Carlos Ghosn, in New Orleans for the National Automobile Dealers Association convention in January, will take up double duties next month as CEO of Nissan and France's Renault SA.
NEW ORLEANS -- As Carlos Ghosn slipped backstage after giving a speech at a dealers' convention, Charlie Clark broke past a pair of bodyguards to hug the president of Nissan Motor Co. and have a picture taken of them together.
"I've always wanted to meet the guy," said Clark, who plans to blow up the snapshot into a poster for his Nissan dealership in Harlingen, Texas.
Ever since Ghosn transformed ailing Nissan into the world's most profitable major carmaker, he has acquired superstar status normally associated with sports icons.
In Lebanon, his name -- which rhymes with phone -- has been floated as a presidential candidate. Detroit executives pick his brain over dinner. In Japan, he has become a comic book hero and a dream idol.
In a January poll, Japanese women picked the 50-year-old father of four as the most desirable husband, after a baseball player. Ghosn is saving it to show grandchildren someday.
"If they tell you you're ugly and unpleasant, you tell them, 'I'm sorry, but this survey shows that a lot of people would have liked to spend a lot of time with you, some of them all their lives,'" he said in an interview here.
Retirement is far off, as Ghosn prepares to take up a new, unprecedented challenge -- running two carmakers based in different continents.
On April 29, Renault SA, Nissan's biggest shareholder, is expected to appoint him as its CEO. He will remain president and CEO of Nissan, too -- and continue heading the team overseeing its U.S. operations.
In today's brutal environment, managing one carmaker is tough -- managing two that are 6,000 miles apart sounds like an impossible task, even for "Mr. Seven-11," as Ghosn was nicknamed in Japan because of his long working hours. Is he stretching himself too thin?
It's not a question that worries Ghosn, who has already mapped out how he plans to do both jobs, down to the housing arrangements. He will keep homes in Tokyo and Paris and his wife, Rita, will accompany him from time to time as he shuttles back and forth.
"I'll be spending 50 percent of my time on Nissan and at least 10 days a month in Japan. In those days, all the important meetings and decisions will be conducted," he said over a quiet lunch during the National Automotive Dealers Association 2005 convention. "I have spent six years at Nissan, so I don't need a lot of time to understand situations."
Last week, Ghosn revamped Nissan's powerful executive committee and appointed a chief operating officer -- a post that had been vacant since 2001 -- to manage day-to-day operations and ensure that Nissan does not lose momentum. The new team has its plate full: Ghosn is leaving it with a new set of three-year growth goals for Nissan.
After a six-year absence, Ghosn has to reacquaint himself with Renault. But the company is in good shape after the successful launch of its Megane cars -- with help from Nissan production experts. Last year, it was one of Europe's most profitable carmakers, earning $4.4 billion, including the rich dividends from its 44 percent stake in Nissan.
But Ghosn seems keenly aware that success is ephemeral -- and that the backlash can be brutal. "No one in this industry can say, 'I'm on solid ground,'" he said.
"It's an industry in which comebacks occur rapidly and downfalls occur fast. Managers have to be extremely attentive to changes because some of them are significant -- and if managers get it wrong, the consequences are terrible for the company."
The right stuff
In early 1999, when Renault CEO Louis Schweitzer bid $5.4 billion for a controlling stake in Nissan, he took the risk because he believed he had a manager who could shore up the Japanese carmaker.
Ghosn, his second in command, recruited from tiremaker Michelin in 1996, had drafted a restructuring plan in 1997 that brought Renault back to profit. Before that, Ghosn had revived Michelin's sinking operations in Brazil and restructured its U.S. business after its costly acquisition of Uniroyal Goodrich.
"He had a remarkable track record, and he was very good at bringing people together," Schweitzer said.
Because of Ghosn's upbringing -- he was born in Brazil to Lebanese parents and educated in France -- "I felt he was able to work in any corporate environment," Schweitzer said.
Ghosn also views his background as an asset, although it makes him an outsider not only in Japan's homogeneous society, but also in France.
"I've always felt different," Ghosn said. "Because you are different, you try to integrate, and that pushes you to try to understand the environment in which you find yourself. That tends to develop one's ability to listen, to observe, to compare -- qualities that are very useful in managing."
In his new autobiography, "Shift," Ghosn comes through as a keen observer whose talents and discipline overcame any obstacles in his way. Excellent in math, he won admission to France's most prestigious university, the Ecole Polytechnique in Paris.
He joined Michelin as a management trainee and was running a plant by the time he was 27. Patriarch Francois Michelin promoted Ghosn rapidly but reserved the top job for his son, Edouard, now CEO. When Schweitzer approached him, Ghosn was receptive.
The two men have sharply contrasting styles and personalities. Schweitzer, the grandnephew of illustrious theologian Albert Schweitzer, is mild-mannered and aloof. Ghosn is more approachable and direct. "He's more hands-on, whereas I delegate more," said Schweitzer, who will become Renault's chairman in April. "We're different, but one thing we have in common is that we're quite rational."
Both executives agreed that the Nissan deal could only work as an alliance of equals -- which may explain why it became one of the industry's most successful pairings.
Renault's stake is now worth $25 billion. Together, the two carmakers form the world's fourth-largest auto group after Ford Motor Co.
"It's a very tough industry, but Ghosn makes it look like a no-brainer," said Gaetan Toulemonde, Paris-based auto analyst for Deutsche Bank.
In June 1999, Ghosn flew to Tokyo with 40 Renault executives. On the one hand, they had to win over demoralized Nissan executives. But they also had to fix the company fast -- Nissan had lost money for six of the past seven years, its market share had fallen for 27 consecutive years and its debts totaled $20 billion.
Jason Vines, a spokesman for the Chrysler Group who was with Nissan in 1999, recalls Renault executive Patrick Pelata losing his cool when Japanese executives proposed to delay a model launch and dismissing them abruptly.
"Ghosn said, 'Find them and apologize. You don't do that in Japan -- some of them might jump out of a window,'" Vines said.
Yet Ghosn managed to get things done swiftly. "I conveyed a sense of urgency at the start, by systematically setting tight execution deadlines.
"When a house is on fire, you can't say that the people inside are patient or impatient. They're in a situation that requires them to react, and we had similar concerns in 1999," he said.
His Nissan Revival Plan violated nearly every Japanese business taboo: He planned to close five plants, lay off 21,000 workers in a culture where lifetime employment was the norm and shed stakes in 1,400 suppliers and affiliated firms.
He concluded his presentation of the plan with a pledge that if he missed any of the targets, he would resign. No one had taken responsibility for Nissan's dismal performance before, and Japanese managers were impressed by Ghosn's public commitment, says Dominique Thormann, now senior vice president for finance at Nissan Europe. "That was the turning point."
A mule race
At first, Ghosn didn't host social events with French managers, to avoid creating the appearance of a Renault clique. But after a year, he brought the French executives together and listened as they moaned about the enormity of their task. Progress had been made, but they felt overwhelmed by the challenges that lay ahead.
"He said he understood our frustrations, and he told us we shouldn't view the car industry as a thoroughbred race -- it was more like a mule race. Things will never be perfect. You just want your mule to run a little bit faster than the next one," recalled Pierre Loing, now product planning director for Nissan Europe.
"He has an enormous capacity to transform complex problems into things that are easy for everyone to understand," Loing said.
Ghosn not only fulfilled the revival plan's goals, but succeeded ahead of schedule. He poured investment into developing and building new vehicles, such as the sporty 350Z and the full-size Titan pickup. Last year, Nissan's U.S. vehicle sales jumped 24 percent to nearly 1 million vehicles.
Ghosn has already achieved two of the three targets set out in the second three-year plan, called Nissan 180. The 180 stands for 1 million additional global vehicle sales by Sept. 30, 8 percent operating margin, and 0 debt.
Nissan has eliminated its debt, and its operating margin last year was 10 percent -- the highest among full-line carmakers, exceeded only by Porsche.
"If you think about what we've accomplished under Ghosn's guidance, it's with 99.9 percent of the same people that were here before he got here," said Jed Connelly, senior vice president for sales at Nissan North America.
"It wasn't a question of bringing in a new team -- it was a question of mobilizing the current team."
If the Japanese were ruffled by Ghosn's methods, they didn't protest. "The Japanese are very courteous people. They'll never speak to you unpleasantly," he writes in his book. "When they don't think much of you, they keep quiet."
Some of Ghosn's cost-saving remedies were standard practice: In addition to job cuts and plant closures, Renault and Nissan pooled components purchases and shared auto underpinnings, or platforms.
But Ghosn also stresses the role of his "cross-functional teams" -- managers from different areas who are assigned to a common goal -- in Nissan's recovery. By uniting managers from different areas, all viewpoints are considered, problems get solved faster and departments are less likely to indulge in a blame game.
For all of Nissan's achievements, the automaker occasionally stumbles. It invested $1.5 billion to build a plant in Mississippi -- a state with no auto industry -- trained thousands of new workers and suppliers and set them on a demanding timetable. Starting in May 2003, they would roll out four new vehicles and one existing car within eight months.
Nissan's quality ratings took a dive as owners complained about wind noise, scratches from workers' rings and belts, and doors that didn't slide properly. In J.D. Power's 2004 initial quality survey, the automaker dropped from 6th place to 11th.
Ghosn reacted quickly, dispatching 220 Japanese engineers to correct the problems at Canton, but it's a topic that still makes him uncomfortable. After emphasizing that he views Canton as an industry benchmark for factory startups, he acknowledges that he has drawn lessons.
"Perhaps we should have launched the factory with a known vehicle, and perhaps spaced out the launches a bit more."
But Ghosn isn't someone who agonizes over past decisions.
"Sometimes I'll revisit the issue, but he moves on," said James Morton, a senior vice president of finance at Nissan North America who met Ghosn 16 years ago when they both worked for Michelin.
In the end, Nissan's U.S. sales grew faster than those of archrivals Toyota Motor Corp. and Honda Motor Co. last year. Globally, Nissan has overtaken Honda to become Japan's second-largest carmaker.
It is also larger than Renault, but that will not alter the relationship, Ghosn says.
"When Renault and Nissan signed the alliance, many people thought Renault would ultimately take control," he said. "But Renault showed respect to Nissan. I think that tone will be perpetuated."
On his last day in New Orleans, Ghosn seemed reflective as he accepted an Industry Leader of the Year award from the Automotive Hall of Fame. "When you have a good moment, it's good to remember the bad moments, because that helps keep your feet on the ground," he said. "And when you have bad moments, it's good to remember the good ones, because that helps you keep your head above water."
As the audience drifted out after the awards luncheon, Ghosn's aides whisked him to the next meeting, with U.S. Nissan dealers, before his afternoon flight.
By Christine Tierney / The Detroit News
Cheryl Gerber / Associated Press
You can reach Christine Tierney at (313) 222-1463 or [email protected].