Rounding the Corner

Apr 7, 2010

Poor economy or not, circle track racing is still an exciting, affordable sport supported by loyal fans and devoted racers.

Whether they’re building race engines, sponsoring local teams or advertising at the track, many speed shops survive and thrive thanks in large part to their local dirt or paved oval.

It’s a niche world and circle track racing is a big chunk of the performance scene. Here we take a closer look at this market with help from some suppliers of oval track-related performance products.

Where We Stand

So, at the start of a new season, how was business last year for those suppliers? While most everyone experienced some dips, many also have a positive outlook for the future.

Longacre Racing Products’ Tom Glithero tells us, “Like everyone else, our business was off in 2009. The market and unemployment had not reached the bottom, and that scared the racing community. As the year went along, a significant number of people realized that they were going to survive and they returned to the sport. The fear of not knowing how bad the financial markets might get, combined with climbing job loss reports, impacted racers like never before.”

Fragola’s Jeff Stacy adds, “2009 can best be described as a building year. While Fragola Performance Systems saw growth through new distribution channels, overall sales figures did not grow as much as in years past. However, we took advantage of this opportunity to expand our product offerings and build inventory levels. We also launched new marketing campaigns that included new packaging, new catalogs and an expanded trade show presence. All of our efforts in 2009 are leading to a great 2010.”

JOES Racing’s Jeff Butcher reports, “JOES Racing Products had a stellar 2009 and we are off to a bang-up start in 2010. We are growing in all aspects of the company, from new products to internal infrastructure. We are fortunate that the JOES growth is rising faster than (the) economic declines that many are facing. We experienced double-digit sales growth nearly every month in 2009, and 2010 has brought us record sales each and every month. We are looking forward to a great year.”

Weld Racing’s Kyle Fickler says, “Given general economic conditions, I think we did well. We completed the acquisition of Weld Racing in November of 2008, so our performance metrics may be different than some manufacturers. But we found new opportunities in existing markets and are now introducing new products into those markets as well.”

And Tiger Rear Ends’ Gerald Williams states, “We were off a little, but overall, it was good. Sales have started out good for this year.”

Some Optimism

The next question was, “What factors do you think are affecting the market this year?”

Butcher of JOES says, “We feel the market is improving. Last year at this time the country was facing the doom-and-gloom of the banking and housing crises. While the economy continues to mend, we enter 2010 without the distraction of a major catastrophe. At JOES Racing Products, our customers are enthusiastic and the sentiment, as compared to the first quarter of 2009, is upbeat and positive. Our dealers put the proof in the pudding as their stocking levels and winter order volumes were at record highs.”

Fickler from Weld says, “I think the market has contracted considerably from where it was a few years ago. Obviously, general economic conditions are not conducive to the growth trends racing experienced over the past several years, but there is still considerable demand for high-quality wheels that are reasonably priced. We are seeing racers who may not have bought wheels for a couple years coming back into the market and we have seen very nice growth so far this year in all of the markets we serve.”

Stacy of Fragola says, “There are several factors that have an effect on the racing and performance industry. But first and foremost, the U.S. is experiencing record levels of unemployment and under-employment. For those people who are working, there is a level of uncertainty about the future of their jobs and the future of the economy. People are cutting back on spending and when your industry is predominately fueled by discretionary spending, you can see why times are tough in the performance world.”

Williams adds: “People are slow to spend their money right now. The price of fuel affects a lot, too.”

Glithero of Longacre builds on that state of the market by noting, “An expression that I’ve heard a number of times this year is ‘I’m sick and tired of feeling sick and tired!’ Racers might just be some of the most resilient people involved in any kind of activity. They will and are finding ways to scrape together the funding to get back out to the track. This attitude, combined with dealers who ran down their inventory throughout last year, has caused our business to see a positive rebound. If Mother Nature cooperates and the tracks get off to a good, solid start, I believe that 2010 will see a positive trend for the entire industry.”

Challenging Times

Next we asked about challenges shops may face serving the oval track world.

Stacy begins: “Shops in the circle track community face some of the same challenges that other performance retailers fight. The biggest challenge is having the right part at the right time on the shelf when the customer needs it. Because the performance industry is driven by want and not need, you have to have the parts on the shelf when the buyer is ready to buy. Otherwise, they will go somewhere else.”

Fickler says, “We used to say that racing was ‘recession-proof,’ but given what we have seen with the current economic downturn, I think we need to say that racing is ‘recession-resilient.’ That being said, the racing consumer is more cautious than he was in years past and will continue to be a little more conservative in years to come. As such, both retailers and manufacturers will have to work harder to create that sale, but the demand is still there.”

Williams says the biggest challenge is “getting racers to spend money and stop rebuilding their old equipment.”

Butcher points out, “Shops that are complacent will get run over. With certain parts of the country still working to reach past levels, the shops that are proactive in providing value and service will prevail. We see certain dealers working hard to promote the right items. Shops need to keep an eye out for quality products that are priced with enough margins to drive volume and inventory turns. We work closely with our dealers to educate them about product opportunities so that they can maximize their inventory.”

Glithero adds, “One of the biggest challenges facing our dealer network is having the right parts available to sell for their customers. Racers are waiting until the last minute to order the pieces and parts necessary to get their cars prepared for the track. Because of reduced inventory levels, the dealer may not have the right mix of inventory. The dealers are turning to the manufacturer, looking for immediate assistance in solving their needs, and in many cases the manufacturers won’t be able to respond quickly enough. The problem in magnified as the lead time to obtain components required by manufacturers is unexpectedly getting longer and longer.”

Keys to Growth

Looking forward, we asked where the growth areas will be this year.

“New products in all categories will be the key for growth,” Fickler says simply.

Stacy says, “Growth in the circle track market will come from maintenance parts-those parts that wear out or are damaged. Racing is an addiction, so you will find more and more racers who have to find ways to cut costs so they can continue to race. That means fewer new cars and more rebuilds of existing cars. Retailers that keep that in mind when ordering inventory and pricing their product selection to accommodate this new mindset will recover best in this economy.”

Glithero says, “Racing has always been expensive, but it seems like each year the cost grows while sponsorship and prize money cannot keep pace. More and more pieces are ordered from manufacturers instead of being made in race shops. Additionally, it seems like schools offer students fewer opportunities to learn how to acquire the skills necessary to maintain racecars, which requires teams to pay someone to build and/or maintain their cars. This trend drives up budget numbers. Classes of cars where expenses are better-controlled will probably see growth, whereas cars that continue to climb in expense could no longer exist.”

Says Williams: “I hope growth will come from building new cars.”

And Butcher brings up an interesting point about volume. “JOES is focused on producing items the reach our core customer in the stock car market. We see growth in dirt track racing, and moderate growth in asphalt late-model racing. Our asphalt racers do spend more, but the volume of the dirt market is a key component in driving growth.”

Down the Road

Lastly, we asked what’s in store for circle track racing in years to come.

“I think there will be more people moving back to Saturday night racing,” Williams predicts.

Glithero adds, “Racing organizations and speedways need to get creative. With the economic conditions that we’ve seen the last few years, we might have lost a portion of a generation of racers. Mom and Dad might not be willing to spend the kind of money to get little Johnny in a quarter-midget at age 7 or 8. If he doesn’t get started racing then, it’s possible we won’t be able to sell him parts at age 8, 18 or 28. Additionally, people need to go to the race track to have fun. Too many people have run up second mortgages in an attempt to make their offspring the next Jeff Gordon or Kyle Busch. Parents need to be realistic-the odds of making it to the top of our sport are very small. Learn to be happy with a second- or third-place finish. If the talent and desire is there, success should follow.”

Stacy says, “As the economy bounces back, I believe you will see a huge surge in circle track participation. It has a great, loyal fan base. Best of all, for participants, you have the opportunity to win back part of your investment. While other forms of racing might only pay the top eight, most circle tracks pay all the way back through the field. Another perk for the circle track participant is the increased visibility to sponsors. We all know racing can be expensive, so sponsorship helps fund the sport. That additional funding helps the industry as a whole, from tracks to racers to the retailers who sell the parts.”

Butcher adds, “Racers find a way to race. We are often surprised at the resilience of our customers and are amazed at how they always find a way to get to the track. In comparison to other discretionary-spend activities, racers have risen above the challenges even in tougher times. We see a rebound in 2010 and look to 2011 and 2012 to show dramatic improvement in car counts and new participants. Challenge creates innovation, and racers will receive the bounty of better products at prices that allow them to purchase more new items.”

Finally, Fickler talks big picture.

“I think we will see a slow recovery, but eventually the market will regain most of the strength it had a few years ago,” he says. “The current economic downturn has trained an entire generation of people that had only experienced economic growth to sit on their wallets, and that has created a sense of conservatism that will likely continue in the foreseeable future. I do, however, think that the sanctioning bodies and tracks that have endured this downturn will offer the racer and spectator a better product in the future than they have in the past.”

But that won’t come by itself, he notes.

“As a manufacturer, we are dependent upon racers in the pits and spectators in the seats for our business to thrive. With that in mind, we are heavily involved in a SEMA MPMC initiative called ‘Take a Friend to a Race’ that is part of MPMC’s Motorsports Awareness program and the initiative is exactly what is says. We believe that if manufacturers help create awareness of motorsports by introducing new fans to the sport, those new fans will not only get hooked, but eventually some percentage of them may decide they want to get involved as racers, car owners, crew members, etc.”

Hopefully, this information can help you set up your shop’s chassis to perform better this year. Let’s go racing!