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Carlos Ghosn


Morpheus XIII
09-17-2001, 08:45 AM
This is old news, but much more detailed than I've ever read. From Business Week Online by Emily Thornton:

"Remaking Nissan (int'l edition)
A long, hard day with Carlos Ghosn, the foreigner remaking Japan's giant

It's 5:30 p.m. on a dreary day, and Carlos Ghosn is squirming in his seat. Two managers are briefing Nissan Motor Co.'s new foreign chief operating officer in his office on the 15th floor of Nissan's headquarters in Tokyo. The topic is middle management's plans to implement Ghosn's drastic makeover of Nissan (NSANY). They express their colleagues' concerns carefully in English, Nissan's new official language. Some managers believe Ghosn's plan is ''very difficult to accomplish.'' Others find it ''complicated.'' Muted objections. But in the polite world of Japanese business protocol, these guarded words express deep anxiety.

Ghosn takes out his heavy artillery. ''We need to reduce our costs by 20%,'' he reminds his Japanese colleagues as he jumps up out of his seat. ''Every day [managers] wake up, they must look in the mirror and see a reduction of 25% or 30%,'' he says, pointing to his forehead. Everyone laughs. But the lighthearted moment is short-lived. He becomes serious: ''No one in purchasing, engineering, or administration will receive a pay increase until they [show] what their contribution is to this [cost-cutting]. I don't want people to think this is a try. This plan has been set to be implemented 100%.''

This is the core speech from Ghosn, the Brazilian-born executive dispatched from French carmaker Renault to carry out perhaps the most difficult job in the global automotive industry: fixing Nissan Motor. This industrial icon is beset by $264 million in losses, $13 billion in debt, and a lackluster lineup of vehicles. In desperation, Nissan accepted a $5 billion injection in May from France's Renault. In return, Renault got a 36.8% stake, a chance to forge a powerful global car alliance, and the major headache of restoring Nissan to profit.

So Ghosn has just decided to put Nissan through one of the most painful restructuring plans the global automotive industry has seen in over a decade. In the next three years, he has decreed, Nissan will shutter five factories in Japan, cut 21,000 jobs worldwide, and rip apart its sprawling, inefficient supplier network. As if that weren't enough, in November Ghosn plans to spell out employees' Herculean tasks and how he will measure their success in a more specific blueprint.

Ghosn's boldness has made him an object of fascination in Japan. ''I keep getting calls from people asking me where I bought my glasses or where I get my hair cut,'' says Ghosn, laughing.

But he has also come to symbolize the fight over Corporate Japan's soul. To the Japanese, Nissan Motor is more than just a carmaker. Its emblem is the rising sun, fitting for the company that led Japan's industrial drive.

Nissan was once so strong it took over Prince Motors, a failing auto maker the government wanted rescued. But for years, Nissan has suffered from overcapacity, feuding management, poor styling, and contentious union relations. The company has spent the decade trying to right itself--all in vain.

STALKING HORSE? So Nissan is permitting Ghosn, dubbed ''le cost killer'' in France, to take the wheel. He may well be the unwitting instrument of government policy: The powerful Ministry of International Trade & Industry tacitly backs Renault's investment and Ghosn's harsh prescriptions. Maybe MITI hopes other Japanese companies will follow the course laid down by this gaijin.

Still, the demolition job might not work. Nissan has a sad history of trying to fix itself and failing in the end to root out its perennial problems. Resistance could build as the March, 2001, deadline for three plant shutdowns approaches. And Renault is an unlikely rescuer. Until recently, the French carmaker itself needed massive infusions of state aid to stay afloat. Today, Renault is profitable, thanks in part to Ghosn's efforts. But it still is not in the top tier of European carmakers. If Renault sinks deeply again into the red, its liaison with Nissan could turn into a disastrous commitment.

Perhaps all these risks are what make Ghosn such a driven executive. BUSINESS WEEK was invited to follow the Nissan COO from dawn until dusk on Oct. 27 to see firsthand how he is working with Nissan managers to reshape the company. What emerges is a glimpse of the unique interplay between a gaijin boss and his Japanese employees. Sometimes, the interplay is downright explosive as Ghosn forces his insular Japanese executives to think in new ways. ''You put dynamite in certain areas and blow it,'' Ghosn explains. ''You don't want habits and traditions to stifle the company.''

The 45-year-old Ghosn doesn't want anything to stifle him. Since taking the helm in July, he has earned the nickname ''7-Eleven'' for the hours he keeps. On this morning, Ghosn's driver rushes through two red lights to get his boss to Nissan's Ginza headquarters by 7:45 a.m. The executive scoots up to Nissan's executive 15th floor and hunkers down. Ghosn selects a test car for the weekend, the Gloria sedan, which sports Nissan's new transmission.

Then he places a call, in French, to one of the 19 handpicked Renault managers now at Nissan's Tokyo headquarters. A Nissan affiliate needs more shock treatment. The company sent a letter offering to do its best to help revive Nissan. Ghosn doesn't like the lukewarm tone. ''It's not enough,'' he says. ''It's commitment that I want.'' Ghosn is offering affiliates and other suppliers a deal: cut costs by 20%, and they get more business and more security. If not, they lose Nissan's business. Tough stuff.

BLAND LINES. Ghosn's office has the look of a place whose occupant has barely settled in. On the wall a poster displays Nissan's product range, from the stately President to the funky Tino wagon.

One striking feature: two large clay models of past Nissan cars. ''I need to get familiar with Nissan's styling,'' he says. Ghosn believes Nissan's greatest problem with its lineup is conservative styling. He wants to fuse Renault's flair for style with Nissan's killer engines. His favorite Nissan car is the racy Skyline GTR, which he has taken out on test runs. Ghosn has not revealed which Nissan cars he doesn't like, although he clearly thinks a number of them are duds.

Next, e-mail time. Ghosn cruises through the messages, some of them gloomy: ''Honda overtook Nissan in production in the first half of the fiscal year,'' he says, before stating matter-of-factly, ''a logical consequence.''

E-mail finished, it's time for a grueling day of meetings covering everything from brand strategy to stock options to cost-cutting, cost-cutting, and more cost-cutting. Every meeting, in fact, pits Ghosn as a harbinger of Western ways against the ingrained, inward-looking Nissan culture. But the Japanese managers are also amazed at this high-energy foreigner, who listens intently to everything that's said. They even seem spellbound when Ghosn occasionally thunders at them to drive his point home.

Ghosn sprints to his first meeting on the 13th floor, where he peruses reaction reports to his plans, all posted on the wall in Japanese and English. These are based on intranet messages from domestic affiliates, dealers, suppliers, and Nissan's workforce.

The good news: Nissan employees wholeheartedly support Ghosn's plan to improve brand image and design. The bad news: They're not so crazy about centralizing purchasing and reducing the number of basic chassis designs to save money.

The surprising news: Overall, Nissan's affiliated suppliers actually like Ghosn's new purchasing strategy. That's strange, since Ghosn plans to halve the number of suppliers. But deeper examination shows that they don't like the idea of Nissan's selling its shares in them, ending the traditional connections between a company and its suppliers.

And there's employee opposition to the looming prospect of job cuts. Ghosn is told that dealers believe the news stories about Nissan's job losses actually hurting sales. Ghosn doesn't see any other way the media could have acted. ''These are facts,'' he says. Then Ghosn is shown a Japanese tabloid Asahi Geino. The paper's headline: ''I'd like to beat this gaijin.'' Asks Ghosn: ''How many people read this? If one person takes this seriously, I'm in trouble.'' He already travels with a bodyguard.

There's not much time to worry, though. By midmorning, Ghosn is poring over personnel plans with a staffer. A big topic: granting stock options. These are still a rarity in Japan--even in France, where Renault operates. But eventually Ghosn wants an options program for several hundred key employees worldwide to motivate them in tough times. And from next year, he wants all promotions based on performance, not on age and rank.

FADED EUPHORIA. Ghosn has come up with a visible way to drive home his point on offering advancement only to the talented. He asks the manager to post detailed profiles of 1,500 employees, including descriptions of their previous assignments, on the walls of an empty room above him. Nissan employees usually never work with anyone outside their departments. Ghosn wants to break down such barriers with crossfunctional teams that will do the heavy work of restructuring. But for these teams to work, executives must select managers based on their abilities rather than on seniority or personal loyalties. And they'll find these prospects in that room.

It's an innovative touch. But it's not clear how these moves help Ghosn with one of his biggest personnel challenges, Nissan's unions. The initial euphoria that swept over Nissan when Ghosn arrived has ebbed with the announcement of head-count reductions. Ghosn believes he can achieve many of these through transfers and natural attrition. ''We still need many discussions,'' says Katsuhiko Hagiwara, president of the All Nissan Motor Workers Union.

Stories of people being told they have no future at Nissan's Shatai factory in Kyoto already are being heard on the grapevine. Union officials say no one is being asked to quit. But plant managers are trying to work out a way to move workers far North to a factory in Kanagawa prefecture. Chances are some workers will refuse the transfer and be forced to leave. If the workforce resists such tactics, pulling off the turnaround could be impossible.

Ghosn is not one to flinch from painful cost-cutting. A graduate of the Ecole Polytechnique in France, he had a meteoric career at tiremaker Michelin, where he ran North American operations. There, he managed a painful merger with Uniroyal Goodrich Tire Co., all during a big industry downturn.

By 1996, he was at Renault. He cut hundreds of millions in costs there, incurring the wrath of unions and management alike. ''It looked as if our future would be managing our natural biological death,'' says Patrick G.M. Le Quement, senior vice-president of corporate design at Renault. ''The company was made up of barons with castles. [Ghosn] got them to lower their walls.''

One of the big lessons Ghosn learned at Renault was to set brutally high standards. He's trying the same thing at Nissan. When two managers pitch Ghosn on a new venture in information systems, the Frenchman challenges them to explain how they could do this better than a world-class outside supplier. He gives them three weeks to get the answer.

Ghosn wants global standards for everything, from the brokerage firms that will handle employee stock options worldwide to the banks that will provide affiliates their financing. Nissan believes it can save $95 million by 2003 if it reduces the number of banks it and its affiliates deal with worldwide to as few as 10, down from its present 400.

Ghosn also expects Nissan to meet global standards for its investments in almost 1,400 affiliates, the suppliers and dealers that have worked hand-in-hand with Nissan in a familial, deeply loyal way. Ghosn considers Nissan's practices of owning shares in many of these affiliates a gross waste of capital. He'll keep stakes in the most critical suppliers, possibly Nissan Diesel, body assembler Nissan Shatai, or engine supplier Aichi Machinery Co. But the others may soon lose Nissan as an investor, even though Nissan may still do business with them.

Selling shares in Nissan's affiliates goes completely against Japanese corporate practice. Many domestic institutional shareholders hold shares in both Nissan and its affiliates. Some of them worry that their shares in these affiliates will be worthless once Nissan walks away from them. Investors are also waiting for results before driving up Nissan shares, which are stuck around $6.

''FRENCH COLONY.'' Yet Ghosn's superiors at Nissan are not staying his hand. Nissan Chief Executive and Chairman Yoshikazu Hanawa has clearly let Ghosn take the driver's seat. Ghosn and Hanawa just meet once a week for two hours to discuss Nissan's plans. Some ex-Nissan managers now refer to Nissan as a ''French colony.'' These attitudes irk Hanawa: ''It may look like after the arrival of Mr. Ghosn that all of a sudden we decided to close a plant. But this might have happened regardless,'' says Hanawa. ''It's not that Mr. Ghosn brought the idea from France with him and Nissan surrendered. That's not right.''

And Hanawa wants Ghosn to do more than just cut costs. He wants a permanent solution to Nissan's crummy brand image. Ghosn estimates that Nissan cars sell for $1,000 less than comparable cars in North America, $380 less in Japan, and $667 less in Europe, because of Nissan's poor brand image.

That's why Ghosn joins an afternoon meeting with a crowd of designers, marketers, and engineers from Japan, Europe, and North America. Nissan has never before included its overseas operations in discussions of its global brand. But Ghosn needs an international group to come up with a potent brand identity.

Ghosn arrives to hear the progress report, joining Shiro Nakamura, Nissan's new design chief in Japan. Ghosn, impressed by Nakamura's experience in the U.S. and Europe, recruited him from Isuzu Motors Ltd. That's another unusual step--luring away a top employee from a rival.

The talks, translated into Japanese or English depending on the speaker, are mostly conceptual, centralizing on the meaning of the ''Japanese DNA'' that makes a Nissan car a Nissan. It's the first time this group has worked together. And some Japanese participants find it difficult to articulate their thoughts. ''We need time to be trained in these types of discussions,'' says one of the Japanese. They won't have that much time: Before Ghosn leaves the meeting, he tells a consultant present he wants a winning global brand strategy by the end of this year.

If anyone has cause to complain about Nissan's poor brand, it's the dealers. Ghosn heads to one dealership late in the afternoon to get the report from the battle line. This dealership, Nissan Prince Kanagawa, is a microcosm of all the problems affecting Nissan. When Ghosn asks the dealer who his main rival is, he hears a perturbing answer: two other Nissan dealers nearby. Such overlap is why Ghosn wants to close 10% of Nissan's dealerships in Japan.

Next, Ghosn ask a salesman for customers' reactions. ''They say Nissan's styling is terrible,'' the salesman responds. Back to the dealer: What does he want from Nissan? ''I would like Nissan to make a product that we can sell without any excuse,'' the dealer says. Ouch! The dealer bows politely.

With another lesson learned, Ghosn heads back to headquarters for a final round of meetings. The total quality management department, a group in charge of making Ghosn's team approach work, brings managers' concerns to the boss' attention. Ghosn patiently listens.

Gaining his ear is clearly motivating managers. When Ghosn asked for additional cost-cutting suggestions in July, he simultaneously asked employees to identify missed opportunities. One team came up with 800 ideas for everything from possible new vehicle versions to sprucing up retail sites. ''We had given up before,'' says Shigeru Sakai, general manager of product planning.

The last thing Ghosn wants is for Nissan employees to give up. After hearing his total quality management team explain that Nissan is not good at implementing plans, Ghosn sends them on a mission to figure out why the plans fell through.

The day finally starts to wind down for many of Nissan's Japanese employees. But as the last meeting ends, toward 8 p.m., the fax machine in Ghosn's office starts humming, spitting out missives from Renault headquarters. They are a sharp reminder of Nissan's new partnership and its reliance on the French.

Ghosn wants to blend Nissan's high productivity on assembly lines with Renault's newfound skills in cost control: Even though Nissan factory managers can tell Ghosn how many minutes it takes to build a car, they cannot tell him how much it costs. Also, Renault's flair for style, as demonstrated in its sleek Clio and Megane compacts, could spruce up the bland bodies hiding Nissan's engines.

Ghosn says he'll resign if Nissan is not firmly back in the black by the year that will end in March, 2001. After that, he wants to realize $3.3 billion in savings on parts and common designs with Renault by 2002. By then, Nissan and Renault plan to have the same chassis for Nissan's Micra, March, and Cube models and Renault's Twingo and Clio. ''Renault has a very difficult future without a strong alliance,'' says Ghosn. So the connections between Nissan and Renault must deepen.

QUALITY QUALMS. But Nissan engineers are already upset over what they perceive as Renault's lax testing requirements. Some Nissan managers are also nervous about Renault's target to sell 10 times as many vehicles in Japan as it has in the past by tapping into Nissan's sales network. They fret that Renault's quality is not high enough for the Japanese market.

The alliance is supposed to extend beyond Japan. Nissan is already picking up speed in North America, where its Xterra sport ute and its Frontier Crew Cab pickup are hot sellers. Renault hopes its new compact minivan called the Avantime can be rebadged and added to Nissan's lineup in the U.S. That's a bold idea: Renault's earlier forays into North America have all ended in disaster.

The work never ends. But Ghosn keeps ramming home the core message: Without cost cuts and hit models, no profits. And without profits, no company. Maybe the message is getting through. After the general managers voice their complaints about Ghosn's plans, they beg him to come in person to explain his vision to their team. Ghosn accepts. That's his job: delivering the bad news before there's good news to tell.

By Emily Thornton, with bureau reports"

DVSNCYNIKL
09-18-2001, 08:26 AM
I hope he can bring it back to what Nissan used to be, the definition of Japanese sport sedans and coupes.

MaximaSEAE01
02-04-2003, 12:52 AM
:jumpie:

Stefanel1
06-01-2003, 08:01 AM
Carlos Gohsn made an excellent job and succeded in his work two years in advance ! Nissan is profitable now. But he won't be the CEO of Renault as he wanted before 2010, Louis Schweitzer (current CEO of Renault S.A) has signed untill this year !!

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