Lola call in the administrators

[Backmarker]

Bad news coming out of Lola today - the economic downturn has hit them hard, and they've had to call in the administrators http://www.lolacars.com/newsstory.asp?NewsId=425

Given that they were talking about entering F1 not too long ago, this is a real shame. They might be back (just like this incarnation is born out of the ashes of the F1 team), I hope they are...

[Stramala]

Not this again...

Is motorsport R&D/construction even a profitable business model anymore? I do wonder sometimes. It seems the only way to ensure a stable future is to get deals with major manufacturers, Mecachrome has been riding along on their Renault contracts for a long time now. Single make series also help, but Dallara has both GP2 and GP3 tied down which is a big blow to the rest of the indie constructors.

[Faustus]

Most unfortunate and a shame to see this again.
The most important asset to ensure the survival of a racing car manufacturer is to secure the contract to supply a major spec series. Lola does not have one. In a spec series, the chassis are usually sold at a relatively low profit margin, because the series organiser contributes to the price, but the sales of spares are where the money is at. Lola doesn't sell many racing cars, pretty much only sportscars and no more than 5 or 6 per year, plus spares and support to run the cars. They have a decent 50% scale windtunnel, but these days it is primarily used for development of their own cars, whereas in years past some of the capacity was rented out to Formula 1 teams. Not much consultancy work going on at the moment, as well.
Lola expanded heavily into the aerospace sector, supplying composite components for UAVs and missiles, but the overwhelming majority of these contracts were for BAE Systems and /or Ministry of Defence-related projects. With the announced reduction and eventual complete pull-out of British forces from frontline military activities in Afghanistan, the level of requirements for operational frontline projects has dropped massively, so pretty much everything that Lola made is no longer required in any decent quantities, so there is no contribution to the cash flow from the Aerospace division.
(On a personal note, I was offered a job at Lola within the Aerospace division 14 months ago but I turned them down to hold out for another job that I had interviewed for, which I ended up not getting. I am so glad I didn't take the Lola job).
The Composites division still does decent business, but the majority of the motorsport work came from doing sub-contracted manufacture of stuff for Formula 1 teams, but with the RRA in place in the last couple of years, teams try to manufacture internally as much as possible, so there isn't much of a revenue stream there. Also, for non-motorsport work, they are too expensive when compared to other composite companies.
What this all adds up to is a bleak outcome for Lola. The company is apparently reasonably viable and there are some big players in the aerospace sector that are cash-rich and are looking to buy up good companies.
I sincerely hope that Lola finds a buyer and / or partner.

[FMecha]

Autosport and Beeb on this.

Sad, just sad

[F1000X]

I blame Dallara, who appear to have a monopoly on open wheel racing. Burn their factory down.

[Phoenix]

I blame Dallara, who appear to have a monopoly on open wheel racing. Burn their factory down.

Yeah, to then have people complaining about what happened to Dallara...

[AdrianSutil]

Autosport and Beeb on this.

Sad, just sad

Indeed. They can never seem to get a decent break.

[East Londoner]

A real bloody shame. I point the finger at Formula Elaborate Bluff in 2009, because I'm sure that Lola would have secured a slot under the budget cap system. Exposure in F1 would have paid the bills.

[Backmarker]

A real bloody shame. I point the finger at Formula Elaborate Bluff in 2009, because I'm sure that Lola would have secured a slot under the budget cap system. Exposure in F1 would have paid the bills.

Or they would have gone bust in 2010! I think you're right though, more sponsorship, and with all their facilities they would have made a better fist of it than HRT. Or if they'd won the GP2 or IndyCar contracts.

[AndreaModa]

A real bloody shame. I point the finger at Formula Elaborate Bluff in 2009, because I'm sure that Lola would have secured a slot under the budget cap system. Exposure in F1 would have paid the bills.

Good call. The ridiculous entry process and the fact the budget cap went down the drain really ruined F1's chances of securing the interests of companies like Lola. It's such a shame they're in this position, especially after making positive noises about an F1 entry only last year.

If what's true in the Autosport article about HMRC not paying up either, then that is a bloody disgrace. Politicians in this country harp on about manufacturing and the need to diversify the economy, but when the chips are down, just as when MG Rover needed help most, and the same now, they don't want to know. And then we all wonder why German manufacturers are so successful. Shameful behaviour, should it turn out to be correct.

[shinji]

I met her in a club down in old Soho, where they drink champagne and it tastes just like Coca Cola... C-O-L-A cola.

[Phoenix]

I met her in a club down in old Soho, where they drink champagne and it tastes just like Coca Cola... C-O-L-A cola.

I refrained myself from putting up this song, and you just had to do it, don't you? Nice work, man, really nice, I hope you're happy...

[shinji]

I met her in a club down in old Soho, where they drink champagne and it tastes just like Coca Cola... C-O-L-A cola.

I refrained myself from putting up this song, and you just had to do it, don't you? Nice work, man, really nice, I hope you're happy...

I pushed her away, I walked to the door, I fell to the floor, I got down on my knees...

[Ataxia]

Bad news coming out of Lola today - the economic downturn has hit them hard, and they've had to call in the administrators http://www.lolacars.com/newsstory.asp?NewsId=425

Given that they were talking about entering F1 not too long ago, this is a real shame. They might be back (just like this incarnation is born out of the ashes of the F1 team), I hope they are...

She's not a showgirl anymore...

...(gets coat)

[dr-baker]

Am I right in thinking that Eric Broadley named the company after that song?

[Faustus]

Am I right in thinking that Eric Broadley named the company after that song?

I'm afraid not. The song was released in 1970 but the company was founded in 1958. Eirc Broadley said in an interview in Motorsport a while ago that the comapny was named after a woman, can't remember if it was his girlfriend or not.

[Captain Hammer]

This isn't as bad as it could be. I understand that Lola has entered voluntary administration. While I have no knowledge of UK corporations law, I do know that voluntary adminstration generally allows a business to continue operating - albeit in a restricted form (though precisely what they can and cannot do depends on the industry they are in and the local laws) - to try and get itself back on track. The alternative is to be placed into court-appointed administration, which means all business acitivites are suspended infedinately, and usually results in receivership and liquidation.

[Alianora La Canta]

This isn't as bad as it could be. I understand that Lola has entered voluntary administration. While I have no knowledge of UK corporations law, I do know that voluntary adminstration generally allows a business to continue operating - albeit in a restricted form (though precisely what they can and cannot do depends on the industry they are in and the local laws) - to try and get itself back on track. The alternative is to be placed into court-appointed administration, which means all business acitivites are suspended infedinately, and usually results in receivership and liquidation.

Captain Hammer, you have understood correctly. Administration in the UK is awkward but because Lola chose to do it, it has considerable freedom to sort out the backroom operations (subject to what the administrators allow). While a lot of companies entering administration turn out to be unsalvageable, a significant number end up re-entering standard trading a few months or years later in reasonable state - without much, if any, impairment to frontline operations in the interim. It may even emerge from administration a stronger company, but it is likely to be painful for at least some of the staff.

The fact that this sounds like a cashflow problem makes me hopeful because they're relatively simple to sort out. Companies that go into administration of any kind with an endemic structural or competitive environment issue tend to have worse outcomes and remain in administration longer.

Fingers crossed that Lola is one of the companies that emerges stronger, and best wishes to everyone there for the future.

[Wizzie]

This isn't as bad as it could be. I understand that Lola has entered voluntary administration. While I have no knowledge of UK corporations law, I do know that voluntary adminstration generally allows a business to continue operating - albeit in a restricted form (though precisely what they can and cannot do depends on the industry they are in and the local laws) - to try and get itself back on track. The alternative is to be placed into court-appointed administration, which means all business acitivites are suspended infedinately, and usually results in receivership and liquidation.

Captain Hammer, you have understood correctly. Administration in the UK is awkward but because Lola chose to do it, it has considerable freedom to sort out the backroom operations (subject to what the administrators allow). While a lot of companies entering administration turn out to be unsalvageable, a significant number end up re-entering standard trading a few months or years later in reasonable state - without much, if any, impairment to frontline operations in the interim. It may even emerge from administration a stronger company, but it is likely to be painful for at least some of the staff.

Thank HWNSNBM I learnt about the concept of Administration last week in Business Studies. Guess it is useful for something afterall

[Alianora La Canta]

Thank HWNSNBM I learnt about the concept of Administration last week in Business Studies. Guess it is useful for something afterall

What a coincidence! Of course, there are no coincidences with HWNSNBM

[Stramala]

Administration has the added bonus of securing the company's assets. Their creditors can't just show up and start repossessing things they claim to be rightfully theirs due to non-payment. I would also theorise this is merely a cash-flow problem rather than than the company being knee-deep in debts, otherwise I'd have expect HMRC to come marching along trying to secure court orders against them considering businesses here see taxes as the lowest priority payment that needs to be made, therefore they're usually paid last and the first to be ignored.

However, if at some point HMRC wade into this and start demanding wind-up orders, Lola will be in deep, deep trouble. Let's just see what unravels in this story in the coming weeks.

[Faustus]

This is looking even worse. According to a posting on the 10-10ths forum:

Numbers from file accounts with Companies House

2011 (March) Lola Composites: Loss: 1.3m Net Assets: 2.2m
2011 (March) Lola Cars: Profit: 0.2m Net Assets: -11.7m
2011 (March) Lola Group Loss: 1.2m Net Assets: -13.6m

Apart from the fact that Composites has tangible fixed assets in its balance sheet (property), all companies have substantial negative net worth. The biggest issues is with repayable loans (with less than a year to go) of £14m.

On these numbers, it wouldn't even be able to service the debt, let alone repay the debt. The R&D credit (even if it were to be paid) was only £124k in 2010. Hard to see it even scratch the surface.

[Faustus]

Unfortunately it is now official, Lola has ceased trading:

http://www.autosport.com/news/report.php/id/103257

[East Londoner]

Ah crap.

RIP Lola 1958-2012. Thanks for some truely rejectful F1 cars over the years.

[mario]

Unfortunately it is now official, Lola has ceased trading:

http://www.autosport.com/news/report.php/id/103257

Sad news indeed, but when you consider the figures that you posted that showed how much trouble the group was in, I guess that it was probably only going to be a matter of time. It's going to be a body blow for the privateers in the Le Mans series in particular, I imagine - several teams are already struggling to find spare parts, and this is only going to make things even harder.

[nome66]

Ah crap.

RIP Lola 1958-2012. Thanks for some truely rejectful F1 cars over the years.

not to mention the innumerable amounts of IndyCar/CART/USAC success.
this only proves that even in Technical form, Shortfalls in F1 can be turned into or increased by IndyCar Championships

[pasta_maldonado]

Ah crap.

RIP Lola 1958-2012. Thanks for some truely rejectful F1 cars over the years.

It's a great shame that such a fantastic company has been taken from us. I guess that good things can't last forever

not to mention the innumerable amounts of IndyCar/CART/USAC success.
this only proves that even in Technical form, Shortfalls in F1 can be turned into or increased by IndyCar Championships

If anything that goes to show how weak the elvel of competition is in IndyCar...

[AndreaModa]

This really is tragic news, and it'll be interesting, and slightly worrying at the same time, to see how it impacts the WEC and the LMP1 and LMP2 entries. I hope the other chassis builders can pick up the slack, or some new ones step in to fill the gap. Maybe another company will get hold of the intellectual property and start production again, if only to provide spare parts for the meantime.

I wonder if Lola ever really recovered from 1997 when it was sold? It's had some decent success in sportscars since then, but what else? It wouldn't surprise me if, behind the scenes, it has been a struggle ever since and that it was only a matter of time until things came to a head. The current economic climate has certainly played a part in its demise, that's clear.

[Wizzie]

not to mention the innumerable amounts of IndyCar/CART/USAC success.
this only proves that even in Technical form, Shortfalls in F1 can be turned into or increased by IndyCar Championships

If anything that goes to show how weak the elvel of competition is in IndyCar...

Actually, most of it was back on the day when CART and the Indycars before the split was more competitive and, arguably, better than F1.

[nome66]

not to mention the innumerable amounts of IndyCar/CART/USAC success.
this only proves that even in Technical form, Shortfalls in F1 can be turned into or increased by IndyCar Championships

If anything that goes to show how weak the elvel of competition is in IndyCar...

weak? Lola was never involved with the IRL if that's what you're wondering. plus the rules and design regs are waaayyy different. case in point, Reynard.
fresh off their '97-'98 championships they design BAR's '99-'01 cars and fail because they couldn't use a winning design

[pasta_maldonado]

not to mention the innumerable amounts of IndyCar/CART/USAC success.
this only proves that even in Technical form, Shortfalls in F1 can be turned into or increased by IndyCar Championships

If anything that goes to show how weak the level of competition is in IndyCar...

Actually, most of it was back on the day when CART and the Indycars before the split was more competitive and, arguably, better than F1.

Unless I'm very much mistaken, CART used the IndyCar tag a lot, so that was my IndyCar/CART confusion. I agree with you that 90s era CART was a great thing, and I still like Indycar to this day, but the wording of nomes66's sentence implies that you can make up for F1 in IndyCar because it is easier to win there.

[mario]

This really is tragic news, and it'll be interesting, and slightly worrying at the same time, to see how it impacts the WEC and the LMP1 and LMP2 entries. I hope the other chassis builders can pick up the slack, or some new ones step in to fill the gap. Maybe another company will get hold of the intellectual property and start production again, if only to provide spare parts for the meantime.

I wonder if Lola ever really recovered from 1997 when it was sold? It's had some decent success in sportscars since then, but what else? It wouldn't surprise me if, behind the scenes, it has been a struggle ever since and that it was only a matter of time until things came to a head. The current economic climate has certainly played a part in its demise, that's clear.

Lola had been working on a new closed cockpit car, but the big problem is that, with a substantial change in regulations planned for 2014 (including a fairly large revision to the cockpit area), those designs will only be legal for the 2013 season at best. There may be a few companies that look into providing spares, but whole new chassis based on Lola's designs might be a touch too far.
Some of the privateers in the Le Mans series have been able to switch to alternative designs - Rebellion, IIRC, were planning on switching from a Lola to Dome chassis because they were worried about a shortage of spare parts and a lack of long term support - but whether those independent chassis designers can accommodate a sharp influx of privateers is another matter. It is possible that the demise of Lola might signal the end of the LMP1 privateer altogether in the longer term - several privateers had already expressed outrage over the ACO's 2014 LMP1 regulations and were planning on downgrading to the much cheaper LMP2 class (Oak Racing were especially critical, for example), and without the manufacturer teams committing to a privateer program, that might accelerate the trend of privateers being driven out of the upper categories.

[Faustus]

Lola is not finished yet, apparently:

http://www.motorsportmagazine.com/misce ... e-of-life/