Schweitzer, Louis 1942–
Chief executive officer and chairman of the board, Renault Group; chairman of the board, Astra Zeneca
Born: July 8, 1942, in Geneva, Switzerland.
Education: Institut d'Études Politiques de Paris (IEP), BA, 1968.
Family: Son of Pierre-Paul Schweitzer (economist) and Catherine Hatt; married Agnès Schmitz, December 20, 1972; children: two.
Career: French government, Office of the Director of General Public Assistance, 1970–1971, inspector; Office of the General Inspector of Finance, 1971–1974, inspector; Ministry of the Budget, 1974–1979, inspector; 1979–1981, deputy director; 1981–1983, chief of staff; Institute d'Études Politiques de Paris, 1982–1986, professor; Ministry of Industry and Research, 1983, chief of staff; Office of the Prime Minister of France, 1984–1986, chief of staff; Régie Nationale des Usines Renault, 1986–1990, vice president of finance; 1988–1990, chief financial officer; 1989–1990, executive vice president; 1990–1992, president and chief operating officer; 1992–, chief executive officer and chairman of the board; Astra Zeneca, 2004–, chairman of the board.
Awards: Ordre National du Mérite, 1992; Légion d'Honneur, 1998.
Address: Renault Group, 13–15 quai Alphonse Le Gallo, 92513 Boulogne-Billancourt cedex, France; http://www.renault.com.
■ In Louis Schweitzer's official photographic portraits, he looked solemn or even stern, but he also looked as if he were about to laugh. Shy, diffident, studious, and low-key, he was a great success as a self-effacing bureaucrat in successive French governments. Even after he became the leader of one of the most successful businesses in France, he preferred to let others have the limelight. Unlike many bureaucrats, he did not believe in the benefits of government intervention in business;
and unlike the usually diplomatic chiefs of staff of successful politicians, he said what he thought. Amid the storms of politics and controversial business decisions, he was calm. In his leisure time he preferred evenings at the theater or quiet forays to art galleries to livelier forms of entertainment. Yet as bookish as he was, he led not one but two of the most remarkable business turnarounds of his era.
A WELL-KNOWN NAME
Schweitzer was born into a family with several famous members. He was the grandnephew of Dr. Albert Schweitzer, the famous New Testament scholar, missionary, physician, musician, and winner of the 1952 Nobel Peace Prize. He was also a cousin of Jean-Paul Sartre, the novelist and philosopher. Schweitzer's father served as the managing director of the International Monetary Fund (IMF) from 1963 to 1973. At the time of Schweitzer's birth in 1942, however, his prospects were not the best. Schweitzer's father had been a member of the French Resistance during World War II; he was captured by the Germans and sent to Buchenwald, where he was one of the few who survived the concentration camp. After the war, the French government nationalized the automobile company Renault and called it a régie, meaning that it was regarded as a branch of government. Renault was considered a source of employment and other services to French society. Although Louis Schweitzer remembered being fond of cars when he was a child, as an adult he found his initial calling in government rather than the automobile business.
Schweitzer earned a degree in law in 1968 and married Agnès Schmitz in 1972. He also took his first job as a government inspector. Stories vary about how he met the Socialist politician Laurent Fabius, but the two men probably became acquainted on a plane trip in the late 1970s. Fabius tried to persuade Schweitzer to join the Socialist Party, but Schweitzer never became a member even though he served under Socialist governments. Indeed, Schweitzer seemed fairly apolitical, although he did advocate the formation of the European Union as a way to prevent a third world war.
From 1981 to 1984 Schweitzer moved up through the ranks of the government bureaucracy along with Fabius. He served Fabius as chief of staff and eventually became the chief of staff in the office of the prime minister when Fabius assumed that high position. Schweitzer worked 16 hours a day; intelligent as well as loyal, he became famous for helping Fabius shape French government policy. Meanwhile, Régie des Usines Renault had 98,000 employees in 1984 and was manufacturing automobiles that it could not sell.
EARLY CAREER AT RENAULT
By 1986 Renault was a company in trouble known for the low quality of its products; it lost $3.5 billion between 1984 and 1986. Inefficient and $9 billion in debt, it survived only because of government support. In 1986, however, the French government finally told the company that it had to start turning a profit. Schweitzer was dispatched to Renault to oversee its finances. He laid out firm objectives of profitability and required that managers of factories account for all their income and expenditures. Schweitzer worked at first for Renault's CEO Georges Besse, who shared his view that Renault had to change its corporate culture from that of a branch of government to that of a privately owned business. At the same time Schweitzer began urging the government to privatize Renault. Sadly, Besse was assassinated in November 1986 by anticapitalist terrorists.
In 1987 Renault stopped selling cars in the United States, where its name had become synonymous with shoddy products. Schweitzer was always reluctant to reenter Renault in the United States market on the grounds that its sales would be damaged by its previous low reputation. Even so, 1987 marked a turning point for Renault, which began a string of nine straight years of earning a profit. In 1988 Schweitzer and Besse's replacement Raymond Levy announced "total quality management," a concept based on the writing of American economist Dr. W. Edwards Deming, meaning a steady focus on producing well-made cars. Improving the company's products went together with an emphasis on giving customers what they wanted. This was a victory for Schweitzer, who had advocated customer-oriented automobile development as a way to improving Renault's financial health. In 1988 Renault gave Patrick le Quément the job of director of design. Le Quément, who answered only to the chairman of the board, was responsible for Renault's innovative designs during Schweitzer's tenure as the company's chief executive officer.
Schweitzer was appointed president and chief operating officer of Renault in December 1990. He was then named CEO in May 1992, replacing Raymond Levy, and was elected chairman of the board of Renault. Schweitzer passed two of his most challenging hurdles that same year. He first persuaded the French government to begin privatizing Renault. He then succeeded in closing the factory at Boulogne-Billancourt near Paris through careful diplomacy with those affected by the move without much fuss, even from unions that had been known to take to the streets to protest management decisions. The factory closing was one of many steps that Schweitzer took to make Renault more efficient by disposing of outmoded facilities.
TAKING THE OFFENSIVE
Schweitzer's next move at Renault was to begin changing its corporate culture from what he saw as a defensive mindset to one that was more aggressive. Some of his initiatives did not succeed; for example, his attempt to buy Volvo in order to make Renault a global rather than regional company fell apart over details at the last minute. On the other hand, Renault made its presence felt in the marketplace when it introduced the Twingo, a small automobile aimed at the market for budget cars. Schweitzer had a vision of Renault positioning itself in emerging world markets by producing automobiles that people at the low end of the income scale could afford. The Laguna, a larger model that was aimed at upscale car buyers, was released in 1994. The company began its privatization that same year.
A POLITICAL SCANDAL
Schweitzer was sidetracked from his projects at Renault in the late spring of 1995, when he was charged with "complicity in poisoning" in a public health scandal related to the use of blood tainted with the AIDS virus in transfusions. In 1985 the French government had delayed the screening of donated blood, a decision that led to the transmission of the AIDS virus to over four thousand people, most of them hemophiliacs. Although Schweitzer had been in charge of Laurent Fabius' private office in 1985, he was connected only tangentially to the officials who had dragged their feet about blood screening. Nevertheless the French government announced on May 22, 1995 that Schweitzer as well as Fabius was under investigation for his part in the scandal. The investigation seemed to be politically motivated because Schweitzer had served under a Socialist prime minister. The Gaullist party had come into power when Jacques Chirac became president on May 17, 1995—just five days before Schweitzer's investigation was announced. Schweitzer responded to the accusations by threatening to resign from Renault if the public health scandal took up too much of his time. In May 1999 he was formally charged with involuntary homicide, but on June 18, 2003, the charge was dismissed by the Court of Cassation, France's highest appellate court, for lack of evidence.
While the government's investigation went nowhere, Schweitzer remained focused on his goals to make Renault more profitable. Renault had cut a third of its workforce and eliminated three layers of management between 1986 and 1995. Schweitzer also continued to pressure the government to divest itself of Renault. By the end of 1995 the government owned only 53 percent of the company's shares. In addition, Schweitzer urged the French government to behave like a shareholder rather than a manager. To cut costs even further, Renault made an effort to shorten the development time of new automobiles from 58 months to 38 months, thus lowering costs by 20 percent. This move also allowed the company to introduce five new car models in 1995—which made an exciting impression on visitors to the annual automobile show in Geneva.
RESTRUCTURING AND TURBULENCE
Schweitzer made one of his most celebrated personnel changes in 1996, when he recruited Carlos Ghosn from Michelin to become Renault's executive vice president of Renault. Ghosn was hired to help improve the company's manufacturing process. Both Schweitzer and Ghosn emphasized reliability in their products. By 1996, Renault's workforce had been trimmed to 58,500 employees. The Mégane Scénic was introduced in 1996 in six different versions and sold well. Worldwide Renault sold about two million vehicles of all makes. In pursuit of a global strategy, the company began building a factory in Curitiba, Brazil. In spite of signs of financial health, however, Schweitzer's restructuring cost the company $900 million in 1996, when Renault posted its first annual loss after nine consecutive years of profitability. There were calls in the press for Schweitzer to be ousted from Renault because of the losses, but the board of directors supported him.
In 1997 Schweitzer served as president of the European Automobile Manufacturers' Association (ACEA), making him the spokesman for the European automotive industry. In what he referred to several years later as the hardest decision of his career, Schweitzer closed Renault's assembly plant in Vilvoorde, Belgium, because the company had surplus production capacity. He agonized over throwing the plant's 3,100 employees out of work but stuck to his decision. The Vilvoorde employees held demonstrations and burned Schweitzer in effigy. He faced considerable hostility from the press, with many journalists believing that he had betrayed the socialist notion of the company's purpose as a régie. Schweitzer stood his ground while facing the reporters' antagonism.
RENAULT GOES GLOBAL
Toward the end of the 1990s Schweitzer committed his company to becoming a global presence in earnest. His plans received a boost when Renault returned to profitability; the company grossed $40 billion and netted $1.4 billion in 1998. On December 17 of that year, Renault purchased a Romanian company based in Pitesti, Automobile Dacia, with an eye to having Dacia manufacture inexpensive cars for the emerging economies of Eastern Europe. In addition to acquiring Dacia, Schweitzer looked for another way for Renault to enter the global market in 1998. Japan's Nissan had accumulated $19.4 billion in debt that year, paying $1 billion in interest on the debt. It lost $5.7 billion in 1998 alone. Nissan's management was looking for a rescuer as the huge corporation threatened to collapse.
Schweitzer negotiated with the leaders of both Dacia and Nissan in 1999. He visited Pitesti, met with Romanian government dignitaries, and entered tough negotiations to gain tax breaks for Dacia. His negotiations with Nissan were difficult as well, even though Nissan was not in a strong bargaining position. Schweitzer agreed to invest $5.4 billion in Nissan in March 1999, which helped the company to retire some of its debt, in exchange for 36.8 percent of Nissan's shares and control of the company. "For us, it was a choice between staying regional or going global," Schweitzer said about the Nissan agreement (BusinessWeek, November 15, 1999). Although Renault was calling the shots at Nissan at the time of the interview, Schweitzer characterized the agreement as an alliance rather than a merger. He wanted Nissan to retain its separate identity, its own corporate culture, and its own goals. He had observed the disaster that occurred when the German company Daimler took over Chrysler in 1998 and tried to force a merger of two distinctive corporate cultures. Schweitzer did not want similar troubles to befall Nissan.
Schweitzer decided to make English the common language for Renault and Nissan for all communications and meetings involving both Renault and Nissan personnel, partly because he saw the measure as a way to avoid turning Nissan into a clone of a French automobile company. Apart from the language issue, however, Schweitzer was convinced that Nissan had to make major changes in how it did business. He saw its troubles as stemming from a combination of incompetent management and inferior products. Schweitzer put Ghosn in charge of overseeing the changes at Nissan. Ghosn brought with him 17 other Renault managers, including a new chief financial officer for the Japanese company. Some of Nissan's managers preferred the way the company had been run, however, and resisted Schweitzer's restructuring. For instance, they had received bonuses for production, not profits, which motivated them to keep running outmoded plants that produced cars no one bought. In addition, the Renault team found problems with Nissan's accounting; the company's books had been doctored for years to show profits where there had actually been losses.
In June 1999 Schweitzer's contracts with Renault as CEO and chairman of the board were renewed to run through 2005. Nissan's president and CEO, Yoshikazu Hanawa, was appointed to Renault's board of directors for a term expiring in 2005. Schweitzer hoped that adding Hanawa to the Renault board would strengthen the alliance between Nissan and Renault. Meanwhile, Ghosn closed five Nissan plants and cut production by 30 percent. Renault planned to eliminate 21,000 Nissan jobs altogether. This drastic restructuring resulted in an annual savings of $3 billion. Schweitzer had also made plans in 2000 for Renault and Nissan to share the platforms (the basic undercarriages) of their models by 2010, enhancing their efficiency as partners and helping to ensure that both companies had a common focus on quality.
In the fiscal year that ended in March 2000, Nissan actually showed a net of $778.9 million, mostly attributable to Ghosn's cuts. When Schweitzer visited Japan in November, he feared a storm of protest and was surprised to find Japanese officials and journalists reacting favorably to his efforts to reinvent Nissan's corporate culture by focusing it on profits and customer satisfaction. Amid all the media attention to changes at Nissan, Renault's buying a controlling interest in Korea's Samsung Motors almost escaped notice.
Just as Schweitzer wanted Nissan to keep its Japanese identity, he wanted Dacia to remain Romanian in character, retaining Romanian management, and to concentrate first on its local customers before looking to larger markets. In spite of Renault's initial successes with Nissan and Dacia, however, not all was going well: Renault had little success entering the Chinese market, found the Indian market mystifying, and wrote off the United States market as too expensive to penetrate. Still, by the end of 2000 the French government had reduced its ownership of Renault to 44.2 percent.
RENAULT BECOMES A GLOBAL GIANT
The next step in Renault's becoming a global presence was to tap the potential of the Internet. Renault announced its plan to sell automobiles over the Internet on February 8, 2000. The company's web site, which became active in October 2000, allowed customers to configure their vehicles and work out financing online. The Internet was also used within Renault and Nissan, especially by their sales forces, as well as for communicating with customers. Renault and Nissan then formed an alliance with Ford, General Motors, and Daimler-Chrysler in March 2000 to create a common web site to sell their products. "We wanted to become a world player," said Schweitzer (The Carconnection.com, March 13, 2000). The web site alliance meant that Renault now ranked among the world's major automobile manufacturers.
The Renault Foundation was established in March 2001 to promote better understanding of French culture and the French language in foreign countries, beginning with Japan. The foundation opened a program in Tokyo on March 27, 2001, to train Japanese managers for working in multinational companies. At that point in time there were 32 Renault managers including Ghosn working in Japan. Schweitzer was sensitive about this issue; he considered 32 managers to be a small number given Nissan's overall size (about 140,000 employees), and he wanted to keep the number low to avoid giving Nissan employees the impression that Renault had simply absorbed their company. To underscore the fact that the relationship between Renault and Nissan was an alliance rather than a conquest, Renault added Nissan's senior vice president and advisor to the chairman Tsotumo Sawada to its board of directors. Schweitzer hoped Renault's employees would learn about consistency in production from Nissan and that Nissan would learn about experimentation in design from Renault. Nissan reported a fiscal year net of $2.04 billion on March 31, 2001. Meanwhile, Renault became the principal shareholder of Volvo in January 2001 to collaborate on industrial vehicles. At that time Volvo was the second largest truck manufacturer in the world.
In 2002 Renault introduced the Mégane hatchback, designed by Patrick le Quément. It created a sensation with the distinctive vertical drop of its back. On the other hand, the new Avantime minivan, a high-end vehicle, was less successful. In addition to bringing out new car models, Schweitzer had been advocating cross-shareholding as a way to create balance between Renault and Nissan. In March 2002 Nissan bought 15 percent of Renault, a sign of the Japanese partner's improving balance sheet. Schweitzer also directed the establishment of a joint governing board for Renault and Nissan. He announced that he would be replaced by Ghosn in 2005 but would continue to serve as the chairman of the new joint governing board. With regard to Dacia, Schweitzer focused its output on a $5,000 automobile to be marketed in developing nations.
Schweitzer served for a second time as president of ACEA in 2003. He wanted the ACEA to use its influence to help reduce carbon dioxide emission levels from European vehicles. In addition to his work with the association, Schweitzer was plainly delighted with the results of the partnership between Renault and Nissan. "The alliance with Nissan has delivered faster than I expected—and much more than anybody expected," said Schweitzer (BusinessWeek Online, January 13, 2003). Nissan was profitable; it completed the construction of a $930 million plant in Mississippi; and the Mégane compact was named the Car of the Year for Europe in 2003. Schweitzer had much to be happy about. Still, Schweitzer was wary of changes in the marketplace, saying that diesel technology was the most important aspect of 2003's automobile market.
"Corporate governance is also a rather new concept in France," Schweitzer remarked to BusinessWeek Online on January 13, 2003. His comment seemed to refer to American-style corporate governance, with a board of directors more responsible to shareholders than to management, although since his company was headquartered in a country of state-supported industries, he might have meant governance by any group other than the government. Renault expanded its board of directors from 17 to 18 members in 2004; it also named six outsiders to the board, which also gave the board more independence from management. With regard to car design, Renault made plans to replace the Twingo. Le Quément was optimistic about future models, asserting, "We like adventure in design." Le Quément also said, "Chairman Louis Schweitzer is totally committed to design" (BusinessWeek Online, February 11, 2004). Nissan agreed to buy Toyota's hybrid automobile technology, even though Nissan and Renault had no immediate models planned that could use the technology. In addition, Schweitzer said that Renault planned to reenter the American market by 2010.
A NEW CHALLENGE
In addition to Schweitzer's duties at Renault, he was named in March 2004 to the board of directors of Astra Zeneca, the second-largest drug manufacturer in Europe, with a branch in the United States. He became chairman of Astra Zeneca's board later in 2004, replacing Percy Barnevik. The Anglo-Swedish pharmaceutical company's best-selling products in the early 2000s included treatments for adult-onset diabetes and asthma.
sources for further information
Carlioz, Remi, "Louis Schweitzer," Journal du Net, March 3, 2000, http://www.journaldunet.com/itws/it_schweitzer.shtml.
Eisenstein, Paul A., "One on One: Louis Schweitzer," The Carconnection.com, March 13, 2000, http://www.thecarconnection.com/index.asp?n=156,193&sid=193&article=1543.
Gil, Iñaki, "Louis Schweitzer," Motor & Viajes, March 22, 1997, http://www.el-mundo.es/motor/MVnumeros/97/MV009/MV009schweitzer.html.
Harbrecht, Douglas, "Renault's 'Adventure in Design,'" BusinessWeek Online, February 11, 2004, http://www.businessweek.com/bwdaily/dnflash/feb2004/nf20040211_7740_db053.htm.
O'Connell, Patricia, "The Man Who Steered Renault to Japan," BusinessWeek Online, January 13, 2003, http://www.businessweek.com/bwdaily/dnflash/jan2003/nf20030113_1789.htm.
"Statecraft at Renault," The Economist, May 27, 1995, p. 65.
Taylor, Alex, III, "The Man Who Vows to Change Japan Inc.," Fortune, December 20, 1999, pp. 189–198.
—Kirk H. Beetz