Martin Birrane on Lola Cars International's difficulties

Martin Birrane Q & A – September 2012

Q1. What led up to the administrators being called into Lola in May and why did you make that decision?

Martin Birrane: After owning and investing in Lola for nearly 15 years it was not businesslike to keep supporting the two trading companies in the face of a number of difficulties. To put this into perspective I invested a further £4m cash in the seven months from August 2011, the last injection being made in March this year.

In 2011 we became involved in the Lola Drayson electric LMP car project. The Board agreed a modest level of investment but the reality turned out to be work in excess of £670K for which no contribution was received from Drayson. This work diverted the resources of some of our top engineers. The 2012 Le Mans Prototype car build ran late resulting in a lot of the components being outsourced. You never make money on LMP car sales, the profit coming from spares, but these delays caused additional losses.

In the Composites business there were delays in customers placing orders for key projects where we had planned for resources to be utilised. We had a great customer base in Lola Composites and we always provided the highest levels of customer service. Many of these customers are still being served.

Another significant event in 2011 was the decision by HMRC not to pay outstanding Research and Development claims and to compound this decision by asking for a rebate on earlier claims. Given Lola’s involvement in High Tech business it seems astounding that the dispute ended up being focused on Lola’s status as an SME (small or medium sized enterprise) as a result of my personal involvement in other completely different businesses. At a time when the Government is supposed to be helping SME’s it seems ironic that their Agency was intent on hammering a nail into our coffin. The amount in question was not insignificant. It was in the order of £1.4m.

Throughout my ownership of Lola we have ridden the economic storms, although this recession, which has been continuing now for five years and is the worst since the mid 70’s, put too much strain on both trading businesses simultaneously.

Q2. What do you think the future holds now for the Lola brand in motor sport?

Birrane: The Lola brand has earned a 54 year reputation at the highest levels in motor sport and is now leveraged into other high technology sectors. The brand is owned by Lola Group Holdings, which is not in Administration, and it is my wish that we can find an entity that wants to continue the brand for their own motor sport projects, such as Formula 1 or LMP. The purchaser could come from within motor sport or perhaps the automotive sector in places such as China or the Far East where they are seeking a brand to promote their existing products on a World stage.

  Q3. If someone or some company came in to buy Lola this week, what would they buy from you?

Birrane: The two main trading companies, Lola Cars International Limited and Lola Composites Limited are both trading currently in Administration. The Administrator is looking at an asset sale for Lola Cars, which involves selling the substantial stock in that company. A purchaser is being sought for Lola Composites who will buy the business as a going concern continuing with existing contracts and bringing in new business. This business can continue using its previous name, Composite Tooling & Structures Limited and has its own self-contained 50,000 sq ft facility in Huntingdon separate from Lola House.

Through one of my companies I own Lola House, which is an 85,000fs office and factory facility fully equipped for composite manufacture, design, engineering and car builds. On the same site and also in my ownership in a different company is the wind tunnel, 7 post rig and technical facility. These assets, together with the name “Lola” and the IPR in all the Lola Cars designs, is still under my ownership and control. In conjunction with the Administrator we could sell the entirety in the previous operation to a purchaser or I could sell any combination of the elements still in my ownership.

Of course it was true that one of Lola’s greatest assets was its staff and to that extent, unfortunately most of the engineers were laid off. However, I know from keeping in touch with them that many remain in the area and would love to return to Lola and continue to be part of the next chapter of Lola’s great history. In the short term we have made some key appointments to keep the facilities operational and where we do not employ people directly we are using sub contractors to meet our customers’ needs.

Q4. Will it be a case of another Martin Birrane coming along to save Lola like you did in 1997?

Birrane: Possibly, but my hope is that an F1 team, current or future will want the facilities we have. Another possibility is that one of the three manufacturers that I know are seriously looking at doing a Le Mans programme will appoint a representative or Lola Group Holdings to do the programme. Our capability to do this was proven with the MG Lola 675 Le Mans programme and the MG Touring Car project. However when we have spoken to manufacturers in the past it has always been for a turn-key product made by us, such as the aforementioned work we did for MG. At present we are open to all discussions with manufacturers/teams and what they want to achieve with these facilities, engineering know-how and technical capabilities that we can still provide.

Q5. How did the regulation changes by the ACO over the last few years affect Lola business?

Birrane: The Americans have a good old saying which states, “If it ain’t broke, don’t fix it.” Unfortunately not everyone in the ACO agreed with this sentiment. Over my 15 years at Lola I worked closely with my good friend and then President of the ACO, M. Jean-Claude Plassart, in my capacity as a Director and shareholder of LMS. We both felt there needed to be continuity and certainty of rules and regulations for teams and competitors. In 2008/2009 there were senior personnel changes at the ACO which led to changes to the regulations in the hope of attracting manufacturers. At that time, Lola had over thirty enquiries for our P1 and P2 coupes although the season ended with the sale of only five due to the uncertainty created. Key people within the ACO introduced confusion by promoting open cars when in 2009 the decision had been taken on safety grounds to end open cockpit prototypes. A later decision to cost cap the P2 car was completely unnecessary. After much internal debate the ACO mandated that the price cap, originally mooted at around €500k to respect the R&D and production cost of the coupe, be reduced to €355k in the full knowledge that this price could effectively exclude any coupe but in particular the Lola coupe which was the only customer car in manufacture. I feel that some people within the ACO were assisting other manufacturers with whom some ACO affiliates had an interest. The uncertainty that influenced 2009 has continued to destabilise the series in subsequent seasons. A look at the entry lists and calendars of 2011 and 2012 for ELMS and ALMS tell the story. Who knows what 2013/2014 and onwards are going to bring.

  During my period of ownership at Lola I believe we produced 69 prototypes starting with the SR1 cars, the B98/10 and the B2K10 and the SR2 cars including the very successful B2K40. In 2001 we made the MG Lola 675 which was the forerunner to a number of LMP1, LMP2 cars and the P1 and P2 open and coupe cars. These cars were designed and manufactured for customers. All bar one of these cars won multiple races or championships.

I have always been passionate about sports car racing and I hope it can be returned to a new golden era with full grids of technologically advanced machinery that create great racing.

Q6. Do you look back at the planned F1 re-entry in 2009 and think that it was a contributory factor in the problems you faced in 2012?

Birrane: Not at all. Lola’s Formula 1 bid was a positive project for Lola Cars International. I personally funded the whole of the Formula 1 programme through Lola F1 Team Limited and we were ahead of all the competition having assembled the key personnel and provided the engineering services, materials and wind tunnel facilities to proceed. We had a wind tunnel model with the basic external shape defined and we completed over 90 data runs in the tunnel. History shows that of the three teams chosen two were uncompetitive and have since been sold and one never appeared. I very much regret that we were not awarded a licence because I know with absolute certainty that had we been awarded a licence the funding was available and I believe we would have produced a very competitive car.

Q7. Lola was supplying Champ Car, F3000, Indy Lights, Formula Nippon and F3 up until the mid-2000’s. What do you attribute the shift away from single seaters to?

Birrane: I believe the rebirth of Le Mans prototypes in 1999/2000, improving as it did through the mid 2000s, was one factor as it attracted drivers and resources from a very difficult economic situation brought about by 9/11. It is not just a shift away from single seaters but those single seater championships that remain have shifted to being one-make series. By being one-make it was the organisers intention to reduce costs. What happened is that most one make single seater series are now supplied by Dallara whose business model is completely different from Lola and I understand they may benefit from Government support in Italy. Lola thrived in competitive championships as demonstrated by our return to dominance in Champ Car and Le Mans prototype racing. We came back into F3 in 2005 and despite having only having three cars running in the highly competitive British F3 series, we won three races against a whole grid of our competitors cars. In Germany in 2007 Lola won 75% of the pole positions and 75% of the races being represented by only two teams amongst a field of Dallaras. Unfortunately Dallara had a stranglehold on the British teams and unless we were prepared to give our cars away the British teams could not afford to change because any deal we offered was bettered by Dallara to retain their dominance in the series. Lola’s last single make series was the A1GP car from 2006. The car was highly regarded by teams, drivers and organisers and it is unfortunate that the financial model upon which the series was built was unable to continue beyond the first three years.

Q8. How do you look back upon the last 15 years?

Birrane: I am sure you will understand that I have a range of mixed emotions. When I bought the business of Lola Cars in September 1997 I knew that was just my “starter for ten”. By the end of 1997 I was asked what it was like being in charge of Lola and I likened it to a rollercoaster. Nothing changed. It has been an exciting journey especially for someone who enjoys the adrenaline rush.

I was immensely proud to be custodian of the race car business which had taken my Crowne Racing team to championship glory in the 1973 FIA European 2-litre Championship with a Lola T292. As anyone can see from a visit to Lola, I invested heavily in the best facilities. A great variety of cars were made during the past 15 years continuing the versatility for which Lola was renowned during its earlier days under the ownership of Eric Broadley. I enjoyed working with some fantastic engineers and I was never less than impressed by the enthusiasm, dedication and support shown by all Lola staff throughout my 15 years. It is one of my biggest regrets that the trading companies fell into Administration, bringing uncertainty to people’s futures. I do, however, draw some comfort from the knowledge that most people have found new positions befitting all their skills.

I am proud to have added a 15 year chapter to the glorious history of Lola. We made some great cars and achieved a lot of racing success.

I am also proud of the composites business that we built up. This was created to give some repeatable, sustainable business and it became a by-word in its own right for quality and engineering excellence. It is unfortunate that the downturn in this side of the business coincided with several difficult events in cars leaving me faced with one of the most difficult decisions I have ever had to take.

We have had many high points including successes in Champ Car between 1999 and 2003, multiple sports car championships in the US, Europe and Le Mans with victories in S2, P1 and P2. Lola was responsible for taking MG back to Le Mans in 2001 and the LMP 675 car of that era is still one of the most beautiful sports race cars of all time.

Lola is still here and it can be great once again. I would like to pass the baton to someone who appreciates what Lola stands for as much as I do.

Source: Lee Armes