Penske Woes Prove No One is Immune

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Again, I’m breaking my self-imposed vow not to write about COVID-19; but I am keeping true to my word that it will only be about how it affects the NTT IndyCar Series and/or the Indianapolis 500…at least, to some extent.

A couple of weeks ago, I wrote a post about how fortunate race fans were that Roger Penske had bought IMS, IMS Productions and IndyCar from Hulman and Company. My logic was that Mr. Penske had much deeper pockets than the Hulman-George family and he would be much more suited to take the hit of the loss of the season’s first four races and still keep things sustainable.

That was posted on March 18, almost two weeks ago. With things sometimes changing by the hour, a lot has happened since then. Businesses had not yet been mandated to a standstill across the globe. Our streets and highways were still somewhat crowded and bars and restaurants were still open, but had just started limiting capacity (at least here in Tennessee). Many were still more focused on losing March Madness and the first four races of the IndyCar season than anything else.

As I said, a lot has happened since then.

For example, the Indianapolis 500 and its accompanying GMR Grand Prix have both been rescheduled to different months.

As the US and global economy crumbles before our very eyes, small businesses and worldwide conglomerates are suddenly faced with unprecedented and massive layoffs. It seems that Penske Corporation is not immune to this pinch either. This past Saturday Roger Penske wrote a letter to every Penske employee, which accounts to 60,000 people worldwide.

The letter stated that senior management would take pay cuts, while layoffs for employees are a distinct possibility. Penske himself will forego his entire salary for the time being, as well as company president Rob Kurnick.

This article that appeared on Autoweek.com states that all Penske operations in the United Kingdom, Spain and Italy are completely shut down, as well as sales operations in Australia and Germany. Here in the US, most of Penske’s business dealings deal with logistics – which has been labeled an essential business. How else will food and supplies make it to their destinations without logistics?

The governor of North Carolina has ordered all non-essential businesses to close, and this includes the race shop of Team Penske just outside of Charlotte. The article was not clear as to whether or not team personnel has been furloughed or just sent home. But with no money coming in, it will be just a matter of time. Then just last night, we got word that IMS and IndyCar have furloughed some employees as of Sunday. Supposedly they were told by IndyCar that the furlough is planned for sixty days. That takes us right to the eve of the Dual at Detroit at the end of May; the projected new opening weekend of the IndyCar season.

If this hits Roger Penske this hard, no one is safe from financial ruin. Even financial giants like Roger Penske or Penske Corporation cannot take hits like this long-term. He built his company on business models that take normal recessions into account; but nothing like what just exploded in this horrific month of March. When he announced his purchase from the Hulman-George family back in November, he made that business (and sentimental) decision based on normal economic patterns. There was no way he or anyone else could foresee what was just around the corner just a few months later.

This is not a political statement, but I’m sure it will draw the ire from some and praise from others. How long can this go? I’m not talking about the loss of racing or other sports. I’m talking about how long can businesses remain shuttered, while we all practice social distancing? At some point, something has got to give or this economy will never come back.

I was having this conversation with a much younger person this week, and he casually said “It’ll come back, it always comes back”. Well, the word always doesn’t apply here because we’ve never seen anything like this. I’m not an infectious disease specialist, nor am I an economist. I’m an over-aged IndyCar blogger in Nashville, sitting anonymously behind a keyboard, so take these words for what they are worth. But I do think I’ve got some common sense and I like to think I take a rational approach to most things. I think those that make it through this crisis are the ones that will keep their head and wits about them.

I respect the coronavirus and what it can do. I understand that it is not the flu or the common cold – it has the potential to be much more serious, especially to those with weakened immune systems. It spreads easily and rapidly and unlike the flu, which has a rapid onset – those infected with the coronavirus can be infected for two weeks without even presenting symptoms, thereby giving a false sense of security as they continue to socialize.

I also understand that there are complete idiots who simply don’t get it. They are having corona parties in small spaces and still gathering in large groups as they throw caution to the wind. They think it’s funny to cough on someone who has made them angry, while they think it’s more important to get in their spring break trip to Florida, as the rest of the country sits at home from work. Those same people will most likely go to visit Grandma over Easter, and Grandma is the one most at risk.

People also need to stop treating a trip to the grocery store as if it’s a field trip to Disneyland for the entire family. It is commonplace to see husband and wife with six or seven kids and an entire extended family in tow, wandering the aisles of the stores. Kids touch everything by nature, and then put their hands in their mouths. It’s also sad that the stores cannot even get sanitizing wipes to wipe their carts down. Why? Because of thoughtless people hoarding them, that’s why?

At some point, however, we’ve got to get back to work. I understand it will be a gradual thing to ease back into it, but it has to happen at some point. The President has said that he hopes to start the process back by Easter. When you realize that Easter is less than two weeks away, that seems a little ambitious. But I would like to think we can start easing back to normalcy by mid-May. If not, the economic damage done by that point may be irreparable. It’s a fine line to walk between being prudent from a medical and an economic standpoint. Both need to be taken into account. Plus, if Penske’s Dual at Detroit has any shot of running on time at the end of May, we’ll have to be back to some level of normalcy by mid-May, anyway.

Those that point out the economic ramifications of this virus are roundly criticized with barbs like “You care more about the almighty dollar than human life” or “OK, you pick which ones to die when we go back to work”. Although some people don’t like to admit it, businesses drive this country. Without the economic engine of big business, our country would not enjoy what we take for granted today.

I find it ironic that those that bemoan how sponsorship dollars have dried up in motorsports, are the same ones saying that anyone who worried about businesses and the economy during a worldwide pandemic are evil, and should only be worried about the safety and well-being of their fellow humans. Well, I’m worried about both.

As I said a couple of weeks ago, this crisis does not really compare to what this country went through after 9/11. That catastrophe brought out the best in people; this has brought out the worst. There is the crowd that is hoarding toilet paper and purposely coughing on people as a sick joke. On the other end of the spectrum there are those that are clamoring for martial law. I actually saw a Facebook post over the weekend from an IndyCar acquaintance that said “…if we don’t implement a national lockdown immediately, enforced by our military, over two million Americans WILL die. This is not an exaggeration. It’s not a fear-tactic. It’s a FACT. Does it scare you? GOOD."

Pay no attention to the fact that just yesterday, Dr. Anthony Fauci gave a worst-case scenario of 100,000 to 200,000 American deaths before this is all over. While that is a huge amount, this person claimed it to be a FACT that over two million will die, so it must be really be a fact. I would like to see the data that backs up this so-called fact. Then again, the person also stated that this was not a fear-tactic, then followed that up by asking if you were scared. Some of you reading that may completely agree with this person’s post, and that’s fine – but I think the majority of people fall somewhere in the middle of these two camps – the COVID-19 deniers and the alarmists spreading gloom, doom and panic.

Rest assured, it’s about to get uglier as the war of words escalates when people’s finances begin to dry up as most continue to sit at home.

We are lucky. My wife, Susan, worked last Monday – but on Monday night she got the e-mail to remain at home until further notice. They say she will continue to be paid, but who knows how long that will last? My line of work is considered essential. In fact, starting last week, I’m now working twelve-hour days – from 7:00 am to 7:00 pm. But I’m grateful to still be working. I don’t get overtime, but I get comp time – which means extra vacation days for when racing season starts back.

But at my work, we have all quickly adapted to today’s way of living. We are all conscious of keeping our distance, scrubbing down door-handles as well as our mouse and keyboard. I suspect some of these practices will continue even after things get back to normal – whatever the new normal is going to look like.

When iconic companies that have been the model of stability, like Penske Corporation, have to make drastic moves – you know we are in unprecedented times.

I thought the most telling part of the Autoweek article was when Penske commented on having to reschedule the Indianapolis 500, when he said “I took the road that gave us the longest distance, five months. If this thing isn’t over in five months, we’ve got bigger problems”. I agree – both medically and economically.

George Phillips

10 Responses to “Penske Woes Prove No One is Immune”

  1. Well said, George. We may never know the full extent of damage this has caused. I’m skeptical at this point if Detroit running in May,, but I agree if things haven’t improved by the start of summer, the economy will be in dire straits.

  2. Very well said George. And while I want to remain positive, I’m really starting to wonder if there will be any racing in 2020. This is similar to the war years with no racing, but perhaps much worse as this is global. Godspeed and keep safe everyone!!

  3. Mark Wick Says:

    For the last three or four years, a very important part of my life has been playing trumpet in community bands and orchestras. Just March 1 I played in a band concert with 90 musicians, to an audience of more than 400 very appreciative people. These community musical organizations are non-profit business that survive on donations from the public. This relates to auto racing in that both provide entertainment for audiences, and opportunities for people to participate in an activity they love.Both need income to happen. Both also require people to gather, both to prepare, and to participate in the performance. Dr. Fauci and other medical experts expect there will be a second wave of this virus, probably later in the year. As much as it hurts to consider life without participating in musical performances at least until fall of 2021, it looks like that is the wise course of action. Will any of the three music ensembles I belong to survive until then? The same applies to auto racing, and all professional and amateur sports. If humans use wisdom and caution, and enough of us survive, the arts, and competitive activities, will start again in some form, some day but the lives we have all known until a month or so ago now just exist in memory.

  4. This thing had better be as bad as they say. Or potentially so. Because the price we are paying to fight it is horrific. Many businesses will never reopen. Many jobs will be permanently lost. Many lives permanently disrupted. Our economy and those of other countries severely damaged. I just hope the cure isn’t worse than the disease.

  5. Bruce Waine Says:

    It is times like these that one reflects on the assets and the functions that others lack and that I take for granted… I am able to walk and am mobile (Robbie Wickens), can move my arms – dress myself – feed myself -take a shower by myself, etc. ( Sam Schmidt), have relatively good vision (Stevie Wonder), have a warm home with a roof over my head and the luxury/availability of not going without a meal (homeless adults and children), not locked within a United States internment camp as an adult or child being convicted as an unwelcome refugee who is fleeing violence and death. As a refugee being treated as a prisoner with limited access to food, comfort, health or medical facilities….

    Guess overall, I have it pretty good. And sports events, etc. well they take a seventh or eighth priority in our current life challenge with this virus and president .

    Listen and heed the advice of medical professionals and I emphasize the words medical professions. Disregard the daily grandstanding of any politician who offers their own unfounded opinions …….. which appear to change daily …….

    Be well, all.

  6. Good to know that you, George, and your wife are alright. Can you please give us an update on your other 2 regular contributors, John McLallen and Paul Dalbey? Here’s hoping they are fine health-wise, too.

    Stay safe everybody.

    Over here in Germany, people have been told to stay home, work homeoffice if possible, and when you’re out walking on the street, you’re supposed to be at least 1.5 meters apart from people who do not live with you in the same household. The queues at the grocery market in my town that was held on Saturday were unnaturally long because of the 2m breaks between every customer waiting in line.
    Also, only the food shops are open now, nothing else. And every food store has a clear screen in front of the cashiers who are working with latex gloves on. Most restaurants have a sign on the door saying that you can buy food to take home but not come indoors to eat there.

    All the best to everybody and take care.

  7. Ballyhoo Says:

    One of the hospital ships arrive in LA Harbor. It will house and treat those patients who are not suffering from the virus, so that hospitals can focus on virus patients. Who would have thought this was possible. I am grateful to be alive and well today. I just hope this continues. Racing is far down on my priority list right now, although you all know how much I miss it.

    All of you please take care and enjoy each day as it comes. I do believe that things will get better just not overnight. And please help those in need if you can. We are all in this together.

  8. Ron Ford Says:

    My daughter, who is a YMCA camp director, just lost her job. The camp CEO cannot offer anything other than a guess as to when the camp can reopen.

  9. I have to say, I voted “Other”. I think that preventing the loss of lives is of the absolute highest importance, but I feel like the one option among the “non-other” poll options is a little….melodramatic….and doesn’t reflect how I feel about the situation.

    Essentially, I believe that rushing people back to work before the risks of the virus are properly limited would be just as damaging (or, more likely, even more damaging) to the economy and society as a whole than just waiting two, three or even four weeks beyond when it appears like we have the situation dealt with and the infection and death rates start to come down. Think of it this way, if there are subsequent surges in infections and deaths after we think (incorrectly) that we have risks sufficiently taken care of:

    1) In terms of the economy, what does that do to consumer confidence? If it’s clear that we thought that the virus was hopefully taken care of enough but we wound up being wrong, doesn’t that put us right back in the same spot, with the stock market crashing, people having to stay home and distance again and businesses still closed? And with an even more open ended finish even further down the road?

    2) What does that do to the already stressed medical field? Some areas of the US are already reaching saturation of the number of cases they can deal with now, with most experts appearing to agree that we’re a solid 2-3 weeks away from any kind of peak (and remember, that means we still have 2-3 weeks of exponential rates of growth in cases and deaths, meaning that in 2-3 weeks, we’re liable to look back fondly on the relatively low rates that we see today). Doctors, nurses and paramedics are all being exposed multiple times on a daily basis, and some are already getting sick (or worse), with more to come in the coming days and weeks. If we have hundreds or thousands of medical professionals that fall ill or die in this initial spike, could we afford the risk of a secondary spike, when the personnel to deal with one would be depleted?

    3) The overloaded medical infrastructure is already poised to be too overloaded to deal with non-COVID calamaties in the next couple of weeks. What this means is that even if you don’t come down with COVID-19, if you have a heart attack, a stroke, a car crash, an accident in your home, whatever sort of event that would lead you to need an ER…that ER is most likely going to be full of COVID patients. Any sort of issue that could have been dealt with relatively quickly and easily by any hospital just 2-3 months ago could essentially become life threatening (from what I have read, this is an extremely real possibility in the coming few weeks). If we are seeing secondary (or tertiary, etc) surges in COVID cases in May/June/July because we sent people back to work prematurely and before the risks with the virus were eliminated as much as possible, this will only lengthen the time that ER rooms across the country will be “no-fly zones” to just about everybody.

    Look, I know this is a tough situation. And I’m not speaking as somebody with no skin in the game here. As co-owner of a small business that loses money every day it’s not open (not that anybody should lose sleep over me/us…I think we’re going to be fine, eventually), I’d like to see things get as close to the way they were two months ago as much as anybody (well, the world’s doctors and nurses probably want it even more than me…). But there are HUGE risks involved, if we try to go back to normal and we haven’t made sure that we aren’t going to wind up with more surges of sick people flowing into the nation’s ER rooms. Personally, I’d rather we have folks stay home an extra week or two, just to be safe (and I also say this as somebody who is still getting up at 4:45 AM every morning to go to the job that I work at outside of the above mentioned small business, so don’t think I’m advocating that angle just for extra “work at home” time, either).

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