As the trend toward automotive acquisitions continues, the successful companies will be the ones that refuse to use cultural differences as a crutch to avoid necessary change, says someone who knows a thing or two about the subject.
Nissan Motor Co. COO Carlos Ghosn, speaking at the Automotive News World Congress, said the revival of Nissan and the strength of the Renault-Nissan alliance depend on avoiding nationalistic and company-to-company cultural clashes.
'We cannot use them as a cop-out or as a crutch. We know they will come, but we are determined to treat them as speed bumps, not detours,' he said.
'Before Nissan can overcome its financial problems, we must establish a binational, multicultural company - not through a forced merger, but by feeding off each other's strengths and minimizing each other's weaknesses for the sake of developing a healthy business.'
Ghosn, former executive vice president and No. 2 at Renault SA, joined Nissan last year after the French company purchased a 38 percent stake in the Japanese automaker.
Ghosn also said Nissan expects to return to profitability in the company's 2000 fiscal year, which ends March 31, 2001, and to have an operating profit that tops 4.5 percent of sales for the 2002 fiscal year.
He said the automaker's debt has been cut by $6.2 billion, to $13.2 billion, in part because of Renault's cash infusion.
'By the 2002 fiscal year, our net debt cap will be less than $6.6 billion,' Ghosn said. 'This reduction will be done at the same time that we will be increasing r&d investments from the very low level of 3.7 percent of net sales in 1998 to more normal levels of 5 percent.'
In a speech salted with wry humor, Ghosn reminded his audience that Nissan's executive committee had promised to resign if any of the targets were not met.
'Well, I am on the executive committee,' he said. 'So I will speak for all when I say that there is nothing like ultimate accountability as an incentive not to permit cultural clashes to get in the way of what we need to do.'
Ghosn cited several reasons for Nissan's financial crisis:
Lack of clear profit orientation
Insufficient focus on the customer and too much focus on chasing competitors
Lack of a sense of urgency
No shared vision or common long-term planning
Lack of cross-functional, cross-border, cross-cultural lines of work
A lack of cross-fertilization, combined with regional - rather than global - behavior.
On other topics, Ghosn said:
One of the future products that will best represent 'what the (Nissan) brand should be will come in fiscal year 2002, the next 300Z.'
Renault won't need to spend a large amount of money to re-enter the Mexican market because Renault will share Nissan's infrastructure in that country.
Though it won't happen in the first three years of the alliance between Nissan and Renault, the automakers will share platforms and assembly plants.