by David Broder
The Honda Formula 1 team may be set to receive a bailout from Lord Mandelson’s £2.3 billion fund for the car industry in a further example of state intervention to shore up the super-rich.
The team is currently owned by Honda, the world’s sixth-largest car manufacturer. Although the marque’s sales have suffered much less from the recession than its rival Toyota, in November it announced plans to sell off its Formula 1 team, which finished 9th out of 10 in the 2008 constructors’ championship on a budget of £180 million. A 63% fall in Honda’s quarterly profits has also prompted the shutting-down of its Swindon road car factory.
Honda claim that closing the team entirely would cost it more than keeping it going, but wants to wash its hands of the operation. Therefore any state bailout would essentially amount to using taxpayers’ money to save an unprofitable part of Honda’s business which it wants to junk.
After the collapse of numerous takeover bids, including an initiative by Mexican telecommunications mogul Carlos Slim, second-richest man in the world, the team’s directors now want a state bailout (or should I say, “nationalisation”?) to make sure the team makes the grid for the March 29th Australian Grand Prix, and keep on board its 700 staff (including £10-million-a-year driver Jenson Button, who finished a derisory 18th place in the 2008 drivers’ championship).
The Department for Business, Enterprise and Regulatory Reform has stipulated that recipients of the bailout money will have to prove that they (i) boast an turnover above £25 million a year (ii) are at the “cutting edge of innovation” (iii) are “committed to reducing carbon emissions” and (iv) can create employment.
The ex-Honda team can indeed boast a high turnover and the ability to create two jobs a year for millionaire racing drivers, although the fact that Formula 1 is high-tech hardly implies that any of the innovation made is useful for the rest of society (although some technology has carried over to road cars in past decades, the current ban on electronic driver aids such as ABS or traction control, the engine standardisation in the sport and focus on aerodynamic development to improve performance means that there is now very little cross-pollination).
As regards the environment, the Honda team has in the last two years been cited a particularly obvious case of “greenwash” – painting pictures of the Earth on their cars and advertising a Honda green technology website while doing very little to challenge the fundamentals of the sport. Motorsports publications such as Autosport and F1 Racing have repeatedly mocked the sport’s organisers’ “green initiatives”, such as painting the grooves in cars’ tyres green at the Japanese Grand Prix to “raise awareness of environmental issues”, just two weeks after a four square mile section of Singapore was saturated with floodlighting for a whole week in order to stage a Grand Prix at night-time for the benefit of western TV audiences.
The “green” Honda’s Jenson Button drives through a floodlit Singapore while advertising “Earth Dream” and displaying a picture of the globe on the rear of the car.
It is all very well to talk about defending jobs, but this operation is breathtakingly wasteful and the amount of money required to keep a Formula 1 team in business is enormous. With a dearth of sponsors – for example, RBS falling by the wayside – it is crazy that the government could even consider using taxpayers’ money to keep Jenson Button on the Grand Prix circus.
Grandprix.com warns “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”. Maybe they are right to say there is no operation sufficiently extravagant that Lord Mandelson will not bail it out: but millions of the rest of us won’t be getting any bailout, and will end up paying for the likes of Honda F1 to be saved.