4LT GS RoadsterThe faces seen in the garage Sunday could easily be gone on Monday.
That's because the day after the Sprint Cup is awarded will be the day many crew members will clean out their lockers and carry their tool boxes out of NASCAR race shops all over the metro-Charlotte area.
America is facing the highest unemployment rate in the last seven years. In October alone, an additional 603,000 workers lost their jobs according the Bureau of Labor Statistics. But when one or several of the more than 10.1 million jobless individuals is a familiar face associated with the numbers, be it a father, a wife, a husband, a son or even a friend, the crisis takes on a whole different meaning.
When Chip Ganassi Racing with Felix Sabates let go of 70-plus employees in July, it sent shockwaves throughout the garage. From a business standpoint, the decision to downsize made sense — there was no sponsor for the No. 40 Dodge, so there was no money in the budget for employees. Still, that didn't ease the concern of the racers in the NASCAR community.
Three months later, even the Hendrick Motorsports juggernaut is not immune to the sputtering economy. Before Phoenix, HMS made staffing reevaluations that included the dismissal of 14 crewmen.
"There are some changes to just make the teams better and some positions are eliminated," Team owner Rick Hendrick said. "Then there's some just layoffs. If the guy's not going to do a motor program and he's got another way of doing it, he's got engine builders and he's got nothing for them to do.
"In our situation I think we've got to look at where we are down the road because, again, if you're lucky enough to have sponsors today and you're not out having to look, you hope when it's time to re-up you're going to be able to at least maintain and not have to cut back. I think it's going to be hard for any of us to do any new business in probably the first half of '09."
Last year Dale Earnhardt Inc. acquired Ginn Racing. Initially, 75 crewmen and support staff were let go before the layoffs inevitably ballooned to over 100. This week, when Dale Earnhardt Inc. merged with Ganassi Racing, at least 90 pink slips were distributed with an additional 30 to come by Monday.
DEI's President of Global Operations Max Siegel relied on the support of his vice president John Story and company counsel Chad Warpula to deliver the painful news. By several crew accounts, the announcements brought Siegel to tears. Admittedly, it was the toughest day of his professional career.
"It was the most difficult thing the three of us had to do," Siegel said. "On the one hand, you're going in and trying to save jobs for people. As a manager, when you have to make a decision that has a negative impact on someone's life it's gutwrenching.
"You try not to take it personally, but you do have a sense of letting people down. It's tough. I don't think I'll ever come to terms with having to eliminate jobs. I can tell you that all of us that were involved in the process have been impacted emotionally in the weeks leading up to the decision. It was horrible when we had to do it and I still feel that way."
There were many sleepless nights leading up to last Wednesday when Siegel made the trip to "DEI West" — the old Ginn shop just north of Davidson, N.C. He refused to send someone else to do the dirty work. Siegel felt it was his duty to personally address the DEI employees and shake the hands of those that offered or provide an encouraging word as others exited the building.
DEI's President of Global Operations Max Siegel with Dale Earnhardt Jr. in happier times. (Rusty Jarrett / Getty Images)
"I wanted to make sure we were all there to look everyone in the eye and let them know how much their contribution to the company has been appreciated and as a leader to accept responsibility and deal with the range of emotions that people have," Siegel said.
"We sat down and wanted to make sure from a separation standpoint that we gave people enough notice, transition and out-placement counseling to kind of soften the blow. But it's difficult."
To put the loss of staff in perspective, DEI had approximately 200 employees when the company expanded to a three-car team in 2001 — the same year it lost its leader Dale Earnhardt. By 2007, when Siegel began his first season in NASCAR, the company had 350 in its ranks. The Ginn Racing merger elevated the manpower total to 472, but that total included testing crews, Camping World East teams and the additional engineers and fabricators needed to build the Car of Tomorrow — a project that in hindsight couldn't have come at a worse time in the sport's history.
Dale Earnhardt Jr. understands the plight of Siegel and other owners in NASCAR. He merged his own Nationwide Series operation with Hendrick Motorsports this season "to consolidate expenses — and it worked." But after a conflict between potential sponsors Craftsman and Kobalt (the tool company owned by Lowe's, sponsor of Hendrick's No. 48 Cup team), JR Motorsports lost the opportunity for backing for one of his cars. As a result, Earnhardt was forced to turn his second Nationwide team into a part-time operation and trim his staff by 20 percent, or roughly 17 people.
Earnhardt shares the sentiments of many who worked at his father's company.
"You can't blame a single individual for the layoffs," Earnhardt said. "The sport is going to have a lot of those hopefully only for the short term. But it is not because of the merger.
"We didn't get rid of any employees at the merger and we tried to accommodate everybody and keep everybody. But the economy got poor and we were unable to get sponsor for the car next year. It's always is difficult to fire anybody, especially when you have to do it in a big chunk. It is tough."
Personnel accounts for the majority of a race team's budget. Certainly, the driver is responsible for the largest percentage of the cost. But multiple sources told FOXSports.com that, on average, crewmen pull down $60,000 to $200,000 annually. Multiply that number by 100 and one gets a sense of how expensive racing can be.
Not surprisingly, the cuts have already begun. All but the road crew was let go from Bill Davis Racing's Cup team as well as most of his engine shop. Roush Fenway Racing trimmed about 45 men between the Craftsman Truck and Nationwide Series programs.
Although not nearly enough to compensate, there are some teams growing during these tough economic times. Richard Childress Racing added three crewmen for its fourth car while Stewart-Haas Racing picked up 90 percent of DEI's No. 8 crew. However, it's uncertain how many men from the original Haas CNC Racing team will be retained as it transitions into Stewart-Haas Racing in the winter.
Siegel has been impressed by other team managers and owners in the sport who have worked in concert to contain costs.
"Through this whole process, every team has been impacted out there and there is truly a spirit of cooperation between the organizations to see if there are spots for people losing jobs — and that's still going on," Siegel said. "We've been meeting with people to find out what other teams' needs are and that has been refreshing."
NASCAR chairman Brian France said earlier in the week that the current economy affects every sector of the sport. NASCAR's decision to establish a testing freeze for 2009 is intended to remove some of the financial burden on the teams.
Certainly, that's one area to start, but France knows more must be done to lower the overall costs to teams to make NASCAR a viable investment.
"It's very difficult," France said. "It's on our whole industry. And there are always some unfunded teams. Now, that's not anything new.
"One of my goals and one of our goals is to have a system where you don't need $26 million to put a competitive team forward. So that is one of the things NASCAR has a lot of influence on and we're working all the time to figure that out."
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That's because the day after the Sprint Cup is awarded will be the day many crew members will clean out their lockers and carry their tool boxes out of NASCAR race shops all over the metro-Charlotte area.
America is facing the highest unemployment rate in the last seven years. In October alone, an additional 603,000 workers lost their jobs according the Bureau of Labor Statistics. But when one or several of the more than 10.1 million jobless individuals is a familiar face associated with the numbers, be it a father, a wife, a husband, a son or even a friend, the crisis takes on a whole different meaning.
When Chip Ganassi Racing with Felix Sabates let go of 70-plus employees in July, it sent shockwaves throughout the garage. From a business standpoint, the decision to downsize made sense — there was no sponsor for the No. 40 Dodge, so there was no money in the budget for employees. Still, that didn't ease the concern of the racers in the NASCAR community.
Three months later, even the Hendrick Motorsports juggernaut is not immune to the sputtering economy. Before Phoenix, HMS made staffing reevaluations that included the dismissal of 14 crewmen.
"There are some changes to just make the teams better and some positions are eliminated," Team owner Rick Hendrick said. "Then there's some just layoffs. If the guy's not going to do a motor program and he's got another way of doing it, he's got engine builders and he's got nothing for them to do.
"In our situation I think we've got to look at where we are down the road because, again, if you're lucky enough to have sponsors today and you're not out having to look, you hope when it's time to re-up you're going to be able to at least maintain and not have to cut back. I think it's going to be hard for any of us to do any new business in probably the first half of '09."
Last year Dale Earnhardt Inc. acquired Ginn Racing. Initially, 75 crewmen and support staff were let go before the layoffs inevitably ballooned to over 100. This week, when Dale Earnhardt Inc. merged with Ganassi Racing, at least 90 pink slips were distributed with an additional 30 to come by Monday.
DEI's President of Global Operations Max Siegel relied on the support of his vice president John Story and company counsel Chad Warpula to deliver the painful news. By several crew accounts, the announcements brought Siegel to tears. Admittedly, it was the toughest day of his professional career.
"It was the most difficult thing the three of us had to do," Siegel said. "On the one hand, you're going in and trying to save jobs for people. As a manager, when you have to make a decision that has a negative impact on someone's life it's gutwrenching.
"You try not to take it personally, but you do have a sense of letting people down. It's tough. I don't think I'll ever come to terms with having to eliminate jobs. I can tell you that all of us that were involved in the process have been impacted emotionally in the weeks leading up to the decision. It was horrible when we had to do it and I still feel that way."
There were many sleepless nights leading up to last Wednesday when Siegel made the trip to "DEI West" — the old Ginn shop just north of Davidson, N.C. He refused to send someone else to do the dirty work. Siegel felt it was his duty to personally address the DEI employees and shake the hands of those that offered or provide an encouraging word as others exited the building.
DEI's President of Global Operations Max Siegel with Dale Earnhardt Jr. in happier times. (Rusty Jarrett / Getty Images)
"I wanted to make sure we were all there to look everyone in the eye and let them know how much their contribution to the company has been appreciated and as a leader to accept responsibility and deal with the range of emotions that people have," Siegel said.
"We sat down and wanted to make sure from a separation standpoint that we gave people enough notice, transition and out-placement counseling to kind of soften the blow. But it's difficult."
To put the loss of staff in perspective, DEI had approximately 200 employees when the company expanded to a three-car team in 2001 — the same year it lost its leader Dale Earnhardt. By 2007, when Siegel began his first season in NASCAR, the company had 350 in its ranks. The Ginn Racing merger elevated the manpower total to 472, but that total included testing crews, Camping World East teams and the additional engineers and fabricators needed to build the Car of Tomorrow — a project that in hindsight couldn't have come at a worse time in the sport's history.
Dale Earnhardt Jr. understands the plight of Siegel and other owners in NASCAR. He merged his own Nationwide Series operation with Hendrick Motorsports this season "to consolidate expenses — and it worked." But after a conflict between potential sponsors Craftsman and Kobalt (the tool company owned by Lowe's, sponsor of Hendrick's No. 48 Cup team), JR Motorsports lost the opportunity for backing for one of his cars. As a result, Earnhardt was forced to turn his second Nationwide team into a part-time operation and trim his staff by 20 percent, or roughly 17 people.
Earnhardt shares the sentiments of many who worked at his father's company.
"You can't blame a single individual for the layoffs," Earnhardt said. "The sport is going to have a lot of those hopefully only for the short term. But it is not because of the merger.
"We didn't get rid of any employees at the merger and we tried to accommodate everybody and keep everybody. But the economy got poor and we were unable to get sponsor for the car next year. It's always is difficult to fire anybody, especially when you have to do it in a big chunk. It is tough."
Personnel accounts for the majority of a race team's budget. Certainly, the driver is responsible for the largest percentage of the cost. But multiple sources told FOXSports.com that, on average, crewmen pull down $60,000 to $200,000 annually. Multiply that number by 100 and one gets a sense of how expensive racing can be.
Not surprisingly, the cuts have already begun. All but the road crew was let go from Bill Davis Racing's Cup team as well as most of his engine shop. Roush Fenway Racing trimmed about 45 men between the Craftsman Truck and Nationwide Series programs.
Although not nearly enough to compensate, there are some teams growing during these tough economic times. Richard Childress Racing added three crewmen for its fourth car while Stewart-Haas Racing picked up 90 percent of DEI's No. 8 crew. However, it's uncertain how many men from the original Haas CNC Racing team will be retained as it transitions into Stewart-Haas Racing in the winter.
Siegel has been impressed by other team managers and owners in the sport who have worked in concert to contain costs.
"Through this whole process, every team has been impacted out there and there is truly a spirit of cooperation between the organizations to see if there are spots for people losing jobs — and that's still going on," Siegel said. "We've been meeting with people to find out what other teams' needs are and that has been refreshing."
NASCAR chairman Brian France said earlier in the week that the current economy affects every sector of the sport. NASCAR's decision to establish a testing freeze for 2009 is intended to remove some of the financial burden on the teams.
Certainly, that's one area to start, but France knows more must be done to lower the overall costs to teams to make NASCAR a viable investment.
"It's very difficult," France said. "It's on our whole industry. And there are always some unfunded teams. Now, that's not anything new.
"One of my goals and one of our goals is to have a system where you don't need $26 million to put a competitive team forward. So that is one of the things NASCAR has a lot of influence on and we're working all the time to figure that out."
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