Having reversed the fortunes of companies like Renault and Nissan in the past, Carlos Ghosn— often called “Mr. Fix-It”—appears poised for his next “makeover mission”—to extricate Japanese automaker Mitsubishi Motors from its current sullied reputation.
Mitsubishi is estimated, by a Goldman Sachs analysis, to bear $3.4 billion in compensations/penalties and production losses following the exposure of its fuel emission testings’ glaring loopholes and vehicle mileage misrepresentations. Following Nissan’s agreement to acquire 34% stake in Mitsubishi Motors this year, all hopes are apparently pinned on Ghosn, already serving as the CEO for as many as three entities (Renault, Nissan and Renault-Nissan alliance), to rebuild Mitsubishi Motors’ business. Could this really mean running four companies? For Mr. Fix-it, it’d just be another day in the life.
At the age of 30, he was assigned the role of COO for French tire producer, Michelin’s, South American operations around mid-1980. The company was grappling with enormous losses from Brazil’s hyperinflation, but under Ghosn’s efforts it managed to rake-in positive earnings in just two years. He also successfully headed the multinational’s North American division after being appointed as its COO in 1989 and promoted to CEO in 1990.
Still, he was just getting started. Next in-line was Renault. After being roped-in as the Executive Vice President by the French auto major in 1996, he turned it from a loss-making company into a profitable business within a single year!
Turning out to be the “man with the Midas touch,” Ghosn’s genius was further revealed in his restructuring of Japanese automaker Nissan, following the Renault-Nissan alliance forged in 1999. At the time, Nissan was mired in mounting losses along with a crushing debt load of more than $20 billion, making it the most indebted car manufacturer in the world. But what followed was to become one of the biggest business turnaround stories in history: under Ghosn’s leadership, Nissan became a profitable company within just one year and then went on to become the world’s most profitable automaker by 2003. Furthermore, Ghosn’s strategies slashed the company’s consolidated net automotive debt to its lowest level in 24 years by end of fiscal 2001, a year ahead of schedule! 2001 was also the year Ghosn was named the company’s CEO, even as he retained his position at Renault.
Trailblazer, Taskmaster, Trotter: The Perfect Recipe for Success?
At the heart of Ghosn’s stupendous success lies his raw ingenuity—from his tactics of cross-functional teams and commingling of various countries’ optimal business practices at Michelin to his Nissan Revival Plan’s revolutionary (and rather daring) strategies, which included subverting inveterate Japanese business practices such as employee age-based promotions and “keiretsu” (the Japanese term for business strategic associations between automakers and their suppliers).
However, the trailblazer businessman has also been subject to criticism, as his aggressive cost cutting measures may have seemed far too ‘ruthless’ to some people. Dubbed as “Le Cost Killer,” he had retrenched close to 20 billion French francs in costs for the ‘90s Renault revival, and that included displacing about 3,300 workers. As for Nissan, his plans included shutting five factories and laying off around 21,000 employees to rake-in profits for a company, which had struggled with losses in seven of the eight years preceding his appointment in 1999.
Nevertheless, that cannot take away from his relentless work ethic and path-breaking management styles, which injected a fresh lease on life for these companies. So dogged was Ghosn on his objectives that he had famously vowed, back in 1999, to resign if he didn’t achieve his goals for Nissan.
Bottom Line for Investors
Carlos Ghosn’s career arc almost feels like the stuff of dreams. But, the more important take- away from his story is the hard work and determination that must have gone into the making of the business maestro; not all of us may be vying to be the CEO of three companies, but success stories such as this could nevertheless serve as great inspiration to do better in life!
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