TOKYO — Nissan Motor Co., once a highflying icon of Japanese economic might, on Monday announced a historic reorganization providing both a stark reminder of its fall from grace and the most dramatic evidence yet that Japan is on the road to meaningful restructuring after years of paralysis.
Any thought that new Nissan Chief Operating Officer Carlos Ghosn might go easy on his Japanese colleagues was dashed when he unveiled the plan--more sweeping than many analysts had predicted--to close five factories, cut 21,000 jobs, pare $9 billion in costs, overhaul suppliers, stop selling bland cars and fundamentally alter its Japanese management practices.
The precedent being set by Nissan--albeit one forced on the company by a non-Japanese partner, Renault of France--sends a broader signal: If Nissan can pull itself back from the brink, it will encourage other Japanese companies in overbuilt smokestack industries to follow suit.
The announcement also underscores a stunning reversal from the '70s, when Japanese auto makers had forced their American counterparts to undertake the same kind of painful downsizing now facing Nissan. Its fall has been spectacular--a $19-billion debt, losses in six of the last seven years and a humbling capitulation in which it had to sell a controlling interest to Renault in March. Marketing blunders, symbolized by Nissan's decision to stop selling vehicles in the U.S. under the Datsun name, and lackluster vehicles conspired to stall sales in key markets around the world.
In a 90-minute, rapid-fire presentation Monday, former Renault executive Ghosn outlined a few of the problems he identified during a four-month review of Nissan Motor Co., which remains Japan's No. 2 auto maker behind Toyota Motor Corp.
These include Nissan's crushing debt, a steady drop in market share, little long-term planning, no sense of urgency and a habit of looking to competitors rather than customers for cues.
"Nissan is in bad shape," he said.
Ghosn, who moved over from Renault after the French auto maker agreed to inject $6.8 billion for a controlling 37% stake, said the plan is only the first step. The far more difficult job is making it work. Nor can cost cutting alone direct Nissan out of trouble, he added. Ultimately, the company needs exciting, well-designed cars the public wants.
Nissan said it will reorganize its design department and release a slew of new models in major markets, including a new version of the famed Z, a distinctively styled high-performance sports car, in the United States.
