January 2003. I’m talking with a senior auto industry analyst about Carlos Ghosn. “If it was announced Ghosn was about to take the top job at Ford,” he muses, “it would add $10 billion to the value of the company.” He pauses just long enough to ponder a pile of greenbacks larger than the GDP of several small Caribbean countries, then delivers the punchline: “Overnight …”
Ghosn became the auto industry’s $10 billion man for one simple reason: He had saved Nissan. In 1999, Japan’s second-largest automaker had been a basket case. Its share of the Japanese market had been shrinking for 26 years, and only two or three of the 48 vehicles it built were profitable. Buckling under $20 billion of debt and teetering on the brink of bankruptcy, Nissan had been humiliatingly forced to seek an alliance with Renault to survive.
For Renault boss Louis Schweitzer, Ghosn was the logical choice to take on what many believed was a near-impossible task. A Brazilian-born Lebanese, Ghosn graduated as an engineer from France’s elite École Polytechnique before joining tiremaker Michelin in 1978 and jumping to Renault in 1996. A bristling, bustling ball of energy with a hair-trigger intellect and an outsider’s disdain for establishment norms, Ghosn was the change agent Nissan needed. He was appointed chief operating officer in June 1999.
Once in Tokyo, “le cost killer” wasted no time shooting sacred cows. “When I joined Nissan,” Ghosn said in 2003, “everyone explained its weakness by the state of the yen, the collapse of the bubble economy, etcetera. I said that was baloney. The problem with Nissan was inside Nissan. When you start looking outside for excuses, that’s when you’re in trouble.”
Ghosn ignored the arcana of Japanese business etiquette, shaking hands with every employee he met, making English the company’s official language, and brazenly poaching Shiro Nakamura from Isuzu to be Nissan’s new design chief. He dismantled entrenched internal fiefdoms by installing cross-functional management teams that cut across the traditionally compartmentalized engineering, finance, sales, marketing, and manufacturing departments.
It worked. In the year after Ghosn’s arrival, Nissan posted a $2.7 billion profit, a stunning $10 billion turnaround on the previous year. By 2003, Nissan’s costs had been slashed 20 percent, debt was rapidly shrinking, and the company’s 10.6 percent operating margin was second only to that of Porsche—long regarded the industry’s most efficient money machine. Nissan’s savior was a hero in Japan: In 2002, Big Comic Superior, a manga magazine that sold a half-million copies to the salarymen who crammed Tokyo’s commuter trains every day, ran a six-part series called “The True Life of Carlos Ghosn.”
Made Nissan CEO in 2001, Ghosn succeeded Schweitzer as CEO of Renault in 2005 to become the first exec to run two separate automakers. By 2009 he was chairman of both, as well, and by 2016, after Nissan acquired 34 percent of troubled Mitsubishi, he headed an alliance that built more than 10 million vehicles a year.
January 2019. Carlos Ghosn is languishing in a Japanese jail cell, accused of financial misconduct. Whether Ghosn is guilty is for the courts to decide, but what’s striking is how ruthlessly the company he saved engineered his fall from grace. Hiroto Saikawa, who took over the Nissan CEO role in April 2017, personally revealed the allegations of misconduct after Ghosn’s surprise arrest—even though difficult questions could be asked of him, and of the Nissan board, as to how they were unaware of their chairman’s financial arrangements and how Nissan reported those arrangements to regulators.
But consider this: Saikawa and the Nissan board vehemently oppose Ghosn’s plan to turn the Renault–Nissan–Mitsubishi Alliance into a full-fledged merger. They believe Renault is now the weaker automaker and fear a merger would permanently cede control to foreigners, allowing the plunder of Nissan’s $10.7 billion cash reserve. Against this background, the Ghosn affair looks more like a messy palace coup than the search for a smoking gun. One source close to events confirms Saikawa may not survive the scandal. But, this source said, the Nissan CEO doesn’t care: “In Japan he’ll be regarded as a hero.”
How times change.
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