One Man Who's Doing It

Automotive Industries,  Sept, 2000  by Lindsay Brooke

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Danny Panoz feels the growing pains, as he takes his low-volume, high quality automaking to the next level.

You can tell very quickly that the auto industry has arrived in Hoschton, Georgia. The tiny hamlet (population: 642), tucked into the rolling hills about 45 minutes northeast of Atlanta, is adding...a waffle house.

"That's a key indicator of a strong local economy," jokes Danny Panoz, the 38-year-old chairman of Panoz Auto Development (PAD), the newest automaker in North America that's located just down the road from the waffle emporium. Judging by the increased activity at his company, Panoz (pronounced pay-noze) looks to be a major reason that little Hoschton is cookin' these days.

Inside the five industrial buildings on the PAD complex, two production lines are assembling a pair of unique sports cars. One, the $62,000 Panoz Roadster, has been in production for a decade, with over 300 examples in owners' hands. The other car is the $79,800 Esperante luxury-sports convertible, just now entering production.

Launched last April at the New York Auto Show, Esperante's planned first-year run of 300 cars is already sold out. Job One, however, is running about three months late. Panoz is handling the situation like a veteran plant manager, albeit one with his name on the building and a few hundred customers eagerly awaiting their cars. The reason for the delay, says Panoz, was the need to redistribute some of the job tasks in the assembly bays, so that the technicians in each bay complete their work at roughly the same time. This will balance the line's average rate (two hours per station) and help ensure its initial daily output of four cars.

A few other issues are also being resolved. While the production plan calls for Esperante's sleek aluminum body panels to be painted off the car, insets, the early-build panels first will be fitted to the car, to confirm accuracy, then painted on the car.

"Before we can realize the manufacturing efficiencies we designed into Esperante, we're going to make sure every single car is absolutely right before it leaves our plant," he maintains "High quality is a must here."

Welcome to the world of low-volume, prestige automaking. At about 100 man-hours, Esperante is designed to be nearly three times more efficient to assemble than the Roadster. It was developed in CAD, and scrutinized with design-for-manufacturability tools. Repeatability on the Esperante line will come, as Panoz and his team iron out the kinks. But the car's primarily handbuilt -- and that's part of its allure.

AN In The Family

Panoz, you say? Danny Panoz founded his company in 1989, with two technicians and an old county highway department salt shed for a "factory." For the next decade, he and his growing team built and evolved the Roadster, a purist two-seater that blends sports car verve with street rod styling. Its basic concept preceded the Plymouth Prowler, except it's got a proper V-8 under the hood. The Roadster has garnered praise from the enthusiast media for its performance, pioneering aluminum construction and overall quality, while it established Panoz as a respected "boutique" automaker.

As this was happening, Panoz's father, Don, was creating a new force in international auto racing. Don Panoz had made a fortune in the pharmaceutical business during the 1960s and '70s, developing the transdermal science that's key to the nicotine "patch" and the heart medicine Cardizem. Upon retiring, the racing bug bit Panoz Sr. in a big way. He's since built a formidible racecar-construction empire to go with his race team, race tracks (he owns Road Atlanta, Sebring and Mosport), race school and race series. He's even developing his own 4.0L dohc V-8 and Trans-Am car. And on the genteel side, the elder Panoz owns a four-star hotel and winery, a stone's throw from his son's factory.

"There's no limit to the man's enthusiasm -- he's quite amazing," quips Danny about his dad, who's also one of the financial backers of PAD.

While some have dismissed young Panoz's business as being a rich kid's dream factory, he ardently stresses that it's in the black and that he's in it to make a profit. "I'll wager he's making money -- maybe close to $10,000 per car," observes an employee of a major automaker, who's toured the Panoz Roadster plant and is an expert on the economics of low-volume production.

Young Panoz admits that his family has indeed helped capitalize PAD, as one might expect when your father's a car nut and astute businessman. But funding also comes from outside investors, Danny Panoz tells AI. He won't reveal what the Esperante program cost, only saying that first-year deposits exceed 30 percent of the investment. "We've got a great case for an IPO later, if we need it," he adds.

Panoz's business vision for PAD extends well beyond the "boutique" of 30 Roadsters per year. Having steadily expanded his manufacturing plant to 100,000 square feet, and boosted his workforce to 50, Panoz is now into the second phase of his growth strategy. The 320-hp Esperante is aimed directly at Europe's high-end cabriolets including BMW'S Z8, Mercedes' SL500, Jaguar's XKR and the Porsche 911. To that party, Esperante brings value: With a similar specification to the Z8 (sophisticated alloy chassis, alloy V-8, rear-drive, classic lines), it's also nearly $40,000 less costly, and arguably more exclusive.