Who will be next year’s tire supplier?

Posted: May 5, 2010 in Uncategorized
Tags: , , , , , ,

This is a critical situation with no solution at the moment. Bridgestone will officially retire from F1 World Championship in 2011. There may be only two ways to convince them to keep going. Let them respond to the planned bid process or get paid for the tires.

No significant discussion among the boards about this subject. The FIA, Bernie and FOTA have been so far too silent. This must be the greatest concern to Bernie Ecclestone and Jean Todt. At the moment there are only deadlock solutions.

In November 2009 during my visit to Bridgestone head quarter in Tokyo, Bridgestone announced its shocking departure. Both Hiroshi Yasukawa (Director of Bridgestone Motorsport) and Hirohide Hamashima (Director of Bridgestone Motorsport Tyre Development) were firm in the decision but still not 100% along with more rooms for negotiation.

Now it looks FIA needs to go begging in Tokyo. Paying for tires may be an option. To supply tires, along with a total of 63 technicians, would be an extra expense for the team amounting to US$5 mil or US$6 mil dollars. That’s more than the cost of engines.

Other tire manufacturers have expressed an interest but only if they are financially compensated.

Bridgestone spends about US$120 mil per year on the program. About half of this is written off as a marketing expense for which they must commit themselves to various contractual obligations. This expense, with marginal returns, is deterring possible alternative suppliers such as Michelin, Goodyear and Pirelli. They all demand to be paid. After Bridgestone’s announcement, the FIA has so far not issued a new tender. Why? It appears nobody was interested and the FIA wanted to save the embarrassment.

It is certain that there will be no more free tires. Potential newcomers such as Kumho and Hankook are being considered too risk. They lack of experiences, the production facility and have no marketing “fit”. To enter the sport for the next season is quite impossible if we look at the time-wise. That leaves only Avon, who delivers the slicks for the historic Formula 1 races. But Bernie is not that generous with the cash and unlikely to fund this (or any) aspect of the sport. There is no development work happening at Avon. Their tires are rock hard and could be impacting lap times increased by 3 seconds.

Ecclestone and the FIA must realize that their plan to give one tire supplier a monopoly has backfired. Tire manufacturers (as Michelin has often said) will only invest funds if there is true competition.

In these difficult economic times, the manufacturers have nothing to give away. We can say good-bye to free tires. The teams have been complaining about the reduction in the number of tires available (44 per driver) but that too is a reality that may be reduced even further. Toro Rosso’s team boss Franz Trost see this situation clearly. “If we need to pay for the tires, most teams will be satisfied with fewer sets. Only the teams with too much money will not be satisfied.” The small and new teams will find the additional cost unsustainable. I can see that this tire issue will trigger a new round of financial hardship.

So, what’s the solution?

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