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McLaren races ahead in business and Formula One

Written By Anonymous on Thursday, August 29, 2013 | 11:15 PM

Woking tech centre is a hive of activity not just in terms of motor sport and supercars but innovation away from automotive core

A McLaren engineer put the finishing touches to a P1 hybrid supercar, the first batch of which is scheduled for delivery in days.

While the pristine corridors of McLaren's chief executive, Martin Whitmarsh, was explaining to its 650-strong racing staff why Jenson Button missed out on a podium spot by 13 seconds in last weekend's Belgian Grand Prix, elsewhere in the pristine corridors of its technology centre in Woking another race was in its final stages.

Engineers were putting the finishing touches to the first of 375 P1 supercars, with the first batch scheduled for delivery in days. First seen at last year's Paris motor show, the vehicle is a plug-in hybrid that can achieve 0-62mph in less than three seconds and comes with a suitably racy price tag of £866,000.

Over in McLaren Applied Technologies (MAT), managing director of the "start-up" Geoff McGrath and his colleagues were working out how it might be possible for surgeons to operate on patients remotely through simulation.

Little wonder the firm has been held up by the government as a poster child for UK industry, innovation, hi-tech manufacturing, engineering and generally everything policymakers would like to see in a more balanced economy that is less reliant on debt-fuelled consumer spending.

As McLaren prepares to celebrate its 50th birthday on Monday, it is clear it has become much more than a Formula One team, but its reason for existence is still to win races.

The team has won 182 grand prix races since Bruce McLaren's debut at Monaco in 1966. In that time more than 100 other teams have failed.

Whitmarsh's passion for Formula One is clear. He remains team principal – only the fourth in McLaren's history – and prefers to spend his time in the racing wing of the technology centre.

"I came into the sport as a non-racing person but Formula One is quite a contagious environment, which again is probably why I still have an office down there. It's difficult to get it out of your blood."

He is irked by suggestions that Formula One is an indulgence and McLaren was only taken truly seriously when it began to diversify – despite the motorsport industry being worth £7bn to Britain.

"Racing has been a fantastic British success story but for some reason it's still treated as a fairly frivolous activity and has not been taken seriously. So in a sense, for McLaren now to be taken seriously it had to be doing something other than all the great things we were doing in motor sport," Whitmarsh said.

Ministers now come regularly through the door at Woking. The chief secretary to the Treasury, Danny Alexander and the business secretary, Vince Cable, have been recent visitors.

The 50th anniversary coincides with the global premiere of Rush, a film depicting the battle for the 1976 title between arch rivals McLaren's James Hunt and Ferrari's Niki Lauda. Button will arrive at the premier in an M23, the car driven by Hunt that season.

The glory days may feel a distant memory, with McLaren getting off to a disappointing start in the 2013 season, and Whitmarsh is accustomed to the media onslaught that can accompany a poor performance. "You have to accept it, it's part of it. Once I've reassured my mother that things are OK, life goes on," he said.

For Whitmarsh, the highs have included championship wins with Mika Häkkinen and Lewis Hamilton, counted by the lows when a driver gets injured or worse, killed.

"The death of Ayrton Senna. He wasn't in our car, but I'd worked with him for the previous four years when he was in our car. So when a driver gets hurt it's a pretty serious moment for you," he said.

Given the tough backdrop of Formula One and so many failed teams, diversification has been the lifeblood of McLaren, and Whitmarsh makes no apology for it despite some criticism.

"People jump on us when we're not succeeding, saying 'They've taken their eye off the ball, they're doing this, they're not doing that, they're building this new technology centre, they're building an automotive business.' And to some extent it's valid but in any business the management has to marshall its resource and attention between the here and now, and investing in the longer-term health and wellbeing of it.

"We are rightly, I hope, respected and feared in motor sport, because we've got the industrial, commercial, fiscal strength which is a consequence of that diversification and that distraction. There are probably four Formula One teams that have got clear and sustainable business models, the others have got a real challenge in front of them."

Away from the racing circuit and the usual talk of driver moves, much is happening in the automotive business, which is on target to break even and where it is about to complete its 3,000th car in two years. About 80% of the cars made in Woking are exported, and McLaren now has 50 dealerships around the world, with the first four in China to be opened in the coming weeks.

MAT is in its third profitable year, operating in sport, health, energy, and automotive industries. It has ambitions to open two new centres – in Silicon Valley in the US and Singapore – within two years.

But motor sport will remain central to McLaren's business in future, said Whitmarsh, even with all the opportunities diversification presents.

"There will be some form of motor racing, whether it's solar powered, hydrogen cell or whatever, and I think in 50 years time we want to be the pre-eminent brand and team and culture in whatever is the pinnacle of motor racing as it then will be.

"I think man's fascination with the best driving experience, the best road cars in the world, it's clear at the moment that the brand has been Ferrari and … if we are not aspiring to displace that and replace it with our own then we're not being ambitious enough."

Britain's valley of speed

Formula One is a global sport, but the engineering brains behind the cars are nearly all based in Britain and invest more than £1bn a year in research and development.

Out of the 11 teams competing in this year's F1 Grand Prix World Championship only three – Ferrari and Toro Rosso in Italy, and Sauber in Switzerland – are not based in the UK. The rest, including Mercedes, Williams and Red Bull, all operate out of the so-called Motorsport Valley, which stretches from Northampton to Surrey. The town of Brackley, near Silverstone, in Northamptonshire is home to both Mercedes and Force India and has benefited from almost £1bn of F1 investment over the years.

The valley is the biggest motorsport cluster in the world, generating global sales of £7bn, of which £4bn is exported, according to the Motorsport Industry Association (MIA).

Chris Aylett, the MIA's chief executive, said Britain began to dominate F1 engineering in the 1950s and 1960s when British aerospace engineers developed lightweight cars on the dozens of former second world war airfields across the south of England. "Slowly but surely, Motorsport Valley was formed," he said. "Now 73% of the teams are based here and 73% of the engines are built here."

The valley now acts as a beacon for the best and brightest engineering minds in the world, according to Aylett, with more than 40,000 people employed in F1-related roles in the UK, including 25,000 engineers. "You'll hear every language in the world if you drive around the valley," he said. "It's an international community that just happens to be based here."

Tim Urquhart, analyst at IHS Automotive, said the engineers working in motorsport were "highly skilled and on very high pay", so benefit the nation both in skills transfer and the tax take.

Urquhart said Britain "might not have been great at retaining ownership of automotive businesses, but the engineering talent behind their continued success is British". Motorsport firms typically spend 30% of turnover on research and development, compared with 4% in engineering, 6% in automotive and 15% in pharmaceuticals. Rupert Neate

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