Honda press conference Participiants: Tony George Robert Clarke Fred Nation (Vice president of corporate communications and public relations, Indianapolis Motor Speedway): Good afternoon and thank you for attending this news conference. My name...
Honda press conference
Fred Nation (Vice president of corporate communications and public relations, Indianapolis Motor Speedway): Good afternoon and thank you for attending this news conference. My name is Fred Nation of the Indianapolis Motor Speedway, the Indy Racing League. We have an important announcement today about a future partner in the Indy Racing League. We have with us to make this announcement jointly, Tony George, the president and CEO of the Indy Racing League, and Robert Clarke, who is the president, general manager of Honda Performance Development, Incorporated. Robert, would you make your announcement? Thank you.
Robert Clarke (General manager, Honda Performance Development, Inc.): Thank you very much. Today American Honda announces that we plan to enter the Indy Racing League next season in 2003. (Applause) Thank you. Honda Performance Development has contracted with Ilmor Engineering, Inc., a U.S. company located in Plymouth, Michigan, and both companies will jointly design, develop and produce the Honda Indy V8, the same engine we used in '94 and '95. Honda is extremely pleased and excited to be joining the IRL competition and competing once again in the Indy 500. This is an all-new direction for HPD, and the intent of the program is to transform HPD from a support operation, one of building engines and trackside support, to a true racing engine development company. In effect, Honda has an all-new commitment to American racing. Our technical relationship with Ilmor, Inc. will allow us to develop the all-new Honda V8 in time for the 2003 season, something that would have been impossible under our old structure. Ilmor, Inc. will use their resources in addition to a special project group under the leadership of Steve Miller, who many of you probably know from his old days at Cosworth, and a new separate manufacturing facility to support the project, which in no way will conflict with their current F1 program. Honda considered a variety of options for HPD's future business and selected this direction as it supported American Honda's long-term motorsports needs while at the same time providing for HPD's development to a full engine company. This change means that all U.S. auto racing engine R&D responsibilities will be turned over to HPD. Excuse me, I sat in a hot car before I came in here, and I just broke out.
Tony George (President and CEO, Indy Racing League): Should have been here earlier this month, it wasn't nearly as bad. (Laughter)
Clarke: Again, Honda is very pleased to join the IRL, the organization, the teams, the drivers and all the other partners. We look forward to a long relationship. The discussions that we had with Tony, with Ken Ungar, Brian Barnhart, all of those involved in the IRL series, have been just wonderful to deal with through all of our discussions and negotiations, which ultimately led to this announcement. Thank you, and we very much look forward to coming here and winning next year. (Laughter and applause)
George: That is great. Thank you, Robert. We really appreciate you being here today. It is a pleasure to welcome Honda to the Indy Racing League. Honda joining the Indy Racing League is another big step forward as we anxiously await their entry next year. It's going to be big both on and off the track. On the track, Honda brings our league another premier manufacturer with a brand that is synonymous with quality and competition. Off the track, our marketing and promotions agreement with Honda adds to the resources needed to continue to grow the reputation and build the fan base and the brand of the Indy Racing League. Everything has its time. We've wanted Honda with us since the beginning of the league, and we've watched Honda's performance in other forms of racing. We've tried to be patient. But now is the time for Honda to join with us in building the Indy Racing League into the premier racing series in the world really. So we're looking forward to that opportunity, Robert, and thank you and your associates for joining us and being here today to make this announcement on what is a fabulously warm, sunny day and looking forward to one on Sunday. And 365 days from Sunday, maybe you will be in here in the post-race, really looking back, and we'll all really appreciate the amount of time and effort and due diligence that went into make this announcement. (Applause)
Nation: We also have with us today Brian Barnhart, the vice president of operations for the Indy Racing League; and Ken Ungar, the vice president of business operations for the Indy Racing League, as Robert had noted earlier had been the point men in negotiating and reaching this agreement along with Tony. The floor is open for questions. Ron Green is on that side, and I'm over here.
Q Robert, could you tell us what basically changed your mind to come over here? Because I know that when Honda announced they were leaving CART, they basically weren't going to be involved in any American racing series.
Clarke: That's true, when we made our announcement in October there at Laguna Seca, we really had no plan, no vision of where we would go beyond that. But the further we looked into it, kind of -- that announcement was -- well, definitely we felt very justified but it was also a very emotional announcement. We had put a lot into that program, and once the emotions kind of settled down and we began to realize the equity that we had in the program and how important for American Honda to have a continuous motorsports program in the U.S., we began to consider other ways that we continue to be involved in North American motorsports. At the same time, we reevaluated HPD. We also had a vision of it being more than just an assembly and a trackside support operation to be a true racing engine development company. And looking at the IRL and looking at what we as HPD could do to develop in that series, we felt it was a perfect match. From that moment on, it became more of a challenge, well, how can we be involved continuously without disrupting our program? And that's led us to the association with Ilmor.
Q Robert, two questions. One, will it just be a one-year deal with Ilmor and you'll have an entirely full-blown Honda program for 2004? And two, will next year's engine be available to CART as well as the IRL teams?
Clarke: I'm sorry, I missed --
Q You and Ilmor are going to be partners next year. In 2004, will it just be a complete Honda deal without Ilmor on your own?
Clarke: I see. No, our arrangement with Ilmor right now is a three-year term.
Q Will the engines be available next year in CART? Will you sell engines to CART?
Clarke: Honda will not, Honda is not participating in CART. Based upon our agreement with Ilmor, they do have the rights to use the same basic platform, assuming that's what CART ends up with, if they wish. You'll have to discuss with them what their intent is there.
Q Do you have any teams allowed to use this engine, one? Two, does this preclude Ilmor from doing work for other suppliers? Three, is this a precursor for a race at Motegi?
Clarke: First question, no, the teams, that is a process that will begin this afternoon. Paul Ray with Ilmor, of course, Ilmor currently involved in the series is going to help me and take me around and begin the process of introductions and talks, and hopefully soon we'll be able to identify some teams that we can align ourselves with. I'm sorry, the second part of your question?
Q Does this preclude Ilmor from doing work on other engines?
Clarke: Yes, in the IRL, yes, it does.
Nation: The third part of the question had to do with the precursor to Motegi. Tony would you like to handle that?
George: As you know, we had a team of people over at Motegi to visit the facility while there was an event taking place. It was a beautiful facility. We were very impressed. We had some very good discussions, and they have proceeded in a very positive way. But at this point there's nothing imminent to announce regarding Motegi. So I guess we'll just have to wait and see on that one.
Q Tony, we've had Honda announce today and Toyota last year, there's another company in open-wheel racing hasn't really announced anything. Can we expect another major American manufacturer in the near future?
George: Well, as you might well guess, it's pretty late to be considering something for 2003. I think, you know, Robert said it, it wouldn't be possible to really do this program the way they were structured before, but it was through this new vision and through a new relationship that allowed them to step up for '03. So I would say while it was possible, I would say it's not likely you'll hear any more announcements.
Q Robert Clarke, this seems to represent a pretty radical U-turn in philosophy for Honda, an engineering company that prides itself in doing its own engine programs. Now you're leaving the bulk of the work up to a specialist company, and not only that, a specialist company that has significant ties with one of your major competitors in the automotive industry. Please explain.
Clarke: It does seem strange, doesn't it? There was a lot of discussion internally. As you're absolutely correct, it's something that Honda has never done before. In fact, it's prided itself in not having that kind of relationship before. But I think times are changing. It's for HPD to achieve those objectives of having American Honda in North American motorsports continuously and at the same time continue to develop HPD's resources, we basically boiled it down to the only choice. We felt that there were actually many advantages to doing that. Honda is a very, I guess, incestuous kind of company in that it develops all of its know-how and technology from inside. While that has many good aspects, it has probably some negatives in that we don't bring in a lot of outside resources. So this program will actually allow us to experience how another very similar company operates; and although they're not just going to hand over their technology, it will be a very enlightening experience, I believe, for us. It's something that Honda, not just HPD, but Honda actually can benefit from. And Ilmor in respect is feeling the same way.
Q How do you get over this conflict, for want of a better term, that it's at least significant Mercedes, Daimler-Chrysler has a significant stake in that company?
Clarke: I mean, just from a confidentiality point of view, I think we have those security measures in place through the agreements and how the program is structured. As I explained, it's actually in a separate facility with separate staff. There's no overlap between the two programs. So both Mercedes and Honda are confident that Ilmor can balance the workload and the security issues between the two programs.
Q And Tony George, could you just clarify when you're talking about the likelihood of another manufacturer coming in, I was under the impression that you had another like submission, another company had put in an application to supply for next season. What happened to that?
George: Yes. Well, I think there were additional applications made, but time is rolling along quickly, and I haven't heard anything to affirm any other manufacturers becoming involved in '03.
Q Robert, with a lot of our undercurrent going on about possible other major teams going the way of Roger Penske and coming over here from CART, as you worked through this, have you had any sort of behind-the-scenes commitment from any major teams in CART that if you go and do this, we want to come and make a deal with you? Is there any that maybe they're not announcing it yet but that -- is there movement there somewhere?
Clarke: No, not really. We've tried to keep this whole program very secret. It seems as though we've done a fairly good job in keeping it secret. There's been a lot of speculation, I believe, but no one was able to really connect all the dots. But, no, because of that we have not been free to go out and discuss with our current CART teams or any other CART team.
Q Robert, how far along is the program? Toyota is prepared to test by mid-summer and both Nissan and Chevy are on paper. How far along is the program? In follow-up to Tony on a slightly different situation, is the series in a financial state where teams can support four different manufacturers?
Clarke: I'll go first. I'm sorry, I've already lost track. Could you repeat it one more time?
Q How far along is the program?
Clarke: OK. The program, we're basically looking at engine startup on September 1st. So I would say that we're behind other engine programs. These discussions between Ilmor, the negotiations, the overall planning of the program, it took longer than we had hoped. So the program is in its design phase and actually going into prototype parts as we speak. As I said, we're starting the first startup of the engine on the dyno September 1st.
Nation: Tony, about --
George: I don't think at any point we ever considered telling Honda not to come because our teams weren't ready for a fourth manufacturer. We view this as a very positive step. I think, as I said, it further enhances our position and our stature as a premier series. I think if anything it will help us grow the series in a way. You know, I believe that the series has to be an advocate of its suppliers, its manufacturers, its sponsors, and likewise, you know, we believe that the suppliers, manufacturers and sponsors need to be advocates of the series. And that's, you know, it was talked a lot about yesterday and the day before, and that's what excites us that we're finally beginning to build a base that should help our teams. We're trying our best to manage it. We've always talked about managing our growth, and we've got all these opportunities coming at us at once, it seems. But we have a good team of people in place to deal with it and manage it. Had all this happened last year or the year before, I would have been a little bit concerned that we might not be prepared to take on this kind of growth or manage it. But I feel very confident. I think it will help the teams. I think it will help position us well to provide a great platform and help connect the dots and create a real value proposition.
Q Tony, another two-parter here. First of all, would you be in a position to say at this point that the addition of Toyota and Honda to the series are programs the two most significant things to happen to this series since its birth at this point just in terms of the overall growth of the series and the image that they bring? And secondly, I'm under the impression that, I've been told that new manufacturers have to sign an agreement to help promote the series, that that's part of it, marketing is part of it. The significance of having a company like Honda and a company like Toyota involved, will that increase the awareness and visibility of this particular end of the open-wheel sport?
George: I hope I just addressed that. I think it ranks right up there with one of the most significant things. I think you can look at a lot of things and view them as significant in the history of the IRL and getting it to where it is. But, again, the other part of your question, I think, I tried to address that a little bit, maybe I wasn't clear. But I think that we do have a promotional agreement with all of our manufacturers, suppliers and, in my opinion, it's not an onerous one, but it's one that just demonstrates their willingness to embrace the series, to use it as a platform, to invest in it, to help, be a partner to, you know, leverage our brand and allow us to leverage your brand to help grow this series. I think it will pay tremendous dividends. I believe that all the partners we have will far go far and above what we agreed to contractually. I think the spirit of the agreement is that it will be embraced and used as similar programs have been in the past.
Q Tony, as you mentioned, most of us heard that you were in Motegi a few weeks back, but when did the discussion become negotiations? When was it assumed that there is going to be a Honda engine and then just working out the details? How long ago did this get really serious?
George: I don't remember. I've lost track of all time. (Laughter)
Clarke: A long time.
George: It's been ongoing for quite a while. Again, I'm surprised that it's been kept as under wraps as it has. There has been some speculation out there, but, as Robert said, I don't think very few, if anyone, connected all the dots. There were a few out there, because I know people would come up and make comments to me, and I'd just act like I don't know what they're talking about. (Laughter) So it's been a while. Let's see, it's definitely in 2002.
Q Would you encourage any of your teams that you have had long relationships with in CART into joining the IRL?
Clarke: Well, obviously if they have interest in coming to the IRL, we'd love to continue that relationship with them and supplying engines. I can tell you that our initial discussions with Ilmor began back in like August last year, which was before our announcement. That was driven by the fact that many of our teams were either already competing in the Indy 500 or wanted to compete in the Indy 500. And the only way they could do that was with one of our competitors' engines. Of course, we allowed that to happen. It was in our contract we didn't have to allow it, but we did allow it; but it didn't feel particularly good allowing them to develop a relationship with a competitive supplier. So Paul Ray, who I've developed a good relationship with over the years and throughout all the engine discussions we've had, he and I got together after the Michigan 500 race and were talking; and he was talking about how they were looking for business basically to keep Ilmor, Inc. going. I was talking about how, jeez, we've got all these teams that want to go to the Indy 500 or even IRL, like Mo Nunn was even willing to go, you know, a full-season car. So we were both thinking, hey, you know, maybe there's something here we could put together. That's basically where it came from.
Q My question is for Robert Clarke. Robert, Honda and Toyota have established quite a rivalry in the recent past. Now that you're back at Indy, I wonder if the execs back at Honda are looking forward to recultivating that rivalry here at the 500.
Clarke: Absolutely. No, basically we hate each other, I think; it's kind of in each other's culture. I've been with Honda 21 years, and it's basically driven into you that you're not supposed to like Toyota. Although, I think both companies make excellent products, they're excellent engineering companies. They're both very capable as I think we both have proven, and I believe Toyota feels the same way. We're both looking forward to competing against each other, and we're looking forward to competing with the other manufacturers that are already involved in the series. So in Honda's mind, the more the better. And basically you compete in racing to prove to whoever's listening, whether it be your customers or your staff, that you make a superior product. We look forward to showcasing the Honda engine and winning not only the Indy 500 and many races but the championship, as well. I think our history in not just CART, but in F1 and motorcycle racing, shows that's exactly what we'll do.
Nation: This will be the last question.
Q Don't put that on me, Fred. Robert, to take that one step further, how much of Honda's decision was driven by the fact that there is this intense rivalry with Toyota? I mean, from the homeland, did Japan say if Toyota is in the IRL and at Indy, we're going to be there?
Clarke: Absolutely none. You may not believe that, but it's the truth. Honda basically is looking after its own needs. We don't go out and target competition with Toyota as a way of justifying our existence and our business. We do that for our own reasons.
Nation: Thank you very much. We'd appreciate it if you would go outside, and Tony and Robert will go outside and do any one-on-ones out there, please, because we have more coming in here. Thank you for coming.