‘Le Cost Killer’ Studies Nissan’s U.S. Operations
Carlos Ghosn, the former Renault trouble-shooter recently named chief operating officer of Nissan Motor Co., said Thursday that his top priority is to return the Japanese auto maker to profitability.
Ghosn, known as “Le Cost Killer” for his restructuring of Renault of France two years ago, is visiting the United States as part of an intensive fact-finding mission to assess Nissan’s operations worldwide.
In a briefing with reporters at Nissan’s research center in suburban Detroit, Ghosn said he will unveil a detailed restructuring plan for Japan’s second-largest auto maker Oct. 15 in Tokyo.
Although he provided few specifics, Ghosn indicated that his proposals will focus on reducing the cost of parts by using fewer suppliers and working with those most willing to share innovative technologies with Nissan.
He also said the company must reduce overcapacity, a move that could require the controversial closing of plants and layoffs in Japan. Ghosn said U.S. operations are unlikely to be adversely affected since Nissan’s plant in Smyrna, Tenn., is one of the most efficient in North America.
“Our priority is putting Nissan on a profitable track,” he said.
The restructuring comes in the wake of Renault’s purchase of a 36.8% stake in Nissan for $5.8 billion in March. Nissan has lost money for six of the last seven years and is weighed down by a huge debt load.
In his first U.S. trip since assuming operational responsibility for Nissan, Ghosn put to rest speculation that Renault would use its partnership with Nissan as a way to return to the U.S. market. In March, Renault Chairman Louis Schweitzer said the company might sell its vehicles under the Nissan name in the United States and Nissan vehicles under the Renault name in Europe.
But Ghosn said it is much too early to consider such brand sharing. Rather, he said, the top priority in the United States is to reestablish the Nissan brand and pump up its product offerings.
“What makes sense is to get as much as possible from the Nissan brand in the U.S.,” he said. “Nissan can do much better in this country.”
Nissan sales for the first half of 1999 are up 3.6% from a year ago. The performance was boosted by strong sales of the new Frontier Crew Cab pickup truck, Xterra sport-utility vehicle and redesigned Maxima sedan. But Nissan’s sales still lag those of the U.S. industry overall, which posted a 7% sales increase.
Ghosn said Nissan’s problems are not related to consumer acceptance of its cars and trucks. He instead cited bad decisions that kept good products from reaching showrooms.
Norio Matsumura, Nissan’s executive vice president in charge of overseas operations, pointed out that the auto maker was the first to show a small-SUV concept vehicle, in 1991. But Nissan never built it. Meanwhile, Japanese rivals Honda Motor Co. and Toyota Motor Corp. delivered compact SUVs that became big hits with consumers: the CR-V and RAV4, respectively.
Ghosn vowed not to make such missteps in the future: “We are going to take risks on product. We are going to be much more product-oriented.”
The executive, a former head of Michelin’s North American tire operations, is a big fan of Nissan’s Z sports car and supports plans to reintroduce it. Although a final design is not set, the new Z will have a distinctive link to the original, which combined performance and affordability, he said.
