Ghosn, Carlos

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Ghosn, Carlos

Chief Executive Officer of Nissan and Renault

B orn March 9, 1954, in Porto Velho, Brazil; married Rita; children: Caroline, Nadine, Maya, Anthony. Education: École Polytechnique, engineering degree, 1974; École des Mines de Paris, engineering degree, 1978.

Addresses: Office—Renault S.A., 13-15 quai Le Gallo, 92513 Boulogne-Billancourt Cédex, France.

Career

P lant manager, Michelin, Le Puy, France; head of research and development—industrial tires, Michelin, Ladoux, France; chief operating officer of South American Operations, Michelin, Rio de Janeiro, Brazil; president and chief operating officer, Michelin North America, 1989-96, chairman, 1990-96; executive vice president, Renault S.A., 1996-99; chief operating officer, Nissan Motor Company, Tokyo, Japan, 1999-2000, president, 2000, chief executive officer, 2001—, co-chairman, 2003—; president and chief executive officer in charge of Renault and Nissan, 2005—.

Awards: Industry leader of the year, Automotive News, 2000, 2001; man of the year, honorary doctorate, Cranfield University School of Management (U. K.), 2002; Fortune Magazine (Asia), 2003; honorary doctorate, American University of Beirut (Lebanon), 2003; honorary doctorate, Kyushu University (Japan), 2003; Golden Plate Award, Academy of Achievement, 2004; industry leader of the year, Automotive Hall of Fame, 2004; honorary doctorate, Waseda University (Japan), 2005; Knight Commander of the British Empire (KBE), 2006; honorary doctorate, University of South Carolina.

Sidelights

T he product of an international upbringing, automotive executive Carlos Ghosn heads both the Japan-based Nissan and its French alliance partner, Renault. In the early 2000s, he was lauded for the successful execution of his turnaround plan for Nissan. While the Japanese automaker had been struggling with falling sales and profits, Ghosn led the company back to both competitiveness and profitability. Because of his triumph with Nissan, Ghosn was asked to head Renault and was allowed to lead both companies beginning in 2005. Though Nissan soon struggled again, Ghosn was expected to right the ship.

Born on March 9, 1954, in Port Velho, Brazil, Ghosn was the son of a Lebanese father and French mother. Ghosn was raised in Brazil and Lebanon, attending high school in the latter country. Ghosn received his college education in France. He studied engineering at the École Polytechnique, earning a degree in 1974, and the École des Mines de Paris, earning a degree in 1978.

Ghosn began his career with Michelin, the French-based tire manufacturer. He first served as a plant manager in Le Puy, France, then became the head of research and development for industrial tires at Michelin’s Ladoux, France, offices. He was transferred to Brazil where he became the chief operating officer of South American Operations. There, Ghosn began developing a reputation as a turnaround innovator, a reputation he took to his next career stop for Michelin.

In 1989, Ghosn moved to the United States where he became the president and chief operating officer of Michelin North America. In 1990, he added the title of chairman. During his time at Michelin, his company bought Uniroyal-Goodrich, and Ghosn played an active role in integrating the former competitors. Ghosn also developed a reputation as an effective cost cutter while working there.

Ghosn left Michelin in 1996 to return to France and join French automaker Renault S.A. as executive vice president. He continued to show his ability to cut costs while working at Renault, where he earned the nickname “Le Cost Killer.” Ghosn’s most significant cost-cutting measures came in 1997 when he instituted a company-wide program which led to the closing of the Belgian Vilvoorde plant as well as firing 3,500 redundant workers. There were riots in Belgium because of his actions, and many European politicians denounced him. Yet Renault became profitable again later that year.

Ghosn also played a role in Renault acquiring a significant stake in the nearly bankrupt Nissan Motor Company in 1999. He told Andrew English of London’s Daily Telegraph, “From the beginning we saw this opportunity but through a real partnership. Also, when we analysed Nissan, we saw that even though the company had very mediocre performance, there were a lot of strengths: good engineering skills, good reliability of the products, very good manufacturing systems. These were all assets that, if appropriately managed, would turn in your favor.”

In July of 1999, Ghosn was transferred from Renault to its new alliance partner, Nissan.As the company’s new chief operating officer, he faced a daunting challenge as the automaker was troubled, deeply in debt, lacked profitability, and had a declining global market share. Within three months, Ghosn laid down the gauntlet and announced his Nissan Revival Plan to turn the company around and make it one of the best auto makers on Earth in three years. He also promised that he and his top managers would resign if the automaker was not profitable in 2001.

As his plan was being implemented, Ghosn was promoted. In 2000, he became president of the company, and in 2001, he was promoted again to chief executive officer (CEO). Ghosn was the first foreigner to become CEO of a major Japanese company. During his first few years at Nissan, Ghosn had to answer related questions about the integration of culture between the French and the Japanese. He believed that in his company’s case, quick integration happened out of necessity.

Ghosn told Victoria Emerson of the Journal of World Business, “The Nissan Revival Plan came very fast and established strong objectives. It didn’t leave any room for mediation on the differences about cultures. We were all mobilized and engaged in the revival of the company. What we see today is that differences in culture as being used more and more as ways of listening to what different people can bring to the table to achieve our objectives for the future.”

When Nissan announced its numbers at the end of the business year in March of 2001, the company silenced any doubters about Ghosn’s plan as it posted its best financial results ever. Operating profits tripled to the equivalent of $2.38 billion. Ghosn’s company succeeded in part because it reduced purchasing costs, cut some 21,000 jobs, sold some of its assets, and boosted sales by four percent. While the Nissan Revival Plan was reaping immediate benefits, Ghosn still wanted to cut the company’s debt to less than $5.8 billion and turn an operating profit equal to 4.5 percent of sales, both by March of 2003. Ghosn also was thinking beyond his three-year plan, and in his Plan 180 (also known as Nissan 180), hoped to sell one million more vehicles worldwide by introducing 28 new models as well as get the company completely out of debt in 2005.

As Ghosn continued to meet his goals with his Nis-san Revival Plan in 2002 with record profits of $3 billion and a reduction in debt, he was lauded in Japan. In 2002, he was the subject of a manga (comic book) series produced in Japan entitled The True Life of Carlos Ghosn. In the comic, Ghosn was immortal-ized as a superhero who saved Nissan. The story integrated episodes of his life with Nissan’s celebrated turnaround, and sold more than a half million copies per issue. Other automakers also noticed Ghosn’s success, and there were constant rumors that he would leave Nissan and Renault for greener pastures. Renault worked to ensure that he would remain with the company.

In May of 2002, it was announced that Ghosn would become the CEO of Renault when the company’s chief executive Louis Schweitzer stepped down from that post in 2005. Ghosn was also to remain in charge of Nissan as an overseer. Before this shift in power took place, Ghosn was promoted within Nis-san to become the company’s co-chairman in 2003. That year, Nissan again announced record profits and cut debts to zero. Ghosn’s company also beat the targeted eight percent profit margin. In the first year of the 180 Plan, the only goal that remained was boosting sales by one million vehicles from levels at the start of the initiative.

As the Renault leadership changeover neared, Ghosn worked on appointing a successor, who would hold the COO position, to oversee day-today operations. In 2004, he began shuffling his duties by dropping a number of responsibilities in Tokyo while taking charge of North American operations. One reason for the change was a concern that Nissan sales goals were not being met in the United States, especially on SUVs and pickup trucks, as well as quality problems and the need to balance sales with incentives to ensure profit.

As scheduled, Ghosn returned to Renault to become the company’s president and chief executive officer, while retaining his nonresident CEO position at Nis-san, in the spring of 2005. By the end of September of 2005, Nissan had completed its Plan 180, reaching its last goal of increasing sales by one million cars. Yet the following month, sales suffered and there were concerns that Nissan might start flagging again.

Despite such problems, auto analysts believed that Ghosn would be the ideal candidate to turn around struggling American automaker General Motors. By 2006, both General Motors and Ford were considering pursuing Ghosn to ally with, if not jump ship for, their companies. Of the idea that he would leave for a new post, Ghosn told James Brooke of the New York Times, “It is very flattering, but at the same time you know that you are as good as your last quarter results or your last six-month results or your last year results. I know very well the rules. As long as you perform, you are good. Your management is as good as your performance.”

In 2006, Ghosn hoped to continue the success he built at Nissan with a new three-year plan, Commitment 2009, for Renault. This turnaround plan set high sales targets, increased profit margins goals, and ensured the third generation Laguna was among the top three models in its class for product and service quality. By 2007, it was hoped that these targets would be helped by Renault’s popular new entry sold in emerging markets worldwide, the Logan. Yet Renault’s sales suffered on the whole in the first half of the year, and the company was losing market share. Ghosn vowed sales would soon increase. More new products were slated to be introduced by Renault in 2009, further cementing Ghosn’s belief that Renault would experience a significant surge by 2010.

Ghosn also faced challenges in 2007 when Nissan did not increase profits for the first time in six years. While the company was still profitable through 2006, sales slowed as few new products were introduced and the rising cost of commodities cut into profits. Ghosn believed Nissan would turn around in 2007 and 2008 as Nissan introduced new products like the crossover SUV Rogue. He also gave into consumer demand in the United States for more environmentally conscious cars by announcing the introduction of cleaner-burning diesel engines in 2010.

In addition, Ghosn faced criticisms from the changes he was making at Renault. Pressure he was putting on staff was linked to suicides at the company’s technical center in Guyancourt, France. He also was blamed for the introduction of work from home and desk sharing policies, a radical change in the company’s conservative corporate culture. There were also concerns that his holding two highly demanding positions on two continents was resulting in ineffective leadership in both companies and contributing to the problems they faced. Ghosn remained confident, telling James B. Treece of the Automotive News, “You learn from your failures. So from time to time, when you miss, I don’t think it is a disaster. If you fail to learn, that’s a disaster.” To that end, Ghosn began staging a comeback for both companies at the end of 2007.

When Ghosn began devising his plans and other projects, he took an unusual approach: He started with a blank piece of paper. He told Kimimasa Mayama of the Independent on Sunday, “Believing by seeing is easy. Believing without seeing anything is much more difficult, even when you are the main dealer of the action. You have to move fast, but at the same time be very cautious. Any step can lead to disaster. The most difficult part is when you see something other people don’t see and can’t back it up by evidence. You question yourself. Am I doing the right thing? Am I going in the right direction?” With all his success, Ghosn has proven that he knows the answers to these questions.