business

Commentary: Will Japan Inc. Copy Nissan's New Model?

Direct. Brutal. Uncompromising. These are traits that chief execs in the West often prize as essential to doing their jobs. Not so in Japan. There, the conciliatory, consensus-building company chief has long been the model.

But on Oct. 18, Japanese execs and investors got a clear view of how tough a Western executive can act when under pressure. That's when Nissan Motor Co.'s chief operating officer, Carlos Ghosn, announced his plans for fixing Japan's ailing No. 2 carmaker. Ghosn, who came from Renault, Nissan's new partner, outlined measures far more drastic than anyone anticipated. Job cuts of 21,000. Five plant closings. A 50% cutback in the number of suppliers.

LITTLE ANGER. The extent of Ghosn's restructuring was not the only surprise. A bigger surprise was the Japanese reaction: There was very little anger aroused at the idea of a gaijin boss acting so tough.

This comparative calm offers a clue to what's going on inside Corporate Japan these days. There's still plenty of resistance in many quarters to restructuring Ghosn-style. But in more and more companies, execs are concluding that they need to act tough, too. And Ghosn's actions may help break down any psychological barriers to restructuring that remain.

Nissan is not the only Japanese blue chip making changes. Hitachi Ltd. will eliminate more than 4,000 jobs at its headquarters. Sony Corp. will scrap 20% of its factories and reduce its head count by 17,000 workers worldwide by 2003. NEC Corp. will slash 15,000 jobs by 2002. In August alone, Japan lost 170,000 jobs year-on-year. "It's not as if Nissan alone is doing something special," says Keiichi Nagamatsu, director of industrial affairs at Japan's association for big business, the Federation of Economic Organizations.

BUFFERS. None of this means that Japanese bosses will now adopt en masse the take-no-prisoners style of their Western counterparts. Even Ghosn must act Japanese in some respects. Instead of outright layoffs, Ghosn is planning a Japanese mix of transferring workers to subsidiaries that will be spun off, offering voluntary retirement packages, and relying on attrition to thin the ranks. And unions may yet prove resistant to Ghosn's cutbacks. "We will oppose anyone being asked to quit if they do not want to," says Yoshio Takahashi, chairman of the Federation of All Nissan & General Workers' Unions.

But the feeling in Tokyo is that Ghosn has the backbone to carry through on cutting those jobs. He has already done something important by saying out loud what Nissan needs to do. As Japan's chiefs consider the future of their own companies, they will be thinking increasingly of him and the experiment at Nissan.

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