Layoffs coming in rapid succession as perfect storm hits NASCAR
A slowdown in the NASCAR economy was expected after this season even if the nation's economy remained strong. With markets roiling across the globe, NASCAR is facing a perfect storm as layoffs and cutbacks hit the industry at a rapid pace, writes David Newton.
CONCORD, N.C. -- The warm South Florida sun was a welcome change from the morgue-like atmosphere at Dale Earnhardt Inc. when Dave Kwasniak and Chris Hamilton arrived at Homestead-Miami Speedway last Friday. They were focused on helping Regan Smith win the Sprint Cup rookie of the year title, not the 100 or so of their fellow employees that had been laid off a few days earlier.Then, shortly after qualifying, the word came: Meet John Story, the organization's vice president of motorsports, in the back of the hauler.
Story wasn't in the mood to talk about the merger with Ganassi last weekend as he stood behind the No. 1 hauler of Martin Truex Jr."I don't want to talk about anything to do with that until I fully explain it to all of our employees," he said.Being fired is difficult. Having to do the firing is equally tough."Communicating to someone you respect greatly that their role has been effected is excruciating," Story said. "I pray none of use are involved in anything like this again."Max Siegel, DEI's president for global operations, called the layoffs gut-wrenching.
Kwasniak grew up racing dirt modified cars in New York. He moved to Charlotte five years ago because of the opportunities NASCAR offered.Now he's starting over, sending out resumes and making calls with the hope something will turn up."But the problem is these people aren't going to know anything until the first of the year," he said. "That just makes it more difficult." Some people who were let go will be hired back at lower salaries, team officials project. That, ultimately, could be good for the industry."There is an unemployment bubble that was triggered by the millions of dollars we were required by NASCAR to invest to build these new cars," Roush Fenway's Smith said. "We had to build 150 cars in the space of 15 months to get a fleet of cars, plus at the same time work on the old car. "That bubble of employment was going to be over, naturally." The economic downturn sped up that timetable. Teams which may have been able to reassign the extra employees can't do so, due to lack of sponsor or manufacturer help. Roush Fenway, for example, downsized two Truck teams when Ford pulled financial support from the series.
There is an unemployment bubble that was triggered by the millions of dollars we were required by NASCAR to invest to build these new cars. We had to build 150 cars in the space of 15 months to get a fleet of cars, plus at the same time work on the old car. That bubble of employment was going to be over, naturally.
-- Geoff Smith
Some sponsors that were paying $25 million under their previous deal are now paying $18 million or less. Petty Enterprises plans to keep the No. 43 on the track by selling sponsorships to four to six companies."We live and die by sponsors," Hendrick said. "You don't see teams out there running without sponsors very long. When [sponsors] cut back, we have to cut back."When we plan to do programs for other teams -- motor programs, chassis programs -- and when they fall through then we've staffed up our parts and then we have to make adjustments."That's when the Turk, or somebody like him, comes in. That's when the surreal becomes real."It scares you knowing there are that many people out there," said Marc Hendricksen, an engineer released by DEI. "But you can't sit around feeling sorry for yourself. If you take the time to do that and get worried about it you fall behind."There are going to be people hustling every day to find something. You've got to compete against them."Hendricksen said he believes he is lucky to a degree because he doesn't have a wife and kids to support."That would make it harder, more emotional," he said. But most of those let go know somebody with families they must support. They're reaching out to one another now, just as they did at the track last weekend after learning their fate.In many ways, the No. 01 team has had an us-against-the-world mentality for months. The crew didn't think any more of DEI executives not being at the rookie of the year luncheon on Tuesday than they thought of them not being around the team at the track."They were at the racetrack, but they didn't associate about what we're doing," Kwasniak said.Said Hamilton: "All you worry about is your group of guys that work on the car. That's all we cared about was each other. All you cared about was how well he was doing his job and how well I am doing my job, what can I do to help him."If he's sick, it's 'You do this for him' and 'I'll do this for him.' That's all we cared about."The good news for the DEI employees is the company will pay salary and benefits through the end of the year. When that time comes and goes, that's when it'll get even scarier for people such as Kwasniak and Hamilton."I'm not saying we make a ton of money, but we make decent livings doing this," Kwasniak said. "The unemployment you're going to get is barely going to cover everybody's mortgage. "It's going to be tough."Hamilton nodded."Yep," he said. "It's not fun."David Newton covers NASCAR for ESPN.com. He can be reached at firstname.lastname@example.org.