The New Reality for Customer Engagement
Date: 5/31/2018 @ 1 p.m. ET
Hendrick Comes of (Info) Age
Whitish lubricant splashes inside the windows of a computerized, Mini Cooper-sized machine tool that carves and bores metal parts with extreme precision, extruding ribbons of scrap steel or aluminum while it works. NASCAR race cars, including the engines, must be built from certain stock elements that you could find at your local dealership, but everything else can be engineered from scratch. "We buy what we can, and build what we need," says Wall, walking past a row of finished engines.
Hendrick Motorsports, founded in 1984 by Charlotte automobile dealer Rick Hendrick, refurbishes engines over 700 times per season, some for its own drivers and the rest for lease to other NASCAR teams. The shop also serves as a development lab for General Motors, the maker of the Chevrolet cars Hendrick races. But, Turner says, the engine business amounts to just a fraction of the revenues of the profitable, privately held company, which average over $100 million per year. Nor does prize money account for Hendrick's profits: A good season might total $10 to $20 million in prizes for all drivers, while the cost of running a single top NASCAR team is over $15 million per year.
The real money comes from sponsorships, and it is sponsorships that make up almost 80 percent of Hendrick's annual revenue. Big brandsLowe's Home Improvement stores, Kellogg's cereals, Budweiser pay big money (over $15 million for a primary sponsorship, perhaps $1 million for a secondary sponsorship) to slap their names on NASCAR machines and stitch their logos on the drivers' fireproof suits. This is a sport where the championship trophyformerly the Winston Cup, now the Nextel Cupis for rent. Chevrolet, Ford and Dodge also pour tens of millions into the racing teams.
Wall has negotiated secondary sponsorship deals with two of his shop's key tool and software vendors, Haas Automation Inc. and UGS Corp. Hendrick gets the machines and software in exchange for advertising space on the race cars and marketing and promotional exposure for the products. "These relationships are extremely valuable to us because they equip us with engineering and manufacturing tools that help us produce more competitive vehicles," says Wall. "We also have access to some of the top people in these companies for support, training and previews of new technology that is coming out in their products."
The drivers are brands in their own right. ("You might see a rookie driver around the engine shop," says one mechanic. "Until they get their first jet.") Even the cars are anthropomorphized by fans and commentators, called by their numbers, as in, "The No. 48 car ran good at Michigan." Hendrick runs four teams full time on NASCAR's premiere Nextel Cup circuit, including the Lowe's No. 48 car driven by Jimmie Johnson, who has been at or near the top of the points standings all season; the No. 24 DuPont car, driven by three-time points champion Jeff Gordon; veteran Terry Labonte's No. 5 Kellogg's car; and Brian Vickers in the number 25 GMAC car. Kyle Busch will compete in six Nextel races this year in the No. 84 Carquest car.
Nobody is getting their money's worth if their ride is in the shop.
With over 400 employees, including more than 80 in the shop run by the storied engine-builder (and Wall's mentor) Randy Dorton, Hendrick is one of NASCAR's biggest companies. But corporate teams are now the rule in a sport once based in small garages and family compounds. Among the leading full-service shops, with multiple cars and engine-building capacity, are Dale Earnhardt Inc., founded by the late legend and animated by the star power of his son, Dale Jr.; longtime powerhouse Richard Childress Racing; and Penske Racing, the NASCAR venture of the fabled open-wheel racing organization. Roush Racing, one of the largest companies as measured by the number of drivers, gets its engines from another major Ford shop, Robert Yates. Like HMS, each of these shops has come to see IT as a competitive necessity, making Wall's job easier on the one hand (he doesn't have to sell people on the value of IT any longer), but more difficult on the other (he has to work harder to remain ahead of the curve).
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