Formula One heads back to its roots at Silverstone this weekend and the industry behind it has never looked so good – but how and why is the area known as ‘Motorsport Valley’ going from strength to strength?
Silverstone hosted the first ever F1 Grand Prix in 1950 and it was not long before an entire industry literally built up around it, with the circuit’s home county of Northamptonshire now sitting at heart of the UK’s famous motorsport equivalent of Silicon Valley.
Its roots go back to the creation of teams like March, Brabham and Williams back in the late 1960s and now it is an industrial cluster that spreads right across the South East, Eastern, East Midlands and West Midlands.
In a world where recessions are biting hard, you would be forgiven for thinking it would be contracting fast as its core customers, primarily racing teams around the world, find finances stretched ever further.
That, however, could not be further from the truth.
In the last financial year, almost 60 percent of the UK engineering companies supplying motorsport saw their sales increase - one in ten of them stating they were up by more than 50 percent – and over half increased their number of employees last year.
So why is everything going so well?
Perhaps the best explanation is in the presence of German automotive giant Mercedes – whose race team is based in Brackley and whose High Performance Engines facility is in a new base in an industrial estate just outside the small town of Brixworth.
The reason the German giant is running its ‘Silver Arrows’ operation entirely from the UK is first and foremost because it bought both sides of the operation from other companies – their race team was originally set up in Brackley as BAR and went through Honda and Brawn guises before it was bought up by Mercedes in 2010, while the engine side was originally Ilmor, a small British specialist motorsport engine manufacturer set up in Brixworth in 1983.
Mercedes could easily have bought Ilmor and shipped all its expertise to Germany. Likewise, it could have bought Brawn’s place on the grid and set itself up near its corporate HQ in Germany.
But it chose not to because of the people and the infrastructure that is makes Motorsport Valley so important.
It’s not just the teams in F1 and other series such as world rally, NASCAR, IndyCar and categories further down the motorsport ladder that are important, it’s also the suppliers that they feed off.
The rich resource of people that all these companies employ, and their unique motorsport-specific expertise, is what has made it develop into a cluster of interconnected organisations that with shared capability are able to outperform other regions anywhere in the world.
Now, the best global talent from around the world is drawn to this area because it is such a global hub – and by setting up in the same place, teams are more likely to attract quality staff across because of the reduced effect of relocation.
The ‘Valley’ is very much an SME set-up, with two thirds of companies employing less than 50 full time staff and just over half having less than £500,000 annual sales within the sport.
And they are now not only supplying those local to them, they are also supplying to the rest of the world.
More than 80 percent of UK motorsport businesses now export services or products abroad – with the USA the largest single export country but seven percent exported to a new growing market, China.
And the most encouraging thing is the understanding within the industry that it needs to maintain its position by investing in the future.
Almost half of the firms spend between 15 and 30 percent or even more of their sales value in research and development – ensuring that their expertise helps lead the way in the growth of next generation products and solutions for the motorsport industry.
But this is now going even beyond motorsport, with the growth of the term ‘high performance engineering’ – meaning the delivery of quick-turnaround solutions that are also useful in other industries.
The region now employs more than 40,000 people and represents more than 80 per cent of the world market in high-performance engineering, with more than 4,000 high performance engineering businesses totalling an annual turnover of ₤6 billion, over £3.6 billion of which is exported.
Skills in areas such as rapid prototyping, lightweight production and low carbon and energy efficient solutions are allowing the firms to diversify into new markets.
These niche, low volume, agile, lean and global companies have effectively become recession-proof because their customer base has now stretched out so far.
So it’s not just motorsport that benefits from motorsport valley these days – the industry has developed solutions for areas as diverse as flywheels for new London buses and carbon composite ladders used on the front line in Afghanistan.
And that is how it has made sure it doesn’t really have any competition...