring in to the CART program, and as a second part to that, the technology that you learn from the tire development, what's the approximate time line for those technology gains to filter down to the consumer product? AL SPEYER: The Formula 1 and CART technology sharing is a two-way street. We've both learned things, particularly in our early activities with CART on the street and road courses that helped launch our Formula 1 program, and vice versa. There's been items the Formula 1 program has identified, both in construction and compound that we have been able to bring back into our CART program. So I think it's been a real advantage for us technology-wise. Our two programs, Formula 1 and CART are run quite independently, but they do share the technological advances with each other. As far as for how long it takes for the racing items to find their way into a normal consumer product, it depends entirely on what the item is. Most recently, the things we've been able to learn in tread compounding, again with this LL carbon is a direct example, it's higher-strength carbon black that gives more consistent wear, longer wear for both the race tire and the consumer. The implication into a street tire, that process, involvement, would be less than a year. It has been very directly transferred over. Some of the other items that are much more long-term, and quite honestly, some of the things we do in a racing tire that are new technologies today are quite expensive and on the cutting edge, and that sometimes may mean they are expensive just because there is very low supply of them and it takes longer for a chemical manufacturer to gear up their process to produce enough. And in that case it could take two or three, or even five years down the road, for some of those materials to be economically justified in a passenger tire.
Q. Just one final thought. A couple years ago there was some development for a rain tire for use on ovals. Now, I don't particularly feel I would want to run an open-wheel car on an oval to begin with, but has there been any further movement on that? AL SPEYER: No. No. And that really would be the sanctioning body's request, and we've talked a little bit about it, but there's been no serious discussion on oval rain tires for racing in the rain.
Q. My question was personally, what was your reaction at hearing that Goodyear was getting out of the series and open-wheel racing for that matter? How did you personally react and did you foresee this coming? AL SPEYER: Well, yes, we did foresee it coming. Throughout the course of the year, we had many discussions in our offices and our trailer at the track that we saw signs that indicated it was certainly possible that Goodyear would be getting out. So it certainly wasn't a total surprise. However, the timing of it, we obviously had no idea when it would actually take place. Like I said, we knew it might, but we didn't know it absolutely would, and immediately, it seems like a great ultimate victory that you've -- you know, been so successful that the competition in our eyes didn't want to continue competing for a number of reasons, and obviously that was an instant euphoria. And clearly as that wore after off, and I can tell that you surely today that has taken a lot of the fun out of it, and it has become more of a business and much more of a responsibility to supply all of the teams and drivers. And we've got every bit as much work to do as we did before, if not more. And I've also come to realize just how difficult a job it is to supply all the cars and all the drivers, and it's a demanding job to make tires for all the different CART circuits, even if you're doing it on your own, and we no longer have the excitement of being against competition. So we very much, very sincerely would like to see competition back in some form some day. T.E. McHALE: Al, thanks for being with us. You covered everything everybody wanted to hear about in just a short amount of time. Thanks again for taking the time to be with us. Best of luck in the Bosch Sparkplug Grand Prix presented by Toyota coming up this Sunday at Nazareth Speedway and through the rest of the FedEx Championship Series season. AL SPEYER: Thank you, T.E.