Shock therapy in Corporate Japan? Before Carlos Ghosn showed up at Nissan Motor Co. last year as chief operating officer, few thought drastic restructuring was possible at the money-losing and highly bureaucratic auto maker. But Ghosn, installed after Renault bought a 36.8% stake in Nissan, brought an impressive track record: He had overhauled Michelin's North American operations in the early 1990s and turned around a money-losing Renault in 1996, where he earned the moniker "le cost-cutter." Still, even he had doubts about saving Nissan, which has lost money seven out of the last eight years. "Six months ago, it was considered mission impossible," says Ghosn, a 46-year-old native of Brazil. Well, maybe no longer.
Ghosn, who will become Nissan's president later this summer, is applying his well-honed techniques and winning over skeptics. He's implementing a downsizing regime he unveiled last October and closing plants to cut capacity by a third. And he's weeding through Nissan's keiretsu-linked suppliers and dumping them if they don't meet demands to improve quality and cut costs.
Shareholders are optimistic that Ghosn can pull it off. Nissan's stock has jumped 50% from last fall's depressed levels. And the betting is that Ghosn will produce an operating profit of $900 million in the fiscal year ending next March. Of course, Nissan isn't out of the woods yet. Its balance sheet is terrifying: $12.7 billion in debt on the auto maker's books and an additional $10.7 billion linked to its sales finance companies.
But Ghosn, who grew up in France after leaving Brazil at 16 and studied engineering at the Ecole Polytechnique, says that in 10 months he has already made more progress on cost-cutting at Nissan than he did in the same time frame at Renault.
Ghosn is truly a car guy. When he's not test-driving Nissan cars, he's jawboning with the company's new design team to jazz up the company's image. "The creativity of Nissan was always there," he says. "Now, we are unleashing it." If he can engineer a turnaround, he will have unleashed more than that. In a land where gradualism is the norm, Ghosn's tough-love management is a shocker. But if it works, there may be Ghosn clones showing up all over Japan.