Shelby American Takes On Fewer Mustang Projects

Every day, the faithful gather at the plant here to see automotive magic conjured in the name of racing legend Carroll Shelby. They come to Shelby American on tour buses or in their own cars. They pick through the gift shop, take a tour of the plant or simply stand in the company’s parking lot a block from the Las Vegas Speedway to have their picture snapped in front of the sign.

Most of all, they pay attention to the cars, Shelby Mustangs and Cobras mostly, that Shelby’s workers have reworked, tweaked and customized to draw every last ounce of horsepower from their engines.

Shelby, the founder, is now 87, taking 25 pills a day, living with a transplanted heart and tooling around in a motorized wheelchair. He says his business is in transition. He’s talking about passing the torch. The devotion to speed and racing is as keen as ever, but the dreams are being downsized.

“It’s going to be much smaller,” says Shelby in a phone interview. “I’ve been in business 60 years. Although I still have the desire to be in the business, it’s changing rapidly.”

Unlike the past few years when it modified Ford Mustangs by the dozens for sale, Shelby American is focusing instead on hopping up the cars that owners bring them one by one. It’s seeking business from owners of all makes and models: anyone who wants Shelby’s operation to coax more horsepower and torque out of a engine.

“We’re going to build fewer and fewer and fewer cars, concentrate on the parts business and the speed shop, ” Shelby says.

Bringing stability to a volatile industry

The change is being driven by financial realities. After earning nearly $1.1 million in 2008, publicly traded Shelby American lost $3.6 million last year.

CEO John Luft says 2010 is “looking good.” A former hotel executive, Luft took over this year after a decade running Shelby’s licensing program. His simple formula: “Retool the company, keep the brand fresh and don’t spend more than you have.”

The goal, he says, is get some stability and ditch the volatility. “We’re knocking off the highs and lows in our business,” Luft says.

The highs and lows were caused mostly by big programs to modify big lots of Mustangs before they reached showrooms. These programs, for instance, included 500 Mustangs hopped up for Hertz, a throwback to a similar rental car program in the 1960s that resulted in a horde of classics still on the road today.

They require big temporary increases in workers and spending as long as the program lasts, followed by painful retrenchments. From a peak of 110 workers, today Shelby American employs about 70. The plant also makes the Cobra, the racing car that put Shelby on the automotive map in the 1960s. But the focus remains on modifying Mustangs.

Today, Ford Mustangs are typically bought by owners and delivered to Shelby’s plant. A Mustang GT, for instance, becomes a Shelby GT 350 after workers make modifications that include upgrading brakes, adding a supercharger to the engine and a racing suspension underneath, installing a different hood and restriping the exterior. Finished, the car is a worthy successor to the GT 350s of the 1960s.

Shelby American was so intent on keeping the cars true to the original that workers made a recording of the throaty exhaust and shipped it to a muffler manufacturer with orders to try to make it sound identical.

“The 350 is the holy grail. It was the first of the Shelby Mustangs,” Luft explains. The modifications cost $33,995 in addition to the cost of the car, but they boost horsepower from a respectable 412 up to a race-worthy 525. “It clearly screams Carroll Shelby.”

Likewise, the company will take the even hotter Ford-produced, 550-horsepower Shelby GT 500 and add a supercharger and other parts to make it a Super Snake. For $34,245, Shelby American says the supercharged car will produce as much as 800 horsepower.

Who buys them? Luft said that a decade ago, Shelby collectors, some of whom own as many as a dozen Shelby cars from all years, typically were in their 50s, Now, by actively trying to get more Shelby cars into driving video games and as toys, the average age is coming down. The goal is late 30s or early 40s.

There’s also a more affordable, entry-level modification — the Terlingua, named for Shelby’s racing team — at $10,999.

A thriving auto parts business

For those who don’t have their cars modified, there is a thriving Shelby parts program. Luft says it’s increased dramatically in the past year to about $650,000. The goal is $1 million.

The new speed shop is a building away from the main plant. Shop manager Gil Nevarez says his crew can make modifications that increase horsepower even more. By changing out pistons, rods and other parts to handle more power superchargers, he can take a car that produced about 250 horsepower up to 400. Behind him as he talked, a 2009 Dodge Charger Super Bee raced on the dynamometer — a sort of auto treadmill that measures power output — at the equivalent of about 150 mph.

Though he is no longer as active, Carroll Shelby says his business is in good hands. “I don’t have the power to fight all the problems that I used to anymore,” he says.

The goal now is not “to build too many cars a year, just the exciting cars.”

Luft points out that in Shelby’s heyday, cars could be modified with the turn of a screwdriver. Today, tuning involves taps of the keys of a laptop. Shelby recognizes the change.

“These people are taking the place of the old hot rodders,” he said. They are “engineering-trained hot rodders who will continue what we started.”

Overall, Shelby says, “I’ve had a good run. I’ve built a lot of things that work and a lot of things that didn’t work.” He estimates that of the 165 car projects he tried over his lifetime, seven or eight turned a profit.

How did he do?

“History will be the judge,” Shelby says.