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The
Best Cost Cutter
Ghosn
has promised to resign unless he turns Nissan around in one year
Nissan president and chief operating officer Carlos Ghosn
objects to the nickname given him by the French press when he was
at Renault: "le cost killer." Though he has now been assigned to
apply the same bottom-line attention to Nissan Motor, of which Renault
owns 37%, as he did at the parent company, he thinks the sobriquet
emphasizes only a part of his management style. He insists he pays
as much attention to spending when necessary to take advantage of
market opportunities as he does to watching the bottom line.
Yet he can't get away from his well-known nickname — at least
not at Nissan. Ghosn (rhymes with loan) is charged with turning
around a company that lost money and market share most of the last
decade. The Renault executive, who arrived in Japan in April, has
pledged to reduce operating costs at Japan's No. 2 automaker by
$9.1 billion and hack the company's $12.7 billion debt in half by
2003. He is so committed to cuts, in fact, that he has pledged to
resign, along with the entire executive committee of the company,
if Nissan isn't in the black within one year.
He'll quit — provided he isn't run out of Tokyo first. Ghosn
is taking on some powerful interests in Japan as he goes about trying
to fulfil his promise. He is substantially reducing the influence
of the Nissan keiretsu, the corporate family of suppliers and customers
that is built around cross-ownerships and long-standing loyalties
with the company. At Nissan's annual meeting in June, he faced down
Japanese yakuza, gangsters who threaten to disrupt the once-a-year
gatherings between companies and shareholders unless they receive
bribes. And his relationship with organized labor may have a few
rough spots ahead. Japanese unions, more than most in the world,
are willing to accept some layoffs to protect jobs. And Ghosn promises
his plan to cut 21,000 Nissan jobs worldwide by March 2003 —
16,500 in Japan — will be accomplished mostly through attrition
and sales of Nissan units. But only time will tell whether he is
able to keep his promise and whether the unions acquiesce. After
all, less radical agendas have scared off more than one executive
in Asia, sending them in search of ways to improve the bottom line
other than cutting costs. And it is why Ghosn is our choice for
the Best Corporate Cost Cutter in Asia over the past year.
He has been through it all before. Born in Brazil and educated in
France, the multilingual Ghosn first honed his cost-slashing teeth
as head of tire-maker Michelin's Brazil operations. After successfully
turning that business around, he was assigned to a U.S. plant where
he merged the French-owned Michelin with an American company, Uniroyal
Goodrich. He was hired by Renault in 1996 to take charge of the
company's cost-cutting program and succeeded in turning losses
into gains after only a year.
Ghosn, known for a driven, unsentimental style, has shown a remarkably
diplomatic side at Nissan. Upon his arrival in Tokyo, he dispensed
with impersonal executive meetings and chose instead to meet face-to-face
with hundreds of managers, sales staff and technicians to get a
frontlines perspective. "The most important thing is to listen to
people and figure out what is motivating them," he says. It also
helps that Ghosn is foregoing the slash-and-burn layoffs favored
by many American managers.
Especially popular with Nissan's more youthful employees is Ghosn's
hands-on management style. Gone is the traditional distance between
top-level executives and staff at a typical Japanese company. He
has also shown flexibility. While he was known to emphasize teamwork
in France, he feels such an approach is unnecessary in Japan. Instead,
he likes to talk about the importance of individuality, which he
figures has been undervalued in Japan.
Within the strategic plan Ghosn has set out for Nissan are a string
of initiatives that will actually cost money. For instance, he sees
an opportunity to increase U.S. sales quickly, partly by spending
$1 billion on new plants in America. At the June shareholders meeting,
he stated: "It will not take long before I can show visible signs
of improvement in business."
Like a world-class athlete confident of success, Ghosn has firmly
established his goal for all the world to see and judge. Now his
success, or failure, will be equally obvious.
— By Murakami Mutsuko
Write to Asiaweek at mail@web.asiaweek.com
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