Nissan by monkey6


More Info
sure they will not regret it. FM: Is there not a danger that having raised expectations like this, you’re being set up for a fall? Ghosn: I am not sure because I can hardly do worse than we did in 1999. If I fall behind 1999 I will give up, give back my prize and go fishing. I can tell you that from 2000 to 2001 and 2002 the kind of results that Nissan will be showing, will be the kind of results that Nissan has not shown for the past 10 years. So you will see a totally different level of profitability and performance. FM: Could Nissan have survived without Renault or another partner? Ghosn: The way Nissan was going in 1999, I don’t think it could have survived. Short-term and medium-term survival was possible but only with strong management skills. I think that a partner was the best way for two reasons. First it provided management skills that were necessary for the company at a crucial time. But it also gave resources which jump-started the efforts and covered strategic issues for the long term. We are an industry that is consolidated. I think it is going to be hard for a small player in the car industry to compete and be profitable in the long term. I’m not saying size is the issue. Competitiveness is the issue, but it’s going to be difficult to be competitive without having a certain global presence and volume of sales because we will have to invest a lot into the new technologies and we will have to reach a lot of agreements with our suppliers. Here, the level of sales can help a lot. If you don’t have the willingness to be competitive, however big you are, you’re not going to be competitive. But if you have the willingness and determination and skills to be competitive, and you add size, you are going to be a formidable force in the market. So I think that, long term, global reach and size are important elements to be taken into consideration. The alliance with Renault provided Nissan with two elements. It provided management skills which it needed then, and it provided help with capital at a time it had huge debt. It gave Nissan a chance to re-establish its market credibility. Long term, it answers the question for Nissan and Renault about how viable are these medium-sized companies. The answer is that they are viable as long as they go for it together. I think it will be difficult for a small player or a niche player to compete against the big companies. It’s not small against big; it’s small and competitive against big and competitive. You have no chance. When it’s small and competitive against big and competitive, you’d better find an alliance or prepare for a difficult period. FM: Many of Nissan’s problems in the past few years coincided with a downturn in the motor industries and economies of Asian countries. How much were Nissan’s difficulties self-inflicted and how much due to regional economic issues beyond its control? Ghosn: I think that the general malaise contributed. But when you are in trouble, you must take responsibility. When you look at some competitors which are Asian and which are established in Japan, they crossed this period well. They suffered from the same Asian malaise. So Nissan’s problems were partly due to that malaise but it was also because of the way the company was managing its performance: the way it was or was not focused; was or was not cost-orientated; was or was not profitdriven; did or did not have a clear strategy shared by its people. FM: Will Nissan always be a Japanese company, or is motor industry consolidation blurring national lines? Ghosn: Nissan will always be Japanese. It has Japanese origins and what we call the Japanese DNA. Our objective is not to change this. It is to maintain the strength of the Japanese model: erase from it the weaknesses and replace them with best international practice, whether they come from the US, Europe or any other car industry. If you can blend the strengths of the Japanese industry with the best practices from elsewhere, then you may end up having something competitive. That is what we are trying to pursue and the future will tell us how successful we have been. FM: What are the chief benefits to Renault of the Nissan association? Ghosn: Renault had no short-term or medium-term problems, but there were questions about the long term because of industry consolidation. Renault had been so far mainly a regional company — selling mainly in Europe, with expansion taking place in South America and some exports to the rest of the world. Making an alliance with Nissan has guaranteed the future will go a certain way. The alliance has given access to markets all around the world, and we haven’t wasted time. Nissan’s presence in Mexico enabled Renault to build cars without having to invest in a new plant, or establish new supplier or dealer networks. This is a huge investment you are saving. Nissan went to Brazil and Argentina, using Renault’s infrastructure. Again, we didn’t have to build a plant or create networks. The only investments are those linked directly to the new products. Renault is coming to Japan. It hasn’t been doing well in Japan for many years but now it is using Nissan’s presence to boost its sales here. In Europe, Nissan has been at 2,5%-3% market share for many years. Now we can use Renault, which has 10,5%-11%. This will help a lot because we are going to have common hubs; we will share marketing skills. So it’s a win-win situation. This alliance allows us to reach a lot of markets at minimum cost, minimum investment, and to use the efficiency between the two companies. The case of SA is interesting. Nissan is investing in SA. We have taken total control of Automakers by increasing our capital there. We have a plan with Renault in SA. It’s an important part of our strategy of expansion and growth. There are a lot of dynamics behind the alliance — not just in quantifiable cost

reductions, but also in unquantifiable things like spirit and dynamics, in how you fire people up to establish a strong entrepreneurial spirit. FM: Have you found problems in moulding together Japanese and European cultures at Nissan? Ghosn: At the beginning, many people said there would be friction between Japanese and French people and between Renault and Nissan. But nothing happened. Why? Because from the beginning we said: “Look guys, we are in a difficult situation. We are losing market share, we have high debt and we have no profits. And we’re not talking of just last year, it has been like this for many years, practically for the whole decade. If we continue like this we are all going to sink — not just Nissan, but also Renault.” We couldn’t afford to bicker. From the beginning we set challenging objectives that were questioned by nobody. I heard no-one say it was unnecessary. They all accepted this was the plan. They may have questioned whether I would implement it, would I go fast enough, would I face resistance. But nobody said it was the wrong plan or that it didn’t face the issues. We have created a motivation to get out of trouble. A huge majority said: “It’s enough, we’ve had our fair share of sacrifice and defeats. Now it’s Nissan’s time — time to get back to productivity, back to growth, back to investment, back to technology.” They say it’s time to stop concentrating on managing debt and seeing how much we can reduce losses. This has resulted in focusing people on real targets and not discussing cultural differences. When you have a demanding target in front of you and everybody is motivated to reach it, cultural differences are no longer walls. They actually become a source of enrichment when people ask others how they would do something, and why, and discuss what is the best practice. This has been the trend of the Nissan revival plan. Now I can’t deny that from time to time there are small splashes or frustration. This is part of the reality but not a significant part. What is significant is people working hand in hand and being motivated to reach the objectives. FM: How long will you personally be part of this process? Will you hand over once you’ve achieved your initial goals? Ghosn: What I can tell you is that the day I leave Nissan, I will be sure that the company is on track for lasting, profitable growth. I will be here at least for the life of the revival plan, until the end of 2002. I have been criticised for



To top