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Nissan CEO Named Heir Apparent to Renault Chief

Autos: Carlos Ghosn may keep current job while taking reins of French firm in 2005.

April 27, 2002|JOHN O'DELL | TIMES STAFF WRITER

Nissan Motor Co. Chief Executive Carlos Ghosn, architect of a turnaround plan that shattered centuries of Japanese business tradition and brought the country's No. 3 car maker from insolvency to profit in just two years, was crowned heir apparent Friday to Renault Chief Executive Louis Schweitzer.

It has long been anticipated that Ghosn, who joined Nissan from Renault, would replace Schweitzer when the 59-year-old executive retired.

But Schweitzer made it official during the French auto maker's annual shareholders meeting in Paris, saying that when he steps down in 2005, Ghosn would be his replacement as chief executive. Schweitzer would remain chairman of Renault, which acquired controlling interest in Nissan in 1999.

The move won't necessarily mean Ghosn will leave Nissan. In remarks to reporters in Detroit earlier this week, Ghosn said it would be possible to have a single chief executive preside over both companies.

"I'm not sure I need to be replaced at Nissan. You could imagine a scenario where you have one CEO for two companies," he said.

With Ghosn as chief executive of the so-called Alliance, separate chief operating officers would be responsible for daily operations at Renault and Nissan and would report to Ghosn.

Ghosn, who was elected to a seat on Renault's board at Friday's annual meeting, said in Detroit that "a lot of people worry what happens to Nissan after Ghosn, [but] 'after Ghosn' is going to take a long time."

Analysts greeted the news with approval, noting that Ghosn, 49, has proved himself capable of overcoming major obstacles.

When he took the reins at Nissan in mid-1999, he was faced with resurrecting a company that had been losing money for nearly a decade and was $19 billion in debt. Nissan was mired in a web of supplier contracts based on personal relationships rather than cost and quality. Ghosn recently disclosed that the company often paid 25% more than other car makers for parts and components.

He did away with the system, required suppliers to slash prices by an average of 20% and, in a move unprecedented in Japan's apprentice-to-retirement employment system, laid off thousands of workers as he shuttered five unprofitable factories in Japan and moved the work to other facilities, including some in the U.S.

Ghosn made it clear that he considered Nissan's North American operations to be crucial to the company's future. The U.S. is one of Nissan's few consistently profitable markets.

The company reported a $2.7-billion profit last year for its 2001 fiscal year, up from a $6.4-billion loss the previous year. Ghosn is expected to announce an even bigger profit for fiscal 2002 on May 9. Nissan's half-year profit, announced in November, was $1.4 billion

A Brazilian-born Frenchman of Lebanese descent who once headed tire maker Michelin Group's North American operations, Ghosn has proved that globalization can work in the auto industry, said Bob Reilly, a senior partner at J.D. Power & Associates.

Indeed, as Ghosn's plans for Nissan started bearing fruit, the Japanese began idolizing him.

Newspapers wrote features about the stores where he shopped for suits, and one of the popular adult comic books, or manga, that are ubiquitous in the island nation serialized Ghosn's life story and saw circulation jump by 500,000 copies for each of the five issues.

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