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Ghosn for the Gold
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| A visit with Nissan President Carlos Ghosn |
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| Updated |
Jun 10, 2004 22:38:58 |
| Rating |
 534 ( -45 -8.42% ) | | Author | Paul A. Eisenstein |
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Description:
Ghosn for the Gold
A visit with Nissan President Carlos Ghosn
All sorts of things have come together to assist the Nissan turnaround, and there's no question the company started with some tremendous resources, especially in its design and engineering department. Yet none of it would have mattered without the sort of leader who could pull it all together.
"We are the only Japanese company with a truly global management, and we think these different cultures, these differences are our wealth. We are trying to boost our diversity…not because of our personal beliefs, but because we believe diversity will give you value."
--Carlos Ghosn, President and Chief Executive Officer — Nissan Motor Co., Ltd.
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Long troubled and failing fast, Nissan Motor Co. was the proverbial "basket case" when, in 1999, its French competitor, Renault, announced plans to spend $6 billion to acquire a controlling share in the troubled carmaker. Skeptics were many, including one who suggested Renault would be better off loading up a barge with gold bullion, taking it out to the middle of the ocean and sinking it.
More recently, General Motors' fast-at-the-lip vice chairman, Bob Lutz, has retracted that remark, and these days, most of the critics of the Nissan/Renault partnership are singing a decidedly different tune. For good reason. The Japanese side of the alliance has been rolling out a procession of hot new products - like the new Nissan Murano, the sporty 350Z and the groundbreaking Infiniti FX45. It's generating lots of cash. And together, Nissan and Renault are proving one of the most formidable forces in the hotly competitive global auto industry.
All sorts of things have come together to assist the Nissan turnaround, and there's no question the company started with some tremendous resources, especially in its design and engineering department. Yet none of it would have mattered without the sort of leader who could pull it all together.
There's no fast and simple way to sum up Carlos Ghosn. In his own words, he is "Lebanese by descent, Brazilian by birth, a French citizen and Japanese by adoption." Trained as an engineer, Ghosn was earning a Ph.D in economics when he was hired away by the tiremaker, Michelin. He later signed on with Renault. The hard-charging manager defines the modern global executive. Indeed, Carlos Ghosn has worked on every continent but Africa and Antarctica.
As an outsider in the normally-closed Japanese business world, Ghosn was able to do things no native executive could accomplish. He closed plants, cut the bloated workforce, restructured supplier contracts and sold billions of dollars in useless land holdings. Ghosn also went to work on his Japanese, quickly becoming fluent in both his language skills and in his understanding of the local culture. Confounding critics, Nissan was back in the black little barely a year after Ghosn went to work, and its health continues to improve with each of its new products.
ABT columnist Paul A. Eisenstein has spent significant time with Carlos Ghosn over the last four years, and this Q&A was derived from a discussion following Nissan's appearance at the Tokyo Motor Show in October.
Trained as an engineer, Ghosn was earning a Ph.D in economics when he was hired away by the tiremaker, Michelin. He later signed on with Renault. The hard-charging manager defines the modern global executive. Indeed, Carlos Ghosn has worked on every continent but Africa and Antarctica.
ABT: One thing that's immediately apparent with cars like the new Z or the Murano and FX is just how different their design is from the boxy, boring cars Nissan turned out during its dark days. What's the role of design for the company?
GHOSN: "What's important is that when you look at a car, you can guess what it is. Design has to express it. If the design suggests it's a cat, but your car is really a tiger, you won't be happy with it. And if it's a cat but looks like a tiger, they won't be happy, either.
ABT: In recent months, the U.S. market has been flooded with incentives, right now, it's averaging almost $4000 a vehicle on Big Three products, yet Nissan continues to lag behind. Why?
GHOSN: I don't want Nissan at the forefront with incentives. We paid a high price for chasing market share in the past and now I don't want to see Nissan jumping into this game. It hurts your profits, it hurts your brand. If people come to you only because you give them the biggest deal, it is going to hurt your value. And when they come back to replace their old car (in a few years) and you don't offer even more incentives, they are going to walk. So, if this hurts are sales in North America, let it be. You're not going to see us at the forefront of the incentives game.
ABT: You had more than a half-dozen concept vehicles on your stand at this year's Tokyo Motor Show, like the Fuga (reputed to be a thinly-disguised version of a new Infiniti flagship sedan). What was your message?
GHOSN: We are telling the world to expect lots and lots of new products. First and foremost, this industry is about product. We're staying competitive, and that's going to be built around products. I think this is great for the customer. It gives them lots of choice. It's about emotion, about their reaching for their dreams, achieving the status they seek.
ABT: Nissan used to build a lot of specialty vehicles and vehicles that seemed aimed at getting market share but were hard to make a profit on.
GHOSN: We will make no cars that are unprofitable anymore. We have to be very careful because Nissan did a lot of this in the past and it drove us into the wall.
ABT: We're been hearing rumors that Nissan will bring back the legendary GT-R (a reasonably-priced, ultra-high-performance sports car. What can you tell us?
GHOSN: It is one of the strong names of Nissan, even though it was sold mainly in Japan. GT-R give you top performance without having to pay a huge premium. We are going to go global and at a reasonable price.
ABT: Two of your rivals, Toyota and Nissan, have been taking the lead in developing (high-mileage gas/electric) hybrid vehicles. You are still several years away from launching your first. Why?
GHOSN: We're going to develop technology…like hybrids and fuel-cell vehicles…but we're trying to do it pragmatically, for one thing by partnering. We have access to diesels through Renault, and we have signed an agreement with Toyota for access to their hybrid technology. We're developing our own, third-generation hybrids. We're not right now at the forefront of this technology because it would be a negative on our profits. If it becomes mainstream, we will be there. I can tell you we will not be caught by surprise.
ABT: The Japanese auto industry has traditionally done little to welcome foreigners, such as yourself. Yet Nissan is now loaded with executives, managers, designers and engineers from all over the world.
GHOSN: We are the only Japanese company with a truly global management, and we think these different cultures, these differences are our wealth. We are trying to boost our diversity…not because of our personal beliefs, but because we believe diversity will give you value.
ABT: The Nissan/Renault partnership took a lot of heat early on. Do you feel you proved the critics wrong?
GHOSN: It was a good invest for Renault (which is) getting a lot of benefits from the alliance. Renault's investment is today worth $20 billion. It was a risky decision. But history will show it was a good one.
ABT: It's easy to talk about how things are going now, but next year, you become CEO at Renault. What happens then, and what happens when you leave the company?
GHOSN: I have no intention of leaving Nissan. I will (also) be keeping my job as CEO, as long as shareholders feel I am doing my job. I can tell you that I think about what will happen in the future because the biggest risk is complacency. My greatest goal is to make sure Nissan never falls into complacency (again). If you have a near-death experience…you don't want to find yourself in the position where you will repeat it.
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---Story by Paul A Eisenstein |
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