JEDDAH, 7 July 2003 — Carlos Ghosn, CEO of Nissan Motor Co., and 2002 Fortune magazine’s Asia’s Businessman of the Year, visited Saudi Arabia last week on the 50th anniversary of the Japanese car giant’s presence in the Kingdom.
Ghosn spoke to Arab News about his formula for reshaping and resurrecting the once-troubled Nissan.
“There were three indications Nissan was in trouble,” he began. “In October 1999 it was announced most in-debt car manufacturer in the world, owing $19 billion. We were coming from a period of seven years with practically no profit. And we were losing market share for most of the 1990s.” The recovery plan, he explained, was relatively simple.
“We had to invest for the future — in our technology and our product lineup; and we needed to re-establish the profitability of the company.”
He said to seize market opportunities Nissan was unable to capture in the past because of a lack of resources, the company initiated a three-year program to reduce costs by $18 billion.
“We said that we would sell all the assets that were not considered core business,” Ghosn explained. Within a year, Ghosn’s “Nissan Revival Plan” wiped out $11 billion from the company’s debt and posted a $5.45 billion profit. This was mainly achieved by laying off 21,000 employees, closing five factories, and demanding 20 percent savings from suppliers.
According to Ghosn, Nissan has launched 12 new models to cover 21 regional markets in the last year alone. Sales surpassed 2,771,000 units of different models, an increase on 67 percent compared with 2001’s sales.
“Through its agent in Saudi Arabia, Nissan sold approximately 40,000 units of different models. We consider the Saudi market one of the most important markets in the region.” The Saudi market, though limited compared with other world markets, has great potential for growth, he said. “We have to deliver more products quicker, and be more reliable and attractive,” he added.
Responding to a question whether Nissan planned to establish a car assembly plant in the Kingdom at a time when foreign investment was being courted in the Kingdom, he said: “Investments are driven by market size. Considering that the markets of the region are small and fragmented, we are unlikely to invest here. However, if the Middle East markets become open in a common manner similar to the European forum or other international economic conglomerates, this could attract foreign investments that are seeking new opportunities.”
Ghosn said assembly plants were not of much benefit. “In fact, they failed in many countries for several reasons, including limited assembly line.”
The solution is to effectuate a common market serving the whole region, he said.
“Nissan is expecting to announce a financial position of $66 million. The debt of car manufacturing has declined, compared with $3.54 billion by the end of the fiscal year 2002. The prime mover of our operation is no longer the debt. Instead, it will be the revenues of the working capital, which is estimated at 19.5 percent in the fiscal year 2002.”
But Nissan is investing $1.1 billion in the new Nissan factory in Canto, Mississippi, which will produce 400,000 cars a year.
He said it was possible that Nissan benefited from the regional boycott of US goods, “but I can tell you we did not do anything purposely to capitalize on it, and I can’t say that the years 2001 and 2002 were good for the car industry in the Middle East. It has been a struggle and a challenge. We probably suffered more than other companies, but these are not golden years.”
