Will Brexit break F1?

The 23rd of June, 2016, is the day everything changed in Britain, the result of the EU referendum kick-starting a monumental political shift unprecedented since the Second World War. In March 2019, Brexit will finally happen (we think), and the United Kingdom will never be the same again.

In the meantime, such is the ever-present time-lag between political will becoming hard reality, all we've had is argument - about what Brexit means, why it's happening, whether it should ever have been allowed to happen, how it should look, where it could take us, and whether it should be stopped.

Decide for yourself. But, for better or worse, Brexit is coming, and when it comes it will change things. Arguably, it already has - dividing the country almost 50/50 between 'Brexiteers' and 'Remainers' and causing the near-collapse of country's system of government, as it creaks under the strain of managing the fallout.

All the while, the country chokes under the grip of economic austerity, imposed following the global financial crisis in 2008. That seismic event undoubtedly changed Formula 1 as well, as manufacturer teams packed up their toys and left, in some cases perhaps never to return. It arguably also led to Brexit too.

But how will the fast-approaching Brexit affect F1? Given the heart and soul of the series - its teams - mostly live and work in Britain, fuelling one of the country's most innovative and successful cottage industries, will Brexit strike a fatal blow, or is grand prix racing geared to thrive in the post-Brexit utopia/dystopia that awaits?

Adapt, survive and speed on

Based in the UK, Red Bull is an Austrian-owned team. Its British 'home town' of Milton Keynes, which houses the F1 operation and Advanced Technologies offshoot engineering business, voted narrowly (51.4%) to leave the European Union.

That's no resounding verdict, and perhaps reflects the general ambivalence of Red Bull boss Christian Horner, who argues Brexit should be no big deal for F1 and his team, and says Red Bull has so far "felt very little effect" from Brexit. In fact, he says, sponsorship deals have become more attractive because of fluctuations in exchange rates for the Pound.

"I'm a great believer that if you're attractive to do business with, people will do business with you," Horner argues. "Formula 1 has grown out of the engineering skillset and entrepreneurship that surrounded the teams and the sport - it's no coincidence that Mercedes' engines and chassis are built in Northamptonshire; Renault are based in Enstone and arguably their engine would have been potentially better consolidated within the UK. Same for Red Bull - we're an Austrian team but we're based in the UK.

"Whilst the skillset is within the UK, people still want to come and do business with us across many industries.

"Maybe the cost of employment may rise if costs of living increase, but maybe it will decrease. You get a lot of scaremongers about Brexit. You could flip it on its head and see it as an opportunity if the guys dealing with it in Brussels don't screw it up."

Horner describes F1 as living in a "bit of a bubble" and urges the UK government to take the Bernie Ecclestone approach to negotiation.

"In order to negotiate something, you've got to be prepared to walk away," Horner adds. "I think common sense will prevail. We have to get on with it and deal with it when it all settles, basically. At the moment, it's having very little impact on how we're operating, and the way we're trading. The economy, reassuringly, seems to be doing well: unemployment is at an all-time low, there's been good growth in the UK.

"We're a sport at the end of the day, not involved in politics. We'll just deal with what we know. You get your regulations and you adapt. F1 has been hugely creative in doing that. One of the British teams' strengths - Williams, McLaren, or Tyrrell, for example - is just adapting to whatever obstacles are potentially presented."

Horner's confidence in F1's ability to adapt is shared by ex-Force India deputy team principal Bob Fernley, who will be embarking on a Brexit of his own in 2019, when he becomes involved in McLaren's latest venture to America to assist Fernando Alonso's Indianapolis 500 victory quest.

"We look at a set of regulations and look at how we can get around them and that's our business," says Fernley, who sees no reason why F1's people and infrastructure cannot move around as easily post-Brexit as the days he recalls before Britain joined the EU.

"If you think about what we do, there are probably very few parts on any car that are interchangeable down this pitlane, so that means everyone is working autonomously to produce and operate. The skills and the organisation and the logistics capability in F1 today, if you just take that mindset across to other industries, I'm sure they could cope as well.

"You can look at the glass half-full or half-empty. If you want to look at it half-full, there's no reason why people might not want to invest more into this country to improve our manufacturing facilities and create skilled jobs and do away with unnecessary costs. F1 has always been an optimistic industry, a can-do industry. Whatever obstacles are put in the way we get around. It's that mentality that needs to be driving the thing forward."

Roadblocks to progress

For Toto Wolff and Cyril Abiteboul, Brexit is inherently something more concerning. Both Mercedes and Renault have bases in the UK, but parent organisations based outside it. Their programmes are beholden to the whims of manufacturers, and this industry has made plenty of loud noises about the impending perils of Brexit.

"Our motorsport division, call it 1800 people, has a large percentage of EU citizens working for the team," explains Wolff. "What this means in the future, whether one can still have such a multicultural workforce, or whether there will simply be certain limits, is already an issue. Definitely logistics and administration, customs clearance, border crossing of goods, will be much more complex. Where all this goes - it's completely incomprehensible to me."

For Abiteboul and Renault, there is shared concern about the UK's ability to move goods and people around easily post-Brexit, as well as potential damage to recruitment done by a political system that looks increasingly 'hostile' to immigrants, skilled or otherwise.

"If you look at the way that we structure our operation, we have two separate entities, at Enstone and Viry, chassis and engine, but we also have functions that are shared between the sites," explains Abiteboul, who says Britain makes for a natural home for a high-end motorsport operation because it houses "a global industry in that country".

"My position is shared between the two sides, legal, finance, IT, communications, marketing. All these functions are across the two organisations. That was really part of the philosophy of us returning to F1 as a complete team.

"It is a great opportunity, but only if you seize the opportunity of working as one group. It is all about integration - not just the integration of engine into the chassis, but integration of people. If we had some difficulties, some roadblocks, in the movement of staff from one site to the other that will be a massive hurdle to the philosophy and intent behind our programme."

McLaren chief operating officer Jonathan Neale is also keen to avoid adding to the bureaucracy involved in employing staff from overseas. That's one of the pillars of concern McLaren has identified relating to Brexit. Ahead of the final race of 2018 in Abu Dhabi, McLaren encountered a specific example of the kind of stress that could become prevalent for F1 teams in the future, if the fallout of Brexit is not managed carefully.

"As the world speeds up it can't be effective for us to have friction in movement of skills, talent, markets," Neale says. "That's the first pillar. The second pillar is customs and border constraints. F1 is high-speed research and development, and that means time to market needs to be very short.

"We had a hiatus with customs clearance going into the UAE [recently]. Something changed in the declaration of hydraulics or hydraulic parts, and the bureaucracy meant we had pallets held in customs for three days. At one point, we were 24 hours away from not being able to run on Friday.

"One has to assume if the borders get more friction it is going to cost more, so it will be more paperwork, more administration, more time. The term 'frictionless border' is something people are talking about for goods and services, and F1 is very dependent on that. There is a strong European or international content, and in some cases, complex systems coming in, going back out and crossing borders, multiple times.

"And when you do that, if you're having to do the customs forms, pay the VAT, do the trade tariff - again those inefficiencies just cost you. Talent, the just-in-time nature of F1's putting on the show, as well as getting our supply chain to work, and the working capital requirements, are the things of most focus that we're looking at."

An accident waiting to happen

Parts of the F1 paddock harbour grave concerns about where Brexit may take the UK. Williams is one of Formula 1's grand old independent teams, but critically it cannot count on the patronage of an automotive manufacturer, nor (after 2018 at least) a large cushion of financial backing from a rich benefactor. Red Bull has Mateschitz, Force India (now) has Stroll, McLaren has the Bahrainis, but Williams depends solely on business to succeed - and business is worried...

"It's like Groundhog Day - you wake up and there's another discussion about Brexit, and there's still no clarity, still no end," says the team's chief executive officer Mike O'Driscoll. "We have a broad group: we have our F1 team, Williams Advanced Engineering group, which is actually developing and growing very quickly, a range of bluechip, Fortune 500 clients, many OEMs, industrial companies, aerospace companies... it's not good for our customers or clients, [so] it's not good for us. The lack of clarity, the constant iteration, is very unhelpful.

"We need viable and strong businesses that can compete internationally. We are concerned about the different sets of regulations that may impact the sectors that we sell into. In many ways, the homogeneous nature of the EU has made for a very good platform for businesses operating within it. Even when you get past the uncertainty, it's difficult to see any upside for the business, there's only downside. At Williams, we're very frustrated with the length of time it's taking to get a clear definition of the terms. As far as we're concerned, it's bad for business and therefore it's bad for Britain."

Large organisations crave stability. That breeds confidence. Although the brave, we-can-face-anything spirit espoused by Horner and Fernley is rousing, and a key part of going motor racing successfully, it is difficult to see how exactly that will chime with the realities of Brexit, and thus how Brexit will in any way make life easier for F1.

"There's a lot of undefined evidence," says Haas team principal Guenther Steiner. "It seems the British government doesn't really know what to do. If people don't know what to do, then it makes the next decision harder - maybe they walk away because they don't know what is coming. It's a little bit like working on regulations for 2021 - we talked plans but we have no decision.

"At the moment, Brexit is up in the air. Our hope is that it stays similar to now, as that makes our job easiest. There will be complications and our biggest threat is 'will it cost more?' That is the last thing we want, costing more and having more bureaucracy, or difficulty with immigration for people who are not UK residents."

McLaren's Neale says the key is for F1 to work closely with politicians, in tandem with F1's logistics partners, to make sure Brexit doesn't produce any harmful unintended consequences.

"I think they are listening - underneath the froth is a lot of people trying to do the right thing," Neale says. "In logistics, we're working with Formula One Management and DHL. We're also working with FedEx and HMRC, looking at getting the latest information from the sources on the ground closest to it, so we can keep an eye on what's happening and what's likely to happen."

But even this is a drain on precious resources. Money, time and effort going out of the sport that could be better spent... "Exactly," agrees Neale, who says there is no upside to Brexit that F1 can see at the moment. "It's just inefficiencies."

Formula 1 is basically keeping its calm and carrying on in the face of Brexit, even as all those around it - certainly in the UK government - lose theirs. But it remains to be seen whether Brexit breaks F1, or merely slows it down temporarily. Certainly it will change things and, in the short-term, probably not for the better.