Top Stories from the Business pages of the International Herald Tribune,
Saturday, June 24, 2000
TAG McLaren Group Revs Up Off Track
By Brad Spurgeon International Herald Tribune
PARIS - With his trademark mania for details, Ron Dennis has built the most successful Formula One racing team into a small conglomerate.
His TAG McLaren Group of eight companies is into everything from catering to composites. Most of the businesses grew out of the needs of the Formula One team, but now have other purposes and independent operations.
An automotive electronics company serves clients such as Honda Motor Co., Peugeot SA and Toyota Motor Corp. An audio company, which became independent last autumn, sells advanced home hi-fi equipment. Absolute Taste, a catering company, caters to anything from private and corporate dinners to parties at Kensington Palace. The composites company has just signed a contract to build part of the Beagle 2 Mars Lander, which is scheduled to land on the planet in 2003.
The group's latest car project is an estimated pounds 130 million (dollars 196.7 million) joint venture with DaimlerChrysler AG to build the German company's Mercedes-Benz Vision SLR sports car, which will sell for pounds 200,000. The car is scheduled for production by 2003, and the aim is to sell around 500 a year for six to 10 years.
Mr. Dennis, the group's chairman and chief executive officer, has been helped by the fact that there has never been a better time to own a Formula One team. With more than 300 million television viewers per race, car manufacturers -- Ford Motor Co., Renault and Bayerische Motoren Werke AG among them -- are rushing in to join or buy Formula One teams to capitalize on the publicity. The value of a team has shot up by as much as 10 times in the last three years, according to some estimates.
Mr. Dennis has certainly known his share of success on the track. Under his direction, the racing team has won 16 championship titles since 1980. Overall, the team has captured 19 titles since 1966 when it began in Formula One under its founder, Bruce McLaren, who died in 1970.
TAG McLaren Group, which employs 700 people, also has enjoyed success. It had profit last year of pounds 30 million on sales of pounds 125 million.
Ever the company chairman, Mr. Dennis describes the 16- or 17-race season in business terms.
''I have 16 quarterly returns,'' he said in a recent interview in the team's impeccably decorated gray and black, high-tech motor home at the track. ''And there is nothing I can do to manipulate the figures. A car crosses the line; it wins or it doesn't win. And that process is watched by a huge audience.''
And while the team is struggling in second place as the current season comes to its halfway point at the French Grand Prix next weekend, the company has never been more successful. Earlier this year DaimlerChrysler AG, which provides the team with engines, bought a 40 percent interest in the group for an estimated pounds 300 million. Mr. Dennis and a longtime partner, TAG Group SA, maintain operational management control and own stakes of 30 percent each.
The TAG McLaren Group, which is spread over 14 locations in and around Woking, England, is expected by 2003 to move into a futuristic, 150-acre (60-hectare), pounds 200 million complex designed by Lord Norman Foster, architect of the Hong Kong Airport and the Reichstag building.
Called the Paragon technology center, and situated in Woking, it will be the highest expression of Mr. Dennis's business management ethic. His mania about details carries over to the work environment. He demands impeccable cleanliness, studied lighting, perfect air temperature and tasteful decoration.
''Put a man in a dark room, he's hot, it smells bad, versus a guy in a cool room, well-lit, smells nice,'' he said. ''When you throw a decision at those two individuals, who's going to be better equipped to effect good judgment and take a good decision?''
For a man used to winning, Mr. Dennis looks at competing in purely practical terms.
''Winning is the result; it's not the cause,'' he said when asked about how he motivates his staff. ''It's better to use the expression 'a desire to be the best.'
''And it doesn't matter if it's a grand prix team or a car production company or a catering organization. If you've got a group of people, all with the common objective of trying to be the best, while you might not always achieve it, it certainly creates the best environment in which you attempt to achieve it.''
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