Nissan Poised To Eliminate Jobs, Transfer Production
Ever since Carlos Ghosn took over the reigns of the Nissan Motor Company during the late 1990s, the business world has seen the automaker transformed from an ailing car company to one offering leadership in a highly competitive industry. Along with managing Nissan, Ghosn also is the CEO of France’s Renault Motors, a dual position highly unusual move for companies of this size.
Ghosn Was Bullish As Recently As November
As recently as November, Ghosn was bullish on the prospects of his company as I heard his speech at the 2008 Los Angeles Auto Show where he outlined Nissan’s bold move forward with a number of initiatives, not least being his promise to have Nissan bring forth an electric car within the next year or so. Those plans are still in place, but the company is also looking to slash its 240,000 workforce by some 20,000 employees.
According to published reports including an article which appeared in yesterday’s The Wall Street Journal (Nissan to Slash Payroll, Pare Japanese Output — page B1) and elsewhere, Ghosn has suspended the company’s 5% annual revenue growth until 2012 while also moving some production from Japan to other countries. The automaker’s popular Nissan March, currently produced in Japan, will now be built at a factory in Thailand where labor and production costs are much lower.
Japan Is Too Expensive For Nissan
Nissan, like other Japanese manufacturers, has found that building cars in Japan has gotten to be too expensive. Not just higher labor and production costs are making car building more expensive in the homeland, but the soaring value of the yen against other currencies is hurting profits. Like all other large automakers, Nissan is truly a business on a global scale, with Japan being just one market where its cars are built.
Nissan is also scaling back new product introduction over the next four years from an average of twelve new products annually to ten. The company insists that it is moving forward with its plans to build an electric vehicle and will tap a $25 billion U.S. Department of Energy loan program established to help automakers develop more fuel efficient vehicles. Nissan will likely also ask the Japanese government and other national governments for financial assistance in the form of low-interest loans.
Nissan also has been pursuing strategic alliances with other automakers including Chrysler LLC for whom Nissan will provide at least one small car and probably a midsize model for America’s third largest automaker. In addition, Chrysler LLC will supply the platform for the next generation Nissan Titan, its big truck. The Titan will likely share the same platform now powering the Dodge Ram.
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