Stoffel Vandoorne, McLaren, Interlagos, 2017

“Repairing the damage”: Jonathan Neale on McLaren’s future after Honda

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Please allow me to open my first column for F1 Fanatic with a few words of thank you for the incredible support and words of praise we received from fans across the world after Keith announced that I had to joined F1 Fanatic after a 25-year relationship with my previous media platforms. Of course, included in all the welcome messages was the inevitable question: “Why?”

Dieter Rencken
Dieter has joined F1 Fanatic for 2018
In order to best illustrate the reasons I would like to draw an F1 analogy: The last two seasons have seen Force India, one of the last remaining truly independent teams, take on and embarrass the established order such that in 2016/7 this archetypical independent team placed fourth in the constructors’ classification.

Cynics view Force India’s classification as third of the losers, but this overlooks a salient factor: the team not only survives on one of F1’s most modest budgets, but punches well above its weight through a combination of enthusiasm, commitment, working both hard and smart, and by taking the correct management decisions in order to best deploy its extremely restricted resources – all in the face of considerable odds.

Sauber – the other only truly independent on the grid – faces the same challenges. What marks these teams out is their survival as independents despite not having the commercial / technical firepower of corporate teams. True, Sauber underwent a change of ownership to survive, but it is back. Force India and Sauber compete in F1 because they love F1, not because it suits some corporate agenda.

F1’s playing field has never been totally smooth – nor should it be in a true meritocracy – but in recent times that angle has been tilted by (alleged) abuse of the dominant position enjoyed by Formula One Management, epitomised by an inequitable payments structure and governance structure that excludes both teams.

Hence their EU Commission complaints on both counts, alleging monopolistic practice. While the matters may soon be resolved, there is no doubt both teams suffered massive injustices, but have survived against almost steep odds.

Sergio Perez, Force India, Red Bull Ring, 2017
Force India: First among independents
I have made no secret of my professional admiration for Force India’s achievements – and, to a lesser degree, those of Sauber – and harbour similar sympathies for F1’s media underdogs, those platforms that battle against the odds to survive in a crowded marketplace on extremely restricted resources, oft in the face of the (questionable) practices of media giants. Interpret that as you wish…

Thus I increasingly (re)considered my position in the sport, and began exploring my options. Keith and I held tentative talks some time back, and I promised to give him first call if I ever cast about. I did so shortly before Christmas, and the more we spoke, the more it became clear we shared a similar vision, one driven by a deep-rooted and shared passion for F1.

That vision is to ensure not only the survival of independent F1 media outlets but their growth in a rapidly changing F1 media landscape – for the ultimate benefit of F1’s fan base. Once I recognised Keith’s commitment to F1 Fanatic – and by extension, the sport, the teams, and, crucially, you, the F1 fan – the rest fell into place surprisingly quickly: quicker even than the landscape keeps changing…

Keith has truly exciting plans for F1 Fanatic’s future, including a name change and a structured expansion into other motorsport genre, and I am delighted to be part of those plans. These will be announced during the course of 2018 in line with our shared goal to make this already great website even better.

As such I will contribute not only weekly columns, but report directly from grands prix on your behalf. I am relishing this new challenge!

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Jonathan Neale on McLaren’s life after Honda

The saying “tip of an iceberg” applies perfectly to Formula 1 team’s manning structures: For every race-going employee there are at least five, possibly as many ten, employees back at base. Despite not having “starring” roles, they are every bit as vital – more so in some instances – to team performance – as the “front of house” folk one sees on television every fortnight or so during the racing season.

Eric Boullier, Jonathan Neale, McLaren, 2017
Eric Boullier and Jonathan Neale face a year of rebuilding
They design and develop cars to winning pitch, build them to exacting standards, obtain (enormous) funding, pay the bills and generally undertake all the “boring” jobs that enable “stars” to do all the high profile stuff. One of F1’s most capable “backroom” people is Jonathan Neale, Chief Operating Officer and acting CEO of McLaren Group Limited, as the newly-integrated operation is now known.

The Group consists of three pillars: Racing (effectively the F1 operation), Automotive (self-explanatory, but with its own GT racing operation) and McLaren Applied Technologies (which provides McLaren-developed technologies to other industries), and while various group companies were separate legal entities with different shareholders, they are converging into one group with one set of shareholders.

An indicator of Neale’s acumen is that he is the only remaining member of the troika that ran the team during those mercurial noughties: Ron Dennis, Martin Whitmarsh, Neale. Thus he survived various upheavals over the years – including “Gates” and the oustings of Dennis, Whitmarsh, other key people and the disappointment that is the Honda era, yet remains very much in charge of McLaren’s nuts and bolts.

Jonathan and I meet up once a year to review the team, and discuss planned progress for the incoming season. The latest agenda has some additional lines: Group structure, Honda/Renault and future strategies. He alludes occasionally to Automotive, but makes clear the car side is the responsibility of divisional CEO Mike Flewitt. Still, Neale can’t hide his pride at McLaren’s success in the sector.

We move straight into Group structure. Has the convergence been completed, and what are the shareholdings? Who actually runs the Group?

“Bringing two groups of shareholders (Automotive and Racing/MAT, the latter previously known as McLaren Technology Group) together back into one company, is great for us,” he says. “There was a good reason why the company separated – to drive additional funding into Automotive – and now to bring it back to one brand, one pillar again. It’s tremendously exciting.

Ron Dennis, McLaren, Hockenheimring, 2016
Dennis’s departure in late 2016 was “painful and public”
Then Neale gets as close to talking about the Dennis situation as will during the 25-minute interview: “Certainly very painful and very public, unfortunately, but sometimes you don’t get to choose the way these transitions happen. You don’t flick a switch and integrate overnight, but whereas it was expanding, it’s now converging under one strategy. Mike, Zak (Brown) and I are very close.”

And the shareholdings then and now?

“Seventy per cent of equity in Automotive was owned by the same people (the Bahraini royal family, via its investment fund Mumtalakat) that owned 50 per cent of McLaren Technology group. But now it’s all one set of investors, one board, and three operating companies.”

Was this achieved via a share exchange?

“Yes, because Ron was bought out.”

And the Bahraini shareholding now is?

“It’s slightly less than 70 per cent, but it’s a majority shareholding.”

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He immediately refutes rumours that McLaren plans to list, but admits that the Group recently raised £500m in the City.

“There’s no internal discussion at the moment about IPO or public; it’s all about continuing the growth in Automotive, about getting behind in gearing for growth in Applied Technologies that we see as an exciting play going forwards, but we’ve got to be focussed about what that is because it’s not all things to all people,” explains Neale, who graduated from Nottingham University in 1984 with an honours degree in physics before joining BAE Systems ahead of a move to McLaren in 2001.

“Then [it’s] repairing the damage that we’ve done in Racing over the next two or three years. That means getting [ourselves] out of P9 in the Constructors’, and getting ourselves back up the front of the grid. The reason we’ve brought Zak on-board is to help restore the commerciality of our motorsport.”

The comment eases to the next question: The structure of the Group, now effectively headed by Sheikh Mohammed bin Essa Al Khalifa as chairman, supported by long-time McLaren shareholder Mansour Ojjeh of Saudi Arabia.

“Myself, Zak and Mike are the senior executives running the company, reporting to the board. Between Zak, myself and Eric we’ve got Racing. I’m Chief Operating Officer. There’s Zak, who’s one of the directors…

Fernando Alonso, McLaren, Circuit de Catalunya, 2017
The racing operation “requires a lot of repair work”
Eric reports to you, predominantly to you, because on some stuff he reports to Zak…

“Yeah, exactly, but if it’s commercial it’s to Zak.”

I detect a weighting in favour of Racing, given Automotive larger contribution to revenues.

“Only because [Racing] requires a lot of repair work over the next two or three years. In the overall scheme of changing management of the company, we’re going through that restructuring. We want to make synergy savings as well. One of the reasons for bringing the companies back together is to de-duplicate where we can. There’s a lot of management work to drive our businesses forward, and also to take that synergy step.”

That dispensed with, the next touch point is Honda/Renault:

“In Formula 1 the key thing has been working out whether we could find a way of restoring our competitiveness, making that happen with Honda,” he says, then pausing slightly before adding, “After the difficulties of winter testing…We concluded, together with Honda, that…” (unsaid).

So, if that’s not the answer, what is the answer? We went through all the various permutations and combinations through the middle of this year, and now we’re looking forward to racing with Renault next year.”

The team’s stated objective with Renault power is to regularly challenge the established order for podiums; indeed, Brown’s commercial strategy is based on such performances. Is that feasible given that to do so McLaren would need to beat various permutations of one or both Mercedes and/or Ferraris – to finish third…

“Well, Red Bull proved it’s capable this year.”

True, but only when others faltered…

“But that’s the nature of motorsport. We’re under no illusion.”

But you aim to consistently be on the podium?

“Of course we do, but that’s a journey. Nobody thinks we’re going to snap back in the space of a few critical months. The competition out there is good, it’s tough, but we can rebuild our business next year, fighting for podiums. But you’re right: It’ll be tough on current form and on current trajectory to consistently be anywhere near beating the Mercedes or the Ferraris.”

A year ago Neale had stated the target for 2017 would be to finish “better than fifth” in the constructors’ classification. I remind him of this, stressing P9, than add that I would be ‘very surprised, indeed very complimentary’ if McLaren placed better than fourth in 2018 – which would require (at least) regular podiums to achieve.

Stoffel Vandoorne, McLaren, Spa-Francorchamps, 2017
McLaren only managed to beat Sauber last year
“Yeah, I think I would be the same. Let’s suppose that we just pick P4 as a marker. From where we are at the moment, P9, that is a step. Is that enough? Absolutely not!

“That isn’t where McLaren should be, but in terms of a trajectory going forwards, it is upwards. We’ve had great conversations with Renault about what kind of contribution we can make to the programme in its broader sense, and we want to be a good technology partner. We don’t want to be a passive customer, and I don’t think Renault wants us to be a passive customer either.”

With all the recent talk about F1’s post-2020 engine regulations, I fly a kite about McLaren doing its own power units in order to mesh with the road car division. After all, what sort of message does it send to its supercar clientele that McLaren F1 cars run Renault?

“Clearly our primary objective is to restore our competitiveness in the Formula 1 arena. We did the (2017) Indy 500; that was good, it gave us better brand exposure, it was good for Fernando, it was good to shine a brighter light on something that was a difficult season. That was more tactical than strategic.

“When you look at what our company does… then we’re not quite – you and I wouldn’t call it ‘entry level’ – but we’ve got sports cars coming in at the sort of 140-ish Euros with bits attached… which will then take you through the Sports Series all the way up to the Ultimate Series.

“I don’t know how much chance you’ve had to look at what’s under the hood in top-end sports cars these days, but you can get pretty much 1,000bhp out of a turbocharged engine, before you hybridise. You can get that for maybe £10,000 or something, and you’ll have 50,000 mile service intervals.

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“For about the same kind of power – yes, a lot lighter, yes there’s a lot of other things about it, but going to pay, whatever it is, millions a year for this thing. The technologies are quite different. You’re right in terms of us stopping and thinking strategically what do we need to do.

“Automotive, and Mike can talk for Automotive, has a clear power train strategy at the moment. You’d expect it to, because it’s got a series of products coming out in the next few years and the emission regulations will drive electrification or hybridisation, so you’ve got to be in there right now. I think in Formula One McLaren hasn’t historically done its own engine.”

So no chance, then, of McLaren joining the expanding list of post-2020 wannabe engine suppliers?

“We’ve just signed a deal with Renault. The regulations are all changing, and only 50 per cent of the map has been released so far, so we don’t know the [exact] direction of travel. But the commerciality of it for us?

Renault, Spa-Francorchamps, 2017
McLaren intend to “get back to health” with Renault
“At the moment it’s not clear. You’ve got big teams like Mercedes who are spending significant amounts of money on a large organisation and an embedded infrastructure. If you’re selling – Ferrari make 35,000 engines a year for Maserati, as well as their own, 8 000 – when you look at the kind of return on sales you get, we’re still a niche manufacturer, even though we’re making the thick end of 4,000 cars a year.

“We have a Formula 1 programme. We’re still not scaled, we’re not a scale manufacturer yet. But we are keeping an open mind, and look at this next phase of where Formula 1 is going, and whether there is a chance to use our capital more wisely. But we don’t have any immediate plans to do anything other than getting ourselves back into health by working well with Renault.”

In the final analysis, does Jonathan believe that the long-term solution is to run with Renault; for Mighty McLaren to remain a customer team?

“I’d go back to what Ron said. Ron is on record as saying that the right model under the current rules in Formula 1 is to be works-engine team, because you’ve got the strength and the power and the muscle of an OEM that has a strong marketing budget, and you have access to deep technology and capital investment.

“Then you have the agility of a team to keep that thing nimble and keep it motorsport minded. I still believe that’s true and that’s the ideal situation. The last few years haven’t delivered that for us and we needed a break-out strategy so we can repair our business. So we’ll see. Ask me that at the end of [this] year…”

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Dieter Rencken
Dieter Rencken has held full FIA Formula 1 media accreditation since 2000, during which period he has reported from over 300 grands prix, plus...

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  • 40 comments on ““Repairing the damage”: Jonathan Neale on McLaren’s future after Honda”

    1. The reason for your “why?” is extremely reassuring, and makes me happy to be part of this community. Welcome, Dieter. Now let me get back to the rest of the article :-)

      1. Yes, welcome on board! This has me so exited. I immediately feel a strong connection through your strong presence at the front lines of F1. The 2 of you using each others leverage is such a welcome movement in this overly commercial & political world.

        And I love the extension to other motorsports!

      2. Welcome Dieter, it’s great that Keith has someone to help share the load with.

      3. I echo all the above comments, welcome Dieter, well done Keith. So good that Dieter has moved her to service the fans – and on this site we are not just F1 fanatics, we are F1 Fanatic fanatics!

    2. Very interesting article, but would it be possible to highlight the questions in the interview (in bold or italic) : I would find the text a bit more readable.

      1. I would second this, it’s not so important on the shorter articles but for a long interview like this it gets a bit wearing.

    3. This is an amazing piece of insight of how teams such as McLaren work on they daily basis.

      I follow quite closely their Applied Technologies division, they do amazing work there and they have shown tremendous development since the first time I noticed it. I think I even applied to a job there when I finished studying back in 2009.
      It is very interesting how they apply racing tech into various sectors.

      Well, if this is a glimpse of what we could expect from Dieter, I’m looking forward to it.

      1. @johnmilk My uncle’s company, based near New Delhi, had a tie-up with them a few years back for a project. I actually visited their office during that time, though being an ecology student I will admit much of the technical aspects went over my head.

    4. Whatever the new engine formula under 2021 rules will be, I hope that this noise thing won’t become the primary criteria driving it. I cannot believe how much traction this issue of the engine sound still has…one would think that there are more important things to deal with. People should just get over it and accept the reality that although complicated, these hybrid engines are now efficient and reliable…and the longer they remain in place the more power-equal they will become.

      1. I agree there @gpfacts, I think how much power vs weight and efficiency for a certain range of cost can be achieved would be a far more interesting and more important question.

        Also, how much hybrid to use and what approach to take. While the heat recovery is not something widely used so far, I think F1 might have already enabled manufacturers to learn enough about it that it could come into play (because it clearly does help with efficiency, without the need for the battery and the whole conversion in between).

        To me, the advantage of the current engines is, that they all sound different, and far more interesting structure of the sound than the loud scream the V8 gave us.

        Surely the current engines when they are left in place for another 3-4 years will mature even more, become more reliable and closer in performance.

    5. @dieterrencken @keithcollantine Great article and congratulations on the near and distant changes upcoming. Exciting times. Thank you for everything you do.

    6. Thanks for the report. Look forward to seeing this kind of insight from other teams?

      McLaren is certainly in an interesting situation. Every time I see their names at the bottom of the grid, I think it’s just temporary and next year they’ll be back in front. That’s been going on for some time now though…

    7. Kieth, Dieter, looks like exciting things are happening. Congratulations!

      Now, about that little comment under the photo “Eric Boullier and Jonathan Neale face a year of rebuilding lies” …… made me laugh.

      1. I’m relieved only one person spotted this before it was corrected. As you probably guessed the caption originally said ‘a year of rebuilding lies ahead’, it was then revised but only ‘ahead’ was deleted. Both now gone!

        1. Yeah Keith (sorry about the misspelling above) saw that and had a good laugh; so true on so many levels! This site is the first one I check, then on to Joe. You’re doing a great job and it’s much appreciated. Will send some money your way this year.

    8. Thank you Dieter for this great contribution! Already looking forward to the next one!

    9. Wasnt Jonathan Neale part of the brilliant strategy to undercut Lewis to promote Button.loosing 2 championships 2010 and 2012 because they refuse to back Lewis when it was apparent Button wasn’t in contention.The idea to not just evolve the 2012 car was another dumb decision taken purely to finally justify their faith in Button, giving him the car exactly to his liking……that ended in Disaster,,, disaster disaster

      Once Lewis left for Mercedes, Maclaren retaliated in spite by and dropping Mercedes knowing Merc had just invested millions in their new hybrid engine……and that’s the real reason Merc refuse to bail them out and give them an engine

      yea folkes dont hold your breath oh sorry Alonso will save them

      1. If I recall correctly, McLaren had two designers alternating designs year by year. Seemed pretty odd to me at the time. Maybe my memory is faulty.

    10. Although I’ve followed F1 since I was 7 (1996), almost my entire investment in the sport has centred around race-weekend action and a devotion to specific drivers, with a relatively shallow understanding of the organisational and technical efforts that go into producing these almighty cars. If Dieter and Keith continue to provide this level of insight I’m sure that’ll change. A great read.

    11. Welcome to you sir.

      If Keith is interested in expanding into other genre, I’d be more than happy to answer any queries he may have about superkarts, the Formula One of karting. I’ll disclose that I speak from a biased perspective since I assist the championship’s press officer.

      1. :-) I guess we would just have to call you out on things if we felt you were too close to the “official line” and ignoring things that did not fit that Simon

    12. Wow. F1, as well as most of its media coverage, can be very discouraging these days. Questions about human rights’ violations in race locales is a mostly unchallenged taboo, anything that has to do with illegal/immoral business practices (ie – Mallya, tax havens, etc.) is hushed, and the overall ‘fairness’ of the sport always becomes subsidiary to profitability. But, in my opinion, what’s the point of watching something that you can’t respect? I’m tickled that F1Fanatic has one of the few, if not only, journalists who seems to be able to step back and see the sport from a larger, more human context. Thanks to Keith for deciding to continue this direction, and thank you Dieter for being on board. Cheers, and best wishes!

    13. Great insight. I love that all the question lead interviewee to reveal his view and feeling about one subject to another. But Q&A article was something new here and for interview article that long I think different text formatting (maybe even different spacing) between questions, answers and some inserted data/comment would be helpful.
      cc @keithcollantine

    14. Hi Dieter
      I was delighted to hear that you are joining Keith at F1F so welcome to the community. I have read a lot of your articles in the past and have found you to be one of the best F1 reporters and most insightful.
      This site just goes from strength to strength so well done Keith and keep up the great work.
      Now for the article!!!

    15. Great read. Very interesting.

    16. Sounds like the rebranding of f1fanatic will be the biggest story of the 2018 season…
      Hope to see that stuff soon.

      Regarding Honda, i´d be suprised if torro rosso didn´t get all the secrets it can out of that renault engine.
      I predict honda engine development will be the second biggest story of 2018.
      Be soft on Jonathan when you ask him that question at the end of the season ;-)

    17. Nice read.

      I still would like to know if McLaren really could have had Mercedes engines this year if they had approached early as Zetsche says, and who is ultimately to blame for this massive mistake with both Boullier and now Neale saying it was clear already after winter testing that things needed changing.

    18. I read they needed money to pay Ron- where did the 500 million go?

      1. The money to pay Ron did not come from the company however, but from the owners. No doubt, they will hope to, or rather expect to, earn that money back from the company though @verstappen

    19. Will we ever get the full truth of McLaren’s involvement in the development of the Honda PU?

      We had words from Honda with Nakamura and Yamamoto in the Japanese media saying that McLaren, with the Applied Technologies supplied them battery packs and lots of hybrid parts (they didn’t give any further details on which hybrid parts). McLaren on the other hand have said zip, they even went back on their previous statement that they had Honda redesign the PU three times to meet their size requirement.

      Something fishy about it all.

    20. I love these in-depth looks at aspects of F1. Welcome, Dieter.

    21. great to see some longer, in depth stuff. a couple of these per week would be fantastic but i think you guys have bigger plans than that!

    22. Thanks for the great read as your first piece here Dieter! Looking forward to many more, and also to those hinted at other area’s of motorsport to see growing on here.

      I do agree that the interview format might be helped with some tweaking to more easily discern questions and answers though :-)

    23. Excellent article, looking forward to what 2018 has in store for the site!

    24. @dieterrencken why is Sauber still considered independent with Alfa Romeo now onboard? And why are the likes of Haas and Williams not considered independent? Maybe my understanding is a bit off.

      1. In my book there are three categories of teams: manufacturer teams, corporate teams and independent teams. The first category is self-explantory; the second consists of the likes of Haas, Williams or Red Bull in that they are part of a larger group that would still exist if the team stopped racing, while independents are those whose sole business is F1 racing. This last category covers Force India and Sauber.

        That Sauber has an engine supply deal with Alfa Romeo in exchange for painting its cars half-red and sticking Charles Leclerc in a cockpit makes no difference to the team’s independent status – its sole business is F1. If Alfa Romeo bought the team outright, then it would become a manufacturer team and if, say, Red Bull bought the team, it would be a corporate team. Until then it is an independent team.

        Why is Williams not an independent team, I hear you ask. Until about ten years ago, when run and owned by Frank Williams and Patrick Head, it was – but then it IPO’d on the stock exchange and Williams Advanced Engineering expanded, so today it is a listed engineering group that owns an F1 team.

    25. As others have said, good to have you onboard and what a great philosophy behind joining. I’ll be excited to see how you help this site punch above it’s weight. Interesting insight into McLaren as well.

    26. Now I know what Dieter looks! This is going to be great. Looking forward to your reports.

      1. “looks like” sigh…

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