Carlos Ghosn – Mitsubishi’s Savior Or Ruthless Businessman?
CEO of Renault and Nissan, Chairman of AvtoVAZ and Renault-Nissan Alliance has come to Japan, yet again, to cut some costs. This time he hasn’t come to Japan to have anything with Renault (which he helped save in 1990’s) or Nissan (which he rose from ashes in 2000’s) but, as we can all assume, to copy paste his strategy in a town called Mizushima.
Road So Far
Mitsubishi is in a great pile of trouble. The company made a huge mistake and lied to their customers about the fuel consumption in a number of models, including two it made for Nissan and together with those models it reached the number of over 600,000 cars. Fortunately, those cars were sold only in Japan, so it wasn’t a international scandal like in some other cases (VW). That scandal came to surface in April and since then, their share price has fallen about 40%.
The savior appeared and everyone in Mitsubishi cheered, until they found out the name of the savior.
Nissan made a dill and paid 1.5 billion pounds for 34% share, which gave the partial control over their smaller Japanese rival. That was fine, but the man they sent was not a good news for people living in industrial towns, dependent of Mitsubishi. Everyone in that area knows of Carlos Ghosn. They know about thousands of unemployed in the streets, after the intervention of Carlos Ghosn. His revival plan from 1999 included the closing of five Nissan’s factories, cutting approximately 14% of employees and shrinking their supplier ranks by half. But that had to be done.
Mitsubishi had some other scandals in the past, (early 2000’s, covering of safety defects – caused some fatal crashes) and people already know what to do, and to do that in time. For example, a little city of Soja, has already courted food companies to build factories in their town, just as a backup plan, in case that automobile industry fails.
Common People Suffers The Most
Ever since the “scandal” the shops related or connected to Mitsubishi are closing down and that caused the economic avalanche in that area. For example, in “the good times” there were shops with uniforms for the workers and fast food restaurants, but they don’t have any customers now, so they had to be closed. As a domino effect sea food, knitting and sewing, children’s toys and futons suppliers had to close too. Even karaoke bars are empty and ready to be rented.
Citizens of Mizushima and surrounding area are scared, and that is natural.
Suppliers are going to feel it first. Even now, at the beginning of everything, one of the suppliers, who asked to be anonymous, said that he cannot bring his finished components to Mitsubishi for the review like he did in the past. Nissan asked him to submit CAD renderings in advance. (computer assisted design). But he didn’t have that kind of a system, and even if he wanted to implement that kind of a system, he would have to spend additional 30 million yens and a couple of years to train his workers which is impossible. Instead he had to reform his company as a second tier company, which means that they would not be able to provide parts directly to the company, which again means that they will earn a lot less because of the “middle man”.
That is only one of the problems, and there will be lots more in the future. We could only take a look at the countries which went through all those cost savings, and people had to endure. There is place for fear, but not for any panic. Mitsubishi is in good hands, judging by the past.
Is The Fear Necessary?
I believe, and that is my own opinion, that Nissan is not going to hurt Mitsubishi. Those two companies were rivals, but I think that Ghosn doesn’t care about that at all. He is a true businessman and he actually knows what to do in problematic situations just like this one is. He is going to cut some unnecessary costs, sure, but he is not going to destroy Mitsubishi, but revive it in the best way he knows. Why? Because true businessmen doesn’t have emotions, but just smell of money running through their veins. Ghosn is going to order the sharing of platforms, engineering, engines, production facilities and parts. Ghosn himself has said that he sees billions of dollars in cooperation and purchasing, common platforms, cooperation in development and joint plant utilization but he was clear that Mitsubishi has total autonomy and that it won’t be controlled but rather supported by Nissan.
In the end Nissan and Mitsubishi are the main source of “mini cars” and that is the sort of a car that sells the most. So, sleep peacefully, Mizushima – Mitsubishi is going to shine yet again.