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Interview with Renault-Nissan CEO, Carlos Ghosn

Aired January 20, 2012 - 05:30:00   ET




CARLOS GHOSN, CEO RENAULT-NISSAN: Nissan is bold. It is looking forward. And Nissan is growing.

COREN (voiceover): The quintessential global businessman. Born in Brazil, he grew up in Lebanon, was educated in France, and now splits his time between Paris, Rio, and Tokyo.

A veteran of the automotive industry, he's the CEO of not one, but two of the world's biggest carmakers, Nissan and Renault.

GHOSN: Nissan is in bad shape.

COREN (voiceover): Arriving in Japan in 1999, he revived Nissan after closing factories and slashing more than 20,000 jobs.

The move shook up the company's traditional Japanese approach to business. But the eventual turnaround of Nissan gave him superstar status in Japan. Complete with his own manga comic book. Also at the helm of the prominent French carmaker, Renault, Ghosn is in charge of the alliance that binds it to Nissan.

But the past 12 months have been nothing short of a challenge. Japan's devastating tsunami, a sluggish U.S. economy, the European debt crisis, and the recent floods in Thailand have tested the company and its CEO.

This week, "Talk Asia" meets Carlos Ghosn at Nissan headquarters in Yokohama, Japan, to find out what he thinks lies on the road ahead.


COREN: Mr. Ghosn, welcome to "Talk Asia". Recently, you said you've never seen a tougher period for the company. The financial turmoil in the United States, the sovereign debt crisis in Europe, the strong Yen, obviously, the March earthquake-tsunami, and then the floods in Thailand.


COREN: And yet, you believe 2012 will be a record year for the car industry. How is that possible?

GHOSN: Well, you know, 2011, yes, we had the record number of crisis. Unfortunately for us, most of them concentrated in Japan. So, there is no contradiction between the fact that 2011, already, will be a record year for the car industry. Because most of the other carmakers, I think right here, with the exception of the Japanese carmaker, which have been hit by so many crisis.

I still consider that 2012 will be another record year for the industry because, with the exception of Europe and the exception of Japan, I still think all the other countries will be growing.

COREN: After the devastating earthquake-tsunami back in March, you praised the Japanese people for their resilience in the face of adversity. How do you think the country is recovering?

GHOSN: Well, I think the country is recovering extremely well from the earthquake. It's absolutely unbelievable that, with the amount of damage that the country has faced, the recovery has been so quick and so thorough.


GHOSN: We are on (INAUDIBLE) 17. And today standing in the plant. As you know, you know, the light is back. There is no problem of water. They are at 100 percent capacity restored.

What we plan became Nissan symbol of swift recovery.


COREN: You were one of the first executives to actually visit the radiation zone. What was that like?

GHOSN: Well, you know, we had one of our plants within 40 kilometers of the Fukushima power plant where there was suspicion of leaks from the nuclear power plant. I visited it because I wanted the plant to revive and I wanted to make sure. And obviously after we got some specialist telling us there was no risk, because I don't want to put our own employees at risk. But then, when I was convinced that there was no risk, I went there. I went with my management team. We gathered all the employees and shored up the efforts to restart the plant as soon as possible.

COREN: You also said after the natural disaster, that change was much easier here than in any other country, which I have found quite interesting. You said, though, that it did lack leadership. I mean, Japan has gone through, what? Six prime ministers in the last five years? It's lost the title as world's number two economy to China. It's been in recession or had little growth for the past 20 years. And then, on top of that, this natural disaster. What do you think Japan needs to do to bounce back?

GHOSN: I kept saying it - I think Japan has a formidable capacity to implement, execute quickly in a way which is extremely organized. That's what you call the (INAUDIBLE) power of Japan. Where often there is a lack of leadership because people, in order to move into the right direction, they need an explanation about what needs to be done. They need a vision about what needs to be done. And then whenever the vision is clear and the explanation is convincing, you know, things go very, very fast in Japan. That's why I'm saying, you know, usually people have a perception that change in Japan is difficult. It's not. It is difficult if people don't see your vision, if they don't see your strategy, if they don't understand your action plan, yes, it's not going to happen.

COREN: And what about now, politically? Do you believe that the government has a vision for this country?

GHOSN: I think this government is trying to establish a vision about how to overcome the latest disasters. But, on top of this, about where the country is going.

COREN: Well, the strong Yen is certainly causing a huge problem for Japanese exporters. And you have told the government in no uncertain terms that if this problem isn't resolved, you will have to move jobs offshore. Do you believe that the government has the resolve to really address and tackle this issue? Because, to date, it's been quite hard, hasn't it, there?

GHOSN: In order to make changes like this one, that mean you have to fight an over evaluation of your currency. It happen in (INAUDIBLE), it happen in Japan. You need to have a complete alignment of government. We've been very vocal on this issue, because we think, at the end of the day, the victim of this is going to be Japan, itself. Because it's going to be a detriment of employment in Japan. Because large companies in Japan can always shift their projects into other countries. We can go everywhere.

But we are all attached to our base in Japan. The roots in Japan are very important. This is at the base of the DNA of Japanese company. That's why we are so vocal. We're just saying, we want you to be aware of the fact that an abnormally strong Yen, completely uncompetitive, is going to be a detriment of short-term results of company and long-term employment.

COREN: Why hasn't the bank of Japan - the government - why haven't they shown that resolve?

GHOSN: Probably because they understand that it will solve by itself. It doesn't need such a strong push.

COREN: But it hasn't.

GHOSN: I know, I know. But maybe the scale of time on which we are thinking are not the same. I mean, we are thinking three months, six months, one year. Maybe other people are thinking in term of two years, three years, five years. But I think it's an urgent situation.

COREN: I mean, you have said -


COREN: -- that if it continues to appreciate, you will take jobs offshore.

GHOSN: Our activity is based on projects. So when a project comes and you have to make a decision about where this project is going to be developed and where it's going to be manufactured, well, it's very hard, today, -- looking at the economics - it's very hard today to allocate projects to Japan. It's very hard.

COREN: You mentioned the Thai floods and how it has impacted on Japanese carmakers. There is speculation that Japanese companies will move out of Thailand because of how badly the crisis was handled. Is there any truth to that?

GHOSN: I tell you, we have no intention to move out of Thailand. We think we are, today, obviously, conscious of the risk existing in Thailand. And we will draw a lot of conclusions about what happened. So there are going to be some countermeasures to try to protect us in a case of something like this happening in the future. But Thailand will continue to be an important manufacturing base for us.


COREN: One shareholder compared you to the armed forces occupying Japan post-World War II. You encountered a great deal of opposition.




GHOSN: Tokyo is very important for us. This is our home market. This is our home country. This is where feature a lot of innovation, both in term of car and in term of technology. We don't consider Tokyo motors only for the Japanese market, but we consider it also for the global market.

Tokyo motor show is showing that the industry is vibrant. That the Japanese industry continues to invest and continues to innovate. I think that competition is also extremely innovative and extremely active. Which puts even more pressure on us to be always ahead of the game.


COREN: You are a Lebanese, Brazilian, French man who splits his time between Yokohama, here in Japan, and headquarters, also, in Paris. Where do you consider home?

GHOSN: You know, I consider home practically everywhere where I life. That mean, for me, my neighborhood in Paris, my neighborhood in Japan - I have also a place in Rio de Janeiro, where I go often whenever I have time. So, home for me, is not one country. It's not one particular place. They are different places where I have roots and where I have homes. And I try to balance it this way.

COREN: You are, of course, the boss of two of the world's largest car companies - Nissan and Renault. So, basically, you do two jobs, which is quite unusual in the corporate world. Obviously, they have cross- shareholdings in both companies. But they are very much two separate entities. Why do both jobs?

GHOSN: You know, I don't think it would be normal, in normal circumstances, for one person to have two jobs, and particularly two jobs and CEO of two company. I have some kind of strong legitimacy from both sides. We know that the tendency of two companies coming together is to drift apart. Each one wants to do its own course. At the same time, we need to make sure, even though you keep the different identities, that you develop the synergy. So, having one person accepted from both parts as being legitimate can help a lot into building the alliance.

COREN: Have you ruled out a merger?

GHOSN: Yes. I think a merger, in my opinion, would destroy more value than it can create. And it has been proven. For 12 years we have been working together. There was no conflict between the two companies. We developed a lot of values because we kept the two identities separate and we kept the two companies autonomous.

COREN: Well, your success story here at Nissan is quite extraordinary. You came to Japan in 1999 to turn the company around. It was on the brink of bankruptcy with a $20 billion debt. In the space of a year, you turned a $6 billion loss into a $2.7 billion profit. You did achieve the impossible, didn't you?

GHOSN: You know what? The solutions were inside the company. When I arrived in Nissan in 1999, two turnaround efforts before me failed. And failed because they were watered down. There was too much complacency, "We can't do this, we can't do that". At the end of the day, if you don't put enough force into a turnaround effort, you don't get the results.

So I had the strength of an outsider. I was an outsider to Japan, I was an outsider to Nissan. So I was able to achieve something that, you know, was known, in a certain way, but needed some coherence - some good shape priorities. Something that would be attractive and that people would consider - could be successful.

COREN: It wasn't without pain or breaking some serious taboos here, in Japan. You cut 21,000 jobs, which was, what? 14 percent of the workforce? Closed down factories, sold off assets. At the time, one shareholder compared you to the armed forces occupying Japan post-World War II. I mean, you encountered a great deal of opposition.

GHOSN: There was a lot of skepticism and criticism at the beginning. There was opposition when we announced the plan. But, you know, I always had the benefit of the doubt. Opposition never reach a level where you could not work. And as results came very quickly, little by little, people massively joined the effort of Nissan. Nissan became a symbol of a reform in Japan.

And I don't think you can achieve turnarounds easily. You know that you're going to have to go against the tide. You know that you're going to have to do things that people before you did not do - not because they didn't think about, but because, you know, it represent a lot of risks or it represent something that society around you would not accept.

COREN: Considering your model is so successful, why do you think other Japanese companies haven't followed your lead?

GHOSN: You know, we have been analyzed a lot. We have been benchmarked a lot. A lot of companies came. No company took exactly what we have done. But a lot of company have taken pieces of what we have done.

COREN: As a result of the success, you gained hero-like status. To the point where you had a manga comic book written about you. That must, of course, be the ultimate compliment, here in Japan.

GHOSN: Well, it's very fun to have a comic book after you, obviously. I mean, it's fun for me. It was fun for my kids. Fun for the relatives. Actually, in fact, no matter how many books have been written or what are the books that I have written about this experience. The manga keeps being the most popular and the most known piece about our experience here.


COREN: The electric vehicle, of course, is a project that you're very proud of. And you are pioneering. Some say that is overly ambitious.

GHOSN: Most of them said that it's overly ambitious.




GHOSN: This is the first car of our offensive on zero-emission cars. It's an electric car. We are practically at 20,000 cars sold. Mainly United States, Japan, and a little bit in Europe. Obviously, this number's going to go up next year. But there are three other cars coming. This is a family car. You're going to have the small city cars, you're going to have light commercial vehicle, you're going to have luxury products. You're going to have many different offers to correspond to different needs.

COREN: You're not just buying into the whole grain technology - you actually want to be a pioneer in as far as electric vehicles are concerned.

GHOSN: Yes. I think, you know, this is the ultimate technology because this is zero emission. We are also developing a new technologies within the zero emission strategy - the fuel cell cars. But they are not ready, yet, to go on the market - the costs are too high.


COREN: The electric vehicle, of course, is a project that you are very proud of and you are pioneering. You're investing billions of dollars into this. You do predict that, by 2020, the electric car will account for 10 percent of global sales. Some say that is overly ambitious.

GHOSN: Most of them say that is overly ambitious. Which is normal. I mean, when you're a pioneer and you are at the forefront of an offensive, you're going to be the most optimistic person. I think it's going to take off. I think the limitation of this is going to be the offer, today - the offer is extremely limited for electric car.

But the Renault-Nissan Alliance is going to put a lot of cars on the street. We take a commitment that, by 2016, more than 1.5 million electric cars will be sold by the Alliance on seven models - seven to eight models - that we're going to offer. So, you know, we are at the beginning of the offensive. So far, so good.

COREN: Mr. Ghosn, is Nissan looking to manufacture Infinity, your luxury car in China?

GHOSN: It's very possible that one day we will. Because Infinity's main markets are United States - China potentially going to be one of the main market of Infinity. China, without any doubt, is a prospect.

COREN: Because Toyota refused to manufacture the Lexus in China over concerns that their technology would be ripped off. You don't have similar fears?

GHOSN: No. I don't. I think we have great partners in China. We trust them. We've been working with them for so many years. And we think that, with the very good discipline inside our company and with our partners, we should be able to, you know, assemble in China, sell in China, eventually export from China without - in a sustainable way.


COREN: When you came to Japan in 1999, did you sort of think 12 years in the future you would still be here?

GHOSN: You know, I had - since 1999, I had the very strong connection with Japan. Even though I didn't know Japan at all. In 1999, I didn't speak the language, I was not familiar with the culture. But I had a very strong connection with Japan that I was not able to explain. I can tell you, I've been so comfortable here. I mean, I'm not Japanese, but I feel I'm part of Japan. So -

COREN: Where do you think that connection came from?

GHOSN: You know, probably the fact that there are fundamental values that I believe in that I found in the company. Like, I believe a lot in, for example, the sense of engagement and commitment. And Japan - Japanese people are extremely engaged and extremely committed.

COREN: But back in 1999, did people say, "He won't last"?

GHOSN: Oh yes. I mean, a lot of people thought that this experience would not be successful. And then, as I committed that I would deliver the results, if not, I would go - a lot of people were just sitting back and say, "We're going to wait until he explodes". So it didn't happen. Fortunately. And fortunately, not only for me, but fortunately for Nissan, because this was really the third attempt to turn around the company. And, frankly, it was the last one.


COREN: One of your colleagues in the United States described you as the most disciplined man that he's ever worked with. What drives you?

GHOSN: Well, you know, you have to be disciplined, because, you know, I don't know a lot of CEOs of one company who are not disciplined. But now, when you're CEO of two companies and if you want to really manage well, you're going to have to be extremely disciplined. I learned discipline by need, because I knew that, without discipline, not a lot of things I could accomplish. Somebody say, "With a little bit of discipline, you can achieve a little bit. With a lot of discipline, you can achieve a lot". And I think, in term of, you know - particularly when you are at the top, it's very, very true.

COREN: The Japanese are known as being workaholics. Do you fall into that category?

GHOSN: I don't think so, because, you know, I have a lot of things that I'm interested in outside my work. So, I don't - I mean, my work is not my refuge. I'm not going there because I'm hiding from something else. I have my family, my children - I have a lot of outside activities. I love not to be busy in a certain way.

COREN: You speak about your family - you are married, with four children. How do you balance that work life?

GHOSN: It's very difficult. I mean, it's very difficult. Now it's easier because the kids are grown up, so they don't need you as much as when they were at home - children at home. I tried to compensate the lack of presence by the quality of the presence. So, when I am with my children, I'm 100 percent with them.

So, one way to compensate for the quantity of time you dedicate is to really focus on the quality of time.

COREN: General Motors and Ford have both tried to recruit you in the past. The Obama Administration tried to convince you to overhaul GM during the 2008 financial crisis. You are a man who obviously loves a challenge. Why didn't you take up that challenge?

GHOSN: I'm too loyal to my companies. I love Renault. I love Nissan. I love the Alliance. I've been a strong artisan of what happen. Now we have the strategic operation with them. So, I feel that I can't jump ship. I am here. I am part of it. I will continue to be part of it as long as I will be considered as an asset.

COREN: Mr. Ghosn, a pleasure to meet you.

GHOSN: Thanks.

COREN: Thank you very much.