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Tuesday, June 9, 2009

Layoffs at Petty team won’t be the last in garage

Anyone telling you bankruptcy is going to be a positive thing for GM and Chrysler in the long run is trying to put lipstick on a pig.

There are really bad, human consequences of these proceedings, such as factory closings and shutdowns, dealers losing their careers, and thousands of layoffs that only make the country’s terrible unemployment numbers worse.

On a much smaller and less important level, the trickle down effect has reached NASCAR.

Richard Petty Motorsports, the Associated Press reports, has laid off nine employees, as well as reduced salaries throughout the organization. Richard Petty has said that the money is coming more slowly from Dodge as Chrysler awaits word on its future with Fiat and works to emerge from bankruptcy. The RPM team also recognizes that it’s likely cuts are coming in the future, and the layoffs are being made in preparation for these upcoming setbacks, sources tell the AP.

Meanwhile, Roger Penske is keeping his head up.
The billionaire businessman said he has not seen the problems with funding that Petty spoke about, and plans to honor his team’s contract with Dodge, which runs for another three years.

Penske is an honorable man, and I trust what he says, but the problem is that after the company emerges from bankruptcy, there might not be a marketing budget period.

Regardless of which side is more accurate about what the future holds for the Dodge teams, the layoffs at RPM are a sign of what might soon come when GM is going through its bankruptcy, which is scheduled to take 60 to 90 days, but could take longer.

As much as we all love racing and recognize how it can work as a marketing tool, the people running the budget meetings once GM reorganizes (also known as the government) will see how much money is being spent on NASCAR and demand a drastic cut in spending, or perhaps go even further and chop that part of the budget completely.

I remember a story I heard long ago that very much applies here. Back about a decade ago, when Ford still owned Jaguar, a Ford executive was looking into employee salaries, and saw that a man named Eddie Irvine (Formula 1 driver) was making about $10 million per year. The executive, confused, asked something along the lines of: Who is this Eddie Irvine, and why is he our highest paid employee?

That’s exactly the kind of thing will happen when President Obama’s handpicked people start telling GM what to do. (Whether they should is a whole different topic … they do own the majority of the company, but it just doesn’t seem right at the same time. But like it or not, it’s the reality of what’s going to happen.)

The board of directors will draw a big red X through much of the auto racing budget as it tries to guide the newly trimmed down companies to profitability. Regardless of whether NASCAR may be able to help the company sell cars, the money just isn’t there to hand out to all these Chevy teams.

GM teams around the garage will likely have to make some layoffs, whether they like it or not, because of the lack of incoming funds from Detroit.

Saturns in NASCAR?
Back on the Chrysler front, Penske has an ace in the hole. He has just bought the Saturn brand from GM, which will continue to make the cars for him for two years, saving 13,000 jobs in this country at a time that some good news is desperately needed. As a Saturn owner, I am very glad he did this, as the brand has a solid reputation and should not disappear.
But beyond the roads we drive, Saturn could play a role in NASCAR in the future. So far, Penske has said he has no plans to adapt a Saturn to Cup racing, but may look into using the car in the Grand-Am series.

But if Dodge stops supporting his team, he may be forced to fall back on this and have his NASCAR drivers behind the wheel of Saturn vehicles. I’m not saying it will happen, as there is a ton of work that would have to be done to introduce the new model into the series, and couldn’t be done overnight. But having the Saturn brand up his sleeve is a good backup to have, considering how uncertain the future is for Dodge and Chrysler.


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