The news that Paddy Lowe is leaving McLaren means that the focus is once again on Mercedes AMG F1. If McLaren’s technical director is moving to Mercedes, what will be his role, and who will be shovelled out of the way to make room for him?
At the moment the Mercedes AMG F1 telephone box is filled with Supermen and rather overcrowded: the cast (in no particular order) are Niki Lauda (non-executive chairman), Toto Wolff (executive director), Ross Brawn (team principal), Nick Fry (chief executive officer), Bob Bell (technical director), Aldo Costa (engineering director) and Geoff Willis (technology director). Lowe’s presence is likely to result in a number of the above being squeezed out, as the intention appears to be to have him running the whole show.
The problem with this idea is that the team needs stability and continuity right now because Lowe cannot join until the start of 2014. By then the 2014 car must have been designed; and the 2013 project must have been developed as much as possible to keep Lewis Hamilton interested.
That is going to take some mighty juggling.
However there is more than a little logic in what is being done.
By bringing in Wolff, Daimler boss Dieter Zetsche has created a situation in which Mercedes can either enjoy the glory of success, or quietly switch the ownership to a different entity and slip out of F1 team ownership, almost without anyone noticing. Mercedes can continue to be a successful F1 engine supplier, a role at which it proved to be very successful, notably with McLaren and Brawn GP, before the decision was taken to become a full-blown team owner, which has not been a great success.
Wolff is perfect as he is a shareholder and the deputy-chairman of HWA, a privately-owned firm that acts as the full service provider to Mercedes in the DTM, in addition to manufacturing and servicing all Mercedes Formula 3 engines and the Mercedes SLS AMG GT3 racers. The Wolff announcement said that he and Niki Lauda had “signed a letter of intent” to acquire stock in the F1 team. It did not say that they had parted with any cash, but it did open the way for the team to get new ownership. That is now easy enough to do. Mercedes AMG F1 can easily became AMG Mercedes F1 and from there it is just a skip and jump to hand over the running of the operation to HWA, with similar arrangements to the DTM teams. Then Mercedes could pull back and be just an engine manufacturer again.
What is really interesting is the appointment of two directors to the board of the team. Joachim Schmidt, who was the chairman, has been re-appointed as a director. He is joined by Wolfgang Bernhard. The former is an ally of Zetsche, the latter is widely seen as the man who will be the next chairman of Daimler AG. Zetsche has recently had his contract extended, but only for three years, when he was hoping for five. Thus he will be replaced at the end of 2016.
Bernhard has been an important player at Mercedes from 1990 onwards. Before he joined the firm he was in charge of management consultancy McKinsey & Company’s activities with Mercedes. McKinsey recommended that Mercedes acquire AMG, which up to that point had been independent of the main company. He then joined the firm and after some years cost-cutting, he was made the head of Mercedes-AMG GmbH. Or to put it another way, he has close links with Hans Werner Aufrecht, the founder of AMG, and Wolff’s partner in HWA.
In 1999 Bernhard was sent to America to help Zetsche run Chrysler. For a while he was talked of as a possible head of Mercedes-Benz road cars, but he fell out with Schrempp in comprehensive fashion and left to join Volkswagen as the head of the VW brand. That lasted just two years, by which time Schrempp had been kicked out at Daimler and Zetsche was in charge. Bernhard returned to the fold and in 2010 joined the management board and became the heir to the throne once again.
Aufrecht and Wolff must now be rubbing their hands at the idea that an F1 team might end up in their lap… This would mean Mercedes would have a team that it could control without having to take the blame for failure, while Aufrecht and Wolff would have a cheap way to get into F1.
Where this leaves Lauda, Brawn and the rest of the gang remains to be seen.
Clear as mud.
Where this leaves Lauda, Brawn and the rest of the gang remains to be seen.
Well I could never see Lauda as anything but a short term fix. Gone by the end of the season even before the most recent shuffling. Brawn, well he has enough FU money that he probably does not care and if he wants to still go to races someone will give him a position. The rest of the team of technical directors will be more fun to watch as the musical chairs plays out this season. Lots of nice gardens this summer one suspects!
Joe as HWA manufactures and services all Mercedes Formula 3 engines why not have them pick up Brixworth too and badge the engines Mercedes, as Ford did with Cosworth? Surely if they want out, that is as out as it gets, in all but name? Why keep Brixworth?
Because it is a far more valuable asset than Brackley.
“Mercedes AMG F1 can easily became AMG Mercedes F1″ Do you mean that the chassis name will be changed from Mercedes to AMG? And would that result in the team losing any historic money?
No, I meant simply a change of emphasis the car name can always change later depending on who else needs favours over name changes.
Joe I am thinking the same as you. I had a similar conversation with TheJudge13 yesterday and would appreciate your views… Do you think factory teams are getting out of F1 and we will go into a period where Ferarri will possibly be the only F1 factory team? The rewards for success is great but failure is in front of a global audience. If your an engine supplier it’s different and relevant to your business (from 2014 onwards).
I don’t know who the judge is.
I think you would find that you indeed do know of TJ13, but are simply unaware of it. He is the “custos morum” of the “sodalitas” of F1.
I am none the wiser. If he is an F1 journalist, why not tell us who he is?
So this Judge is the moral custodian of the learned society of F1?
Nope, I’m still baffled as well.
But then again (like Peter Cook’s EL Wisty) I never had the Latin to be a High Court Judge.
I think the opposite will happen.
Thats Interesting, but who? i really can’t think of any manufacturers that be coming to F1 anytime soon. Possibly 5 years time, so they can review if the turbo engines have been a success.
Very insightful and thought provoking read, this was. Well done.
It certainly looks complex, but I wonder how much is happenstance and how much is by design?
I agree about Mercedes slipping away if things don’t work out, but on the other hand they really need to put more of a show on, having come this far down the F1 road.
“At the moment the Mercedes AMG F1 telephone box is filled with Supermen” – I’m happy not to be paying their weekly wages!
I have great respect for Lauda as a racer, but as a manager I think he is left wanting. His toolbox seems to consist of hand grenades and a very big loudspeaker, I cant imagine this being conducive to developing a consistent front running F1 team. I think Mercedes would be better off without him.
As for the rest of the Chefs in that kitchen it is hard to discern who’s contributing what (those titles sound like they would overlap quite a bit on a Venn diagram); as much as it saddens me, I would be surprised if Brawn is team principal at the start of the 2015 season (if not sooner).
I guess this gives Mr Lowe a few months to brush up on his demi – team principal skill sets in preparation for his hybrid role at Mercedes, not much else for him to do whilst under house arrest in Woking !!
I might put in for Paddy’s job! How many squillion’s do you get paid? Lol
Not as much as you get at Mercedes, obviously.
http://dl.dropbox.com/u/7999761/gone-fishing.jpg
Wilson
I get the idea that Lauda is currently more of a talking head than anything…
All the words written say stuff like he ‘lured Lewis away from McLaren’…
F1 branded Clue/Cluedo game.
…In the pit lane with the titanium piping?…
Was it Flavio Briatore, in the Singapore motorhome, with the order to crash at the right time?
What is McLaren take?
Why would Wolff not want to further his own brands ends? HWA is AMG to an extent, the knowhow of F1 is paying dividends to AMG already in terms of Halo product image(SLS AMG) and in terms of tech(A45 AMG turbo was developed at Brixworth).
So to have it all “end up in their lap” is neither here nor there when you consider it is already in their lap.
As for the list of heads, Nick Fry is a lame duck. Lauda is the team mouthpiece and watchdog, he will bite if anyone slacks so much as an inch(good or bad that may be).
Bell is working 2014 engine integration and loopholes, while Costa gets on with design. Willis is hardware, think windtunnel upgrades.
The point is, they could do without a couple of these people…namely Lauda and Fry. But if Brawn went, and Lowe came, surely this is a very good thing indeed for Mercedes.
His McLaren IP would be priceless. And usable as long as its stored from memory
HWA is not AMG. It is a sub-contractor. It is independent of Mercedes, while AMG is a subsidiary.
True, but the links are forged in titanium. HWA is Mercedes and solely Mercedes.
It is what AMG was 25 years ago. The moment Mr Hans Werner Aufrecht moves on to the next world, it is nearly a given that HWA will be a Mercedes owned entity.
Speculative, but more than likely would not concur?
Either way, the initial point of Lowe being a good thing for Mercedes…do you think his appointment is positive news for us silberfeil-istas?
That is true today, Joe, but not too long ago AMG was a sub-contractor as well. It’s particularly relevant that the A in both belongs to the same fellow.
With that said, this was a truly excellent piece, Joe. I, for one, really enjoy the blog entries where you get into the business analysis of F1. Thank you.
-k-
Joe,
Jonathan Neale is quoted as saying:
“If you want to buy some short-term know-how then you can go out and pay telephone-number salaries. We’ve all done it?”
How many numbers in their phone number do you think Joe? 6? 7?
What do you think they refer to when they say short-term know how?
Not more than low- seven
Neale also made a reference to waiting “12, 18 months or longer” for hires from McLaren to be available…
If Paddy has to give, say, nine months notice of termination, spends from now until September polishing the bonnet of Ron’s MP4-12C, and then has nine months of gardening leave, it would be the middle of next season before he actually starts work at Brackley. Not really to his or Mercedes’ advantage…
Cheers. How do you think that compares to the Adrian Newey’s of this world? Mid 7′s per year ish?
I have no idea at all.
I would think that “Short term know-how” refers to the knowledge of what Mclaren have now and in development for this year, and residing in Mr Lowe’s head. Long-term know how is building up capability in a design team and derives from work done by that team, as a team.
It’s often difficult to lift detail design from one car and apply it to another. The interaction of details differ. What you get from someone like Mr Lowe is the overview of the technical tsrategy.
I wonder if the wording of Lewis’s contract included specific named people he would report to and who would need to stay long term. Still it’s all about next year really, if Ross goes will Lewis go too? Will the engines be any good? A major (quoted) car manufacturer may supply up to three teams at present so that’s another rule change coming up. Or maybe a clarification by Charlie that 3 actually means 5
The management structure hardly makes you think “lean mean fighting machine” does it? I have never understood why manufacturers don’t simply become title sponsors of existing teams rather than go through all the trouble of buying one. You could even end up with a situation where you sponsor the team for just long enough for them to change their entry name to yours, then stop paying, and everyone still calls their cars by your name! Genius!
Brilliant comment, TimW.
If you are going to “invest” a lot of money into a team as a sponsor, say like Bolivarians, you essentially have no control. If the team wins some accolades, then all the value goes to the team owners when arguably they have contributed none of the cost.
Attaching your sponsorship name to a losing team (particularly when a rival manufacturer sponsors/is the winner) arguably still brings the same result as if you owned the team. Yet by owning it you can influence the result more.
You could also spend hundreds of millions, and by meddling too much in things you don’t understand, turn a once winning team into also rans.
Why would Paddy Lowe want to step into that mess?
Reports are being made that sutil has got the force India seat. If that’s true, well FI be continuing with Mercedes engines?
I’ve always thought that Mercedes moving off from McLaren was a mistake. However, now with the Mercedes Grand Prix team, it’s certainly not a McLaren style management that they are establishing. As a matter of fact, it strikes me as being increasingly more and more like the “Too Many Chiefs, Not Enough Indians” syndrome.
Sounds like Norbert got at just the right time.
Or even out
LOL. Norbert went out with a very big dagger in his chest/back. He did not jump.
Whos fingerprints on the dagger, Joe?
I think the word ‘omnishambles’ was created for these sort of situations.
The original coining was followed in the words of Mr M. Tucker by
“From bean to cup, you **** up”
Not quite fair on Merc F1, perhaps?
Question: Does the removal of Lowe’s services from McLaren factor into his “phone number” purchase price? Seems that Team Merc have smartly taken a crucial player away from Team McLaren by making this purchase now. Though Paddy will not start work for Mercedes until next year, he can’t have anything do with McLaren’s 2014 and beyond ideas and developments, either. He’s not just on a vacation, he’s out of play at time when his services would otherwise be a critical part of McLaren’s 2014 development program. Sure, this whole situation is confusing and seemingly hard to understand, but F1 has chess matches inside of chess matches inside of chess matches, just like any other technology driven industry. I think Merc is being quite clever, at least in regards to move. Thanks for the very interesting read, Joe.