· 5 min read · News

The buzz factor


<b>By involving staff from the beginning of its revival plan, Nissan transformed attitudes and revolutionised its car production. Sheridan Winn reports</b>

It has taken Carlos Ghosn, CEO of the Nissan Motor Company, less than three years to turn round the ailing carmakers fortunes and reinvigorate a demoralised workforce. How did he do it? Ghosn himself puts the successful revival down to engineering, innovation and one other thing a buzz in his workforce.

Brazilian-born Ghosns task began in 1999, when he moved across from Renault, which had taken a 36% stake in Nissan, then sinking under 10.8 billion of debt. He was put in charge of the alliance, but observers were not optimistic. In the preceding eight years Nissan had made a profit only once and production had dropped by over 600,000 cars during the previous decade. Its product portfolio was largely uncompetitive, the brand was diminishing and there were few resources for new product development.

Ghosn had already acquired the name Le Cost Killer at Renault, when he became executive vice-president in 1996 as the company was struggling. Despite massive protests at the closure of Renaults large assembly plant in Belgium, he focused closely on cost reduction and the rationalisation of production capacity. It was a successful move, resulting in the rejuvenation of the product portfolio.

Nissan today is a very different company from the one it was three years ago. In two years one year earlier than planned the company has completed the Nissan Revival Plan (NRP). Its debt has been cut by 90%. Revenues are up by over 10% and the latest figures show a near doubling of operating profit. Our operating performance exceeds our plan, says Ghosn. Weve achieved six straight months of record profitability. Our half-year results paint a powerful picture.

While Nissans engineering skills, its significant presence in the worlds most important markets and its world-class manufacturing systems have undoubtedly all been important factors in the success of the NRP, Ghosn believes the basis for a suc-cessful corporate turnaround, with its sweeping changes, is the companys identity and the self-esteem of its workforce, which is where the buzz factor comes in. It was critical for us to have the active involvement of our workforce, he says. This was Nissans plan. People had ownership from the beginning it wasnt something delivered by consultants.

Before Ghosn joined, the company had no culture of working together across borders, functions or hierarchical lines, and no shared vision. As he and his team began the analysis for the NRP, they quickly came to one fundamental belief. The solutions to Nissans problems were inside the company, he says, quickly chopping the air with his hand.

Ghosn was not a man to be fazed by traditional Japanese business etiquette hence DaimlerChrysler chairman Jrgen Schrempps alternative nickname for him, the Icebreaker. With easy charm, Ghosn cut through traditional practice. He shook hands with every employee he met not just top Japanese managers. Communi-cation is very important, especially when a company is in crisis or in the process of drastic change, he says.

Committed to delivering significant results, the top management began by outlining a clear and uncompromising diagnosis of the situation to its people. Ghosn is a man who believes in quantifiable, measurable and timed commitments. We said, This is what we are going to do, he explains. This is the degree to which we will do it, and this is when we will do it. It was a credible plan that showed a clear perspective and built a simple strategy for the future.

A key management role was to give team members the authority to make tough decisions, says Ghosn. Cross-cultural management and teams have been the tools employed in a search for commonality. Weve achieved that combination of synergy and better performance in a variety of important areas. Weve taken cross-cultural differences out of the picture and are creating a unique, specific Nissan culture.

From the beginning, Nissan and Renault determined that the companies should remain separate, with two distinct management teams reporting to their respective shareholders. Making changes and protecting identities could have created many paralysing conflicts, says Ghosn. We didnt allow that to happen.

However, a separate reporting line did not mean that French and Japanese best practices were not applied in the others domain. We knew some people were concerned about the potential for culture clashes between the French and the Japanese, but it was not an issue, he continues. Cultural differences should be used as a catalyst for change, not as a crutch that inhibits change. You can learn a lot from somebody who is not like you. And, to be honest, we didnt have the luxury of wasting time worrying about cultural differences. The urgency of our situation forced us to focus on the true agents of change our people.

Most importantly, Ghosn believes, Nissan is a company of competent, dedicated people. Citing people as the most important key to revival may sound simplistic, but its not, he says.

Certainly the willingness of the workforce at Nissans Sunderland plant to accept added demands was central to the success of NRP. In the dark days of 1999 we had realised just how bad the plant was in terms of its global performance, says Philip Ashmore, personnel director at Nissan Motor Manufacturing UK (NMUK).

The biggest private employer in the Sunderland region, with a workforce of 4,700, it is now the most efficient plant in Europe: 80% of cars currently made here are exported to Europe and around 10,000 people in the region rely on the plant as suppliers and second-tier suppliers.

Ghosn brought a simplicity and direction to the organisation that it never had before, says Ashmore. Ghosn made it clear to everybody, that were operating as a global player. With Renault we are now the worlds fourth-biggest car producer. And to keep competing, weve got to behave as if we are.

Having been with the company for 13 years, Ashmore has seen radical change, not least in the size of the organisation. Established in 1985, the Sunderland plant employed 1,700 people by 1989 and produced one automobile model. Today the 4,700 strong workforce manufactures three models across two production lines. A new 5-5-5 Plan is pledged to employ 5,000 people, working 5,000 man-hours a year to build 500,000 units.

As NRP called for wide-ranging costs cuts, NMUK had to deliver on all its commitments against a backdrop of a 30% reduction in production spend while introducing three new models in as many years.

Despite the changes, the workforce is stable with a turnover of only 3%, although uncertainty resurfaced two years ago, with the question of which Nissan facility would gain production of the new Micra. At that point staff turnover had crept up to 6% the highest Ashmore can remember.

Sunderland has now moved on to the next stage of NRP, named Nissan 180. All around the plant are features and issues communicating the new plan. As a big plant, a potential issue here is keeping everybody well-informed, says Ashmore. You cant walk in without knowing about N180. Theres a terrific single mindedness and sense of direction.

And the future of Sunderland? Its strength will add to our clear targeting, replies Ghosn, before adding a stark warning. However, the most productive plant is not always the most cost-effective. Cars produced here are made with the strong pound and sold with the weak euro. The Sunderland plant will be less and less important to Nissan if the currency issue is not addressed. The workforce is very dedicated and competent, and we are trying to influence the environment. We dont want all their efforts to be ruined.

With hindsight, Ghosn believes the word plan does not accurately describe what was behind the completed Nissan Revival Plan. Process would have been a more appropriate word, because we are talking about an ongoing revival process, he says. We were taking the first step. The plan was only 5% of our task. The remaining 95% lay in its execution and the delivery of results.

And is Nissans growth sustainable? Yes, I think so, replies Ghosn. We must avoid complacency. The day you sink into complacency, everything stops. We need to keep a modest,

fact-based attitude.