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Economy

Carlos Ghosn: The Extraordinary Fate Of A Boss Outside The Box

A path through Lebanon, Brazil and France, the former top Michelin manager may have met the end of the road in Japan.

Ghosn for good
Ghosn for good
David Barroux

PARIS — This time, it's unlikely that Carlos Ghosn will make it out unscathed. For the first time in his career, the man who has orchestrated the formation of the world's largest automobile group — bringing together Renault, Nissan and Mitsubishi into one alliance — is experiencing a resounding setback and appears to be on the verge of being ousted from the presidency of the Japanese group he'd brought back to life.

He who survived the Chinese spying scandal at Renault, who was saved by slight-of-hand regarding quality control issues in Nissan's Japanese plants and who managed to win the power struggle with the French state, the majority shareholder, over his salary, now risks losing everything. Because after ceding the presidency of Nissan, his continued leadership of Renault — and therefore the entire alliance — seems to be extremely jeopardized.

Sent to Japan in 1999 by Renault to try to save Nissan, after the French group had become its major shareholder, Carlos Ghosn was then a relatively unknown man. He had spent most of his career at Michelin, and had then arrived as number two and potential successor to Louis Schweitzer at the head of Renault in 1996, and was then known only to the small auto-manufacturing community. Renault employees — as well as French and Belgian politicians — had just had the opportunity to run up against this rigorous manager, who had not hesitated to tackle sensitive issues. Following an audit conducted by his teams at Renault, he sparked upheaval by deciding in 1997 to close the plant in the Belgian town of Vilvoorde.

In barely twenty-four months in Japan, this Brazilian of Lebanese origin who came to France as a teen, found himself for the first time at the head of a company and was going to prove all the skeptics wrong. Other automakers did not believe in the potential for Nissan to rebound, and Japanese insiders doubted that a foreigner could, for the first time in the history of capitalist Japan, succeed in leading and rectifying a company as symbolic and important as this underdog rival of Toyota.

The "samurai" returned to France in 2005.

The methods of the former student at France's elite polytechnic university would wind up working miracles. Dubbed the "cost killer," Ghosn never veered from his rather simple and straightforward method: identify problems, propose solutions, commit to results. While Nissan had refused for years to look the truth in the face, this was an executive who spoke directly and unequivocally: closure of factories, forced retirement of 21,000 employees (a first in the country of jobs-for-life), massive sell-offs of non-strategic subsidiaries, relaunching of production plans, pioneering bets on China. Though he began only as Nissan's number two, Ghosn declared that he would step down if he didn't achieve the goals he had set for the group in terms of profit and revenue.

The Ghosn method worked magic, and it helped Nissan's recovery so much that the "samurai" returned to France in 2005 to take over management of Renault. Arriving at the head of a manufacturer that was still "too French" and too dependent on certain models like the Scenic, Ghosn was not helped by the situation: The company was about to face one of the most serious crises of the automobile industry, starting in 2008.

At a Nissan plant in Yokosuka, Japan — Photo: Junko Kimura/Jana Press/ZUMA

His plans took longer to materialize at Renault, but his efforts eventually paid off. The new designer — Laurens van den Acker, from the Netherlands — gave a fresh look to the product line, including the Dacia, and particularly the Duster, which became Renault's best-selling vehicle. Even though the gamble was slow to pay dividends and the French were late to get into China, the internationalization of Renault made the manufacturer less and less dependent on the French market.

By 2016, with Nissan and Renault having recovered, the duo made a bet to buy up shares in Mitsubishi Motors, which was then in the middle of a crisis. Even if he didn't take operational control of Mitsubishi, Ghosn sent a close friend, who used his methodology to revive the manufacturer known for its 4x4.

Ghosn has also had complicated relations with the French state.

The successes of Carlos Ghosn are undeniable, but he has also always faced harsh criticisms. Some blame him for having ridden on the coattails of the bets of Louis Schweitzer (buyouts of Nissan and Dacia for example). Others for having invested in electric vehicles, which may seem visionary but has not yet proven to be profitable.

Still, more people focus on his own personal compensation and brash management style. Paid at the same time by both Renault and Nissan, Carlos Ghosn certainly was making more than 10 million euros a year, which puts him in the ranking with the CEOs of the largest car manufacturers, but he also earns more than most French and Japanese CEOs. The state-majority shareholder of Renault voted against his salary in its 2016 general assembly, but supported by his board, Ghosn managed to maintain his pay. He appeased critics by revising certain elements of his earnings, but the controversy damaged his image.

At the heart of the alliance, Ghosn has also had complicated relations with the French state, which regularly accuses him of concentrating too much power and of not having sufficiently prepared for his succession. This all-powerful boss, who had in his turn reproached the state for wanting to run the group — of which it is only one shareholder among many — had nevertheless made the development of the alliance his latest priority. The current crisis, it seems, won't give him time to read (or write) the last chapter of this adventure in industrial capitalism.

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Society

In Northern Kenya, Where Climate Change Is Measured In Starving Children

The worst drought in 40 years, which has deepened from the effects of climate change, is hitting the young the hardest around the Horn of Africa. A close-up look at the victims, and attempts to save lives and limit lasting effects on an already fragile region in Kenya.

Photo of five mothers holding their malnourished children

At feeding time, nurses and aides encourage mothers to socialize their children and stimulate them to eat.

Georgina Gustin

KAKUMA — The words "Stabilization Ward" are painted in uneven black letters above the entrance, but everyone in this massive refugee camp in Kakuma, Kenya, calls it ya maziwa: The place of milk.

Rescue workers and doctors, mothers and fathers, have carried hundreds of starving children through the doors of this one-room hospital wing, which is sometimes so crowded that babies and toddlers have to share beds. A pediatric unit is only a few steps away, but malnourished children don’t go there. They need special care, and even that doesn’t always save them.

In an office of the International Rescue Committee nearby, Vincent Opinya sits behind a desk with figures on dry-erase boards and a map of the camp on the walls around him. “We’ve lost 45 children this year due to malnutrition,” he says, juggling emergencies, phone calls, and texts. “We’re seeing a significant increase in malnutrition cases as a result of the drought — the worst we’ve faced in 40 years.”

From January to June, the ward experienced an 800 percent rise in admissions of children under 5 who needed treatment for malnourishment — a surge that aid groups blame mostly on a climate change-fueled drought that has turned the region into a parched barren.

Opinya, the nutrition manager for the IRC here, has had to rattle off these statistics many times, but the reality of the numbers is starting to crack his professional armor. “It’s a very sad situation,” he says, wearily. And he believes it will only get worse. A third year of drought is likely on the way.

More children may die. But millions will survive malnutrition and hunger only to live through a compromised future, researchers say. The longer-term health effects of this drought — weakened immune systems, developmental problems — will persist for a generation or more, with consequences that will cascade into communities and societies for decades.

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