James Hurley talks to the entrepreneur who took his love of motor sport and turned it into a business that is racing against the big boys

Running a Carlisle-based tyre manufacturer may not sound the most glamorous of occupations, but Dick Cormack would, with some justification, disagree. The managing director of DMACK Tyres is in the south of France at the moment, overseeing his company’s debut season in the world rally championship.

The opening stage of the Monte Carlo Rally has seen the Estonian duo of Ott Tänak and Raigo Mõlder battling snow, ice, dry and wet asphalt in mountain passes in the Hautes Alpes as Mr Cormack’s fledgeling DMACK team takes on rally veterans such as Volkswagen and Hyundai.

Over 16 stages, they will cover 1,474 kilometres, more than 900 miles. It’s been a long road, too, for Mr Cormack, who started DMACK from home in 2008, initially using “less than £10,000 of savings” to visit Chinese suppliers to discuss whether they’d be willing to produce his tyre designs.

Having left his job in Pirelli’s motor sport division, Mr Cormack was determined to become his own boss: “I started my own brand because I didn’t want to have to rely on anyone else for my future.” So he set out with a plan to supply an affordable, well-designed tyre to meet demand from a revival in the “historic” rallying scene, which required smaller sizes than those supplied by industry giants such as Michelin to world championship teams. “The idea was never originally to get into the world rally championship, but simply to produce four or five sizes for the historic market and see where we went from there.” When high street banks said “no” to his plans, he released money from his pension to buy moulds and start manufacturing in China.

“To begin with, it was a bit of fag-packet engineering and relying on what you know. I did the first tread designs at home. From my time at Pirelli, I knew the market extremely well and the price point I needed to make money. I managed to get that from our Chinese partners, so the hardest part was making a product that worked.”

The company enjoyed a solid start, but the real breakthrough came in 2011, when DMACK won a tender to supply the world rally championship with tyres, alongside Michelin. “We applied without telling many people. It was a massive risk. On the day of [the tender] deadline, as a completely unknown brand, we sent everything in with half an hour to spare.”

Mr Cormack admits that the International Automobile Federation, the governing body for world motor sport, took a significant risk in doing a deal with a small business. “Hats off to them, they could see it was a chance to get something new into the fray. Luckily, it has worked out and hasn’t been a catastrophic disaster, which it could have been.”

The company went on to enter its own team in WRC 2, the second tier rally competition, and won the world team championship in 2014. Running a team in the senior competition this season will cost DMACK at least £1 million a year, a huge investment for a business with annual sales of less than £13 million, but Mr Cormack argues that a willingness to keep taking risks and ploughing money back into the business lies behind its growth.

“We’ve been successful because we didn’t just focus on making money. We’ve focused on the product and the brand and reinvested every penny. A lot of businesses don’t do that, but it’s the reason we’ve got to the level we have.”

Mr Cormack’s latest plan involves a significant upping of the ante. He is working with Chinese investors, the British government and his local authority on an ambitious scheme to build a tyre factory near Carlisle. The facility, which Mr Cormack hopes to complete by the end of 2017, could create 375 jobs once production is up to full speed. It is hoped that it will make two million tyres a year, mostly for motor sport and specialist markets.

While DMACK has been backed previously with £3.5 million from Maven, the private equity firm, building a factory requires funding of a different order altogether and Mr Cormack says it simply wasn’t available close to home: “We’ve had fantastic support here since we started, but there isn’t the money around at the moment in the UK for this kind of project.

“That’s where the UK lets itself down — when we have so many good opportunities being created by UK businesses.”

Instead, Mr Cormack says that he has funding offers lined up from three Chinese trade investors for the project, which is likely to cost more than £130 million to complete, and is now looking for one more investor to join in with about £25 million to complete the deal. “The Chinese investors are interested because they can see the benefit. They want to invest in businesses [abroad] to access production.

“They have had issues with anti-dumping laws and embargoes, which means they can’t always export to countries they want to export to. We would allocate some production space for them, if that’s what they wanted to do. The Chinese are thinking, if they can’t do it there, they’ll do it somewhere else. They see something new, they take a risk on it.”

UK Trade & Investment, the government’s export and inward investment team, has helped to broker relations with Chinese investors. There also has been support from Mr Cormack’s local MP, John Stevenson, and the local enterprise zone, which will mean a discount on business rates on an agreed 120-acre site, if the project goes ahead.

If it does, it would involve DMACK manufacturing its own tyres for the first time, instead of sending its designs to production partners.

“One of my dreams has always been to build my own factory,” Mr Cormack, 49, says. “And if you have the opportunity to do it, you want to do it where you come from.”


Pension gives company a kick-start
 When banks declined Dick Cormack’s racy plans to start his own tyre manufacturing business, he chose a risky-sounding alternative: his own pension.

“The whole world had just collapsed,” he says. “It felt like a pipedream to get a loan. The banks didn’t have any appetite to lend at the time. This was an airy-fairy idea and they didn’t want to get into it.”

A friend tipped off Mr Cormack about a little-known alternative, provided by Clifton Asset Management. Through its “pension-led funding” product, it advises the owners of small businesses on how to release money from their pensions to plough into their ventures.

The process can either involve a company’s intellectual property being sold to a director’s pension fund, or allow the intellectual property to be used as security for a loan from the fund. Mr Cormack sold his company’s tyre brand to his pension fund, raising £75,000.

There are obvious risks. A failed business might leave a director with no way to fund his or her dotage. Adam Tavener, the chairman of Clifton Asset Management, advises that only bosses with “sound” companies should consider this approach.

Nevertheless, Clifton says that it has helped more than 1,800 entrepreneurs to raise nearly £215 million from their pensions.

Mr Cormack didn’t have any doubts, however. “I never thought it would fail — I had 100 per cent commitment. My wife backed me up, because she knows a lot about rallying, and we went all in. Without the pension funding, I simply wouldn’t have got the company off the ground.”