When the final race car crosses the finish line this weekend at the Toyota Grand Prix in Long Beach, it will mark the beginning of a new era in Indy auto racing and a lucrative opportunity for one Los Angeles County engine builder.
The nation’s two elite, open-wheel racing leagues will fully merge after the race, ending a 12-year feud that has cost the sport untold profitability and more than a few fans many of whom started following the competing NASCAR races.
After the merger, a local outpost of Honda Motor Co. Ltd. will be the sole supplier of pricey racing engines to the expanded league.
The Japanese automaker has its North American motor sports headquarters in Santa Clarita, where it designs, builds and maintains engines for the 18 vehicles in the Indy Racing League’s IndyCar Series. Now, the company plans to accelerate its local operations to accommodate a surge in business as the league expands to 26 teams.
“This place is humming all the time,” said Erik Berkman, president of Honda Performance Development. “The added car count has put some increased demands on our organization. We have added some positions. We’ve looked at the entire gamut of possibilities.”
Honda has built its motor sports reputation on providing high-quality engines to open-wheel race cars, starting in the 1980s after it had success as a top manufacturer in Europe’s high-end Formula 1 series.
In the United States, it began building engines in 1994 for Championship Auto Racing Teams, the organization that presided over the Indy car series. Honda had big success after a slow start, winning trophies as the top engine manufacturer six years running.
Then CART split into two factions in 1996. The Indy Racing League whose chief Tony George owns the Indianapolis Motor Speedway ran races on oval tracks. The other faction, which continued as CART before evolving into Champ Car, ran most of its races on winding road courses and public roads, such as in Long Beach.
After the split Honda provided engines to CART, but in 2003 became a supplier to the Indy Racing League. In 2004, it powered its first Indy 500 winner and became the sole engine supplier to the Indy Racing League in 2006.
Racing fans have cheered the unification, partly because the bitter rivalry relegated the sport to second-tier status behind NASCAR racing. Open-wheel racing was arguably more popular than stock car racing before the split.
Already, the reunified league has brought on two new sponsors and seems to be generating more fan interest and awareness a key reason that Honda or any sponsor that hawks consumer products spends millions to attach its name to a sport.
“So far it’s been pretty good. Both from a consumer standpoint and from a corporate America standpoint, I think we’ve opened some eyes with this unification,” said John Griffin, vice president of public relations for the IndyCar Series.
At the start of a long racing season, Honda is revving up for what it expects will be a rush of new business. The company leases its hulking 650 horsepower, 3.5-liter V8 engines to race teams for about $1 million per year.
Teams are required to go with the Honda motors, mainly to keep costs down.
Berkman kept tight-lipped about his company’s revenue, but he said he expects to add to his staff of 140 employees.
From the company’s little-known Santa Clarita outpost, workers design some of the most advanced racing engines ever created. Honda also does a variety of manufacturing work, including initial construction on the engines, which have a life of about 1,400 miles, and rebuilding of worn parts for the engines. What’s more, the company designs and builds entire race cars at its 123,000-square-foot facility for the American Le Mans Series.
“A substantial amount of the work is done here in Santa Clarita,” Berkman said.
Honda’s presence in Santa Clarita, though not huge, is contributing to an increase in jobs and economic activity there. Santa Clarita is one of the few areas in the county seeing an increase in manufacturing employment, according to the Los Angeles County Economic Development Corp.
Jason Crawford, economic development manager for Santa Clarita, said Honda has been a successful member of the community’s so-called “technology cluster” of high-tech companies. “We love having them here,” he said.
The company first moved into its local digs 15 years ago, when it was little more than an assembly station for engines designed in Japan. But over the years, local engineers have helped Honda Performance Development earn respect and recognition within the racing world, prompting the company to transfer much of its U.S. race car engine-building work to Southern California.
In 2005, the company moved from a 43,500-square-foot facility into its current location, almost three times as large. Honda also maintains motor sports operations in Japan and the United Kingdom for the Formula 1 series.
As the company has expanded its local presence, it also has increased its stature within the racing community.
Last year, for the first time in the Indy Racing League’s history there were no engine failures during the strenuous qualifying period leading up to the Indianapolis 500.
The benefits to Honda’s arrangement are numerous, said Eric Wright, vice president of research and development for marketing analyst Joyce Julius & Associates Inc. Not only does the company’s work on race car engines complement its commercial automobile engine development, but being the sole supplier to an entire league is great advertising.
“Whenever an auto manufacturer becomes a supplier to a series, probably the primary benefit is getting your name out there,” he said. “It’s nice in that you’re not necessarily competing against another brand, so there is really no bad day at the track for them.”
However, Honda is nearing the end of its exclusive supplier contract. The company presumably will still be a big supplier in the future and may even grow if the sport’s popularity takes off again but additional engine suppliers will likely be brought on after Honda’s contract expires in 2009.
Different engines help generate more interest among fans as they root for their favorite drivers and teams.
“Honda has a great deal of passion for competition, and I think as we move forward with them we’re going to look to increase the competition,” said Griffin, of the Indy Racing League.
“There’s full intention of both sides to move forward with each other, but Honda may become one of two or three engine suppliers.”