International -- Asian Business: Japan
Nissan: Still Downshifting (int'l edition)
A board reshuffle is a start, but there's more fixing to do
For years, it has been the auto maker that could do no right. Nissan Motor Co. missed Japan's recreational vehicle bonanza, saw its U.S. sales skid despite booming demand, and got so desperate that it sold a third of its stock to France's Renault--the ultimate humiliation for a proud icon of Japan Inc.
So it was a relief to see Nissan finally take some forceful steps. On Apr. 28, President Yoshikazu Hanawa announced plans to reduce the number of board members from 37 to 10 to speed up decisions. Three will be replaced by directors from Renault. Departures include Minoru Nakamura, president of Nissan's troubled North American operations. In his place is Nobuo Araki, who headed a joint venture with Ford Motor Co. to produce the Nissan Quest and Mercury Villager minivans in Ohio. The Quest has been a stellar performer in the U.S., with April sales alone rising by 90%. "This decision shows that Hanawa is determined to plow through Nissan's difficulties," says a former Nissan manager.
Yet a great deal more is needed than a board reshuffle. Nissan's bloated workforce is the main reason the company expects to lose $250 million in the year ended March, 1999, while rivals Toyota Motor Corp. and Honda Motor Co. remain in the black. Toyota sales are nearly twice the $54.7 billion that Nissan posted last year, yet Toyota has only a slightly bigger workforce. So far, Hanawa has indicated he plans to cut only 3% of Nissan's global payroll of 137,000 over the next two years, mainly through attrition. Most executives ousted from Nissan's board, meanwhile, will stay on the payroll in other positions. If Nissan is going to be a survivor, Hanawa will need to step up the pressure even more.By Emily Thornton in Tokyo