Nissan's ousted CEO Hiroto Saikawa, unbowed
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December 02, 2019 12:00 AM

Nissan's ousted Saikawa, unbowed

Hans Greimel
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    NISSAN MOTOR CO.
    “I am proud of what I have done,” Saikawa says. “It should be appreciated.”

    YOKOHAMA, Japan — Two months after being forced to resign as CEO of Nissan Motor Co. in a swirl of management scandal, Hiroto Saikawa remains unbowed and proud of his short term at the top.

    The sidelined Nissan lifer feels that way especially about the tumultuous past year, a period riled by the arrest and ouster of his onetime mentor Carlos Ghosn, the near implosion of Nissan's 20-year alliance with Renault and a perilous plunge in profits at Japan's No. 2 carmaker.

    To hear Saikawa tell it, few other executives could have navigated such troubled waters.

    "For Nissan, it was good that I was, at that time, in charge. Because it's not easy to properly handle this situation," Saikawa told Automotive News last week, reflecting on a 42-year Nissan career.

    "I am proud of what I have done," he said. "It should be appreciated."

    Saikawa's career at Nissan, ending in his three-year tenure as CEO, was consistently overshadowed by the larger-than-life Ghosn. And there are regrets. Saikawa said he failed to push back hard enough against Ghosn's expansionist strategy.

    But Saikawa was still the point man for some significant changes over the past 20 years.

    He was boss when prosecutors set the trap for Ghosn at Tokyo's Haneda airport in November 2018. He led the battle against Renault's push for an "irreversible" integration with Nissan. And he fixed corporate governance to improve transparency and accountability going forward.

    Crucially, Saikawa even tried to reverse several of Ghosn's signature business strategies — most notably the controversial and profit-eroding drive for volume and market share in the U.S.

    But Saikawa was unceremoniously forced to stand down in disgrace in September, before completing his envisioned plan to revive the company and pick new leaders.

    "Especially in the last year, I did a lot for Nissan. I myself believe I contributed a lot," Saikawa said. "But I did step down earlier than planned because it could be good to stabilize the situation. My plan was to hand over to a new generation after putting the company onto a recovery path."

    Board backlash

    To be sure, not everyone is so upbeat about Nissan's wild ride under Saikawa.

    Some within Nissan saw Ghosn's longtime loyal protege as part of the problem. They wondered why he didn't step down earlier to take responsibility for Ghosn's alleged misconduct.

    Others criticized Saikawa's execution of rolling back Nissan's use of U.S. incentives and fleet sales, which triggered a massive tumble in U.S. sales and corporate profits. In July, the company reported a 99 percent plunge in operating profit for the April-June quarter and said it was slashing 12,500 jobs worldwide.

    It was Nissan's board of directors — reconfigured to be more independent, thanks to reforms ushered in by Saikawa himself — that eventually turned against the CEO. When an internal report found Saikawa had improperly benefited from a stock-linked incentive program that boosted his payout by almost half a million dollars, the board said Saikawa's baggage was just too much.

    "There was very quick alignment behind having Saikawa resign," a person familiar with the board's decision said. "It was impossible to continue with him as chief executive in that situation."

    Saikawa was appointed co-CEO alongside Ghosn in November 2016 and became solo CEO the following April, when Ghosn stepped back as chairman. Almost immediately, Saikawa began rocking the boat with plans to dial back Ghosn's pursuit of ever bigger volume and market share.

    Surprisingly, Ghosn didn't voice objections — at least not openly, Saikawa said. But there was conflict under the surface. While Saikawa was giving orders to scale back on the incentive-heavy aggressive growth strategy, Ghosn was sending his own directives to stay the course.

    "It created a lot of mess in [the field], which is kind of a cause for losing trust from our partners," Saikawa said.

    Saikawa and Ghosn locked horns again in early 2018, when Ghosn floated the idea of pursuing an "irreversible" new structure between Renault and Nissan — a move urged by Renault's largest shareholder, the French government. This raised alarms at Nissan and with Saikawa, especially if it meant meshing management.

    "At the end of the day, a single guy would handle everything, which I don't think is sustainable," Saikawa said.

    "We had some discussion, and I was not supportive," he said. "It would not be accepted by other guys at Nissan and also the Japanese community. This is what I told him."

    Fear of merger

    Ghosn, now free on bail and awaiting trial in Japan on four indictments of alleged financial misconduct, says Nissan's fear of a merger inspired a corporate coup to remove him. He has blamed his arrest on a conspiracy of executives worried about losing their jobs.

    Saikawa conceded that some inside the Japanese company had anxieties about whether Nissan would be merged with Renault under Ghosn's leadership.

    "This was a concern of some people. That is true. But I don't think it has anything to do with what happened in November at all," Saikawa said, referring to Ghosn's November 2018 arrest.

    REUTERS
    Saikawa says he and Jean-Dominique Senard, Ghosn’s successor at Renault, had a rapport.

    Only after Ghosn's arrest did the deep divides within the alliance and within Nissan begin to surface, Saikawa said. One camp inside Nissan and at Renault remained loyal to Ghosn, while at Nissan, another group believed that Nissan should revert to being a Japanese company, led by Japanese. Some individuals waxed nostalgic about its pre-alliance times.

    Yet Saikawa maintains that he wanted to preserve and promote the alliance as a tool for advancing Renault and Nissan. And he opposed the old guard at Nissan who wanted to undo years of international bridge-building, he said.

    Nissan's relations with Renault stabilized after Jean-Dominique Senard was poached from French tire maker Michelin early this year to become Ghosn's successor as chairman of Renault. Saikawa said that he and Senard had developed a rapport and were working to mend ties when Saikawa's tenure was abruptly cut short in September.

    Makoto Uchida, Nissan's former China chief, was to take over as Nissan CEO on Sunday, Dec. 1. But Saikawa, 66, will stay on the board until February.

    Mending the alliance and reviving Nissan's business will now fall to Uchida and his team.

    But the selection of 53-year-old Uchida, Saikawa said, is proof that Nissan's reformed corporate governance system is working. A more independent nomination committee now selects leader candidates. And this time, they followed Saikawa's vision for promoting a younger generation.

    Related Article
    Former Nissan CEO says he was not a scapegoat

    Looking back, Saikawa remains convinced that Ghosn's relentless quest for scale overstretched the company in harmful ways, forcing it to rely on unsustainable "push" strategies to reach unrealistic goals. A prime example, he said, was Ghosn's 2017 declaration that the alliance would seek combined global sales of 14 million vehicles under a six-year business plan through 2022. Saikawa said his own internal reference target at the time was much lower.

    Saikawa now wishes he had taken a page from the playbook of rival Toyota Motor Corp. and pushed harder for an "intentional pause" at Nissan. Toyota President Akio Toyoda coined that phrase when he deliberately put the brakes on rampant growth for three years after his company's 2010 recall crisis and the disastrous 2011 earthquake-tsunami in Japan. Toyoda's idea was to get his company's house in order and refocus on sustainable growth.

    "I remember the words of Akio Toyoda," Saikawa said. "And if I had convinced Carlos Ghosn in a more explicit manner, starting maybe even from 2016, then our targets for performance could have been much, much milder. Maybe in the current situation, that is the biggest regret."

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