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Monday, 30 October, 2000, 12:03 GMT
'Le cost killer' strikes at Nissan
Carlos Ghosn, Nissan's chief executive and president
Carlos Ghosn: has cut 1.2bn from bills, with further savings to come
Carlos Ghosn, nicknamed "le cost killer", has struck at Nissan, the Japanese carmaker revealed as it announced operating profits up 130%.

Mr Ghosn was installed as chief operating officer at Nissan last year after Renault took a 36.8% stake in the Japanese car maker.

Nissan credited a rise in operating profits to 136.6bn yen (865.7m) between April and September on cutting 192bn yen (1.216bn) from parts and general expenses bills.

The firm estimated net profits for the full 2000-01 year would reach 250bn yen (1.584bn), four times previous forecasts.

But while Nissan stated its wish to slash further costs through reducing its exposure to foreign exchange risks, Mr Ghosn said the future of the company's Sunderland plant had yet to be decided.

Although the site is Europe's most productive car plant, Nissan has threatened to switch production of future models, including the new Micra, to Continental factories to reduce the company's exposure to the strong pound.

Board divided

"As you know, we are very divided... because we have a very productive and effective plant [at Sunderland]," said Mr Ghosn, who earned a reputation for slashing jobs while at tyre-maker Michelin.

Production line at Nissan's Sunderland plant
Nissan's Sunderland plant: may be denied investment

"We are just gathering all the information necessary to make a good decision for Nissan both in the short term and in the long term."

Nissan said on Monday it was "optimising manufacturing capacity utilisation... to meet increased demand and to reduce exposure to foreign exchange fluctuations".

The future of the Sunderland plant, which employs 5,000 people, is set to be decided by the end of 2000.

The firm is also to make an announcement "in the coming weeks" on US strategy.

Nissan is rumoured to be planning a $1bn vehicle assembly plant for central Mississippi, creating 4,000 jobs, and allowing the production of a full-size pick-up truck and a new generation of minivans.

Sales figures

Demand for US cars is meeting expectations, while European and Japanese markets are softer than expected and sales in developing countries beat forecasts, the firm said.

Results snapshot
Operating profit: 136.6bn yen (up 130%)
Cost cuts:192bn yen
Vehicle sales: 1.31m (up 15%)

Forecasts for 2000-01

Operating profit: 220bn yen
Net profits: 250bn yen (firm lost 684.4bn yen, 1999-2000)
Vehicle sales: 2.72m (up 8%)

But thanks largely to the cost-cutting, which is to cut supply costs by 10% over 12 months, two points better than expected, the company said full-year operating profits would come in at 220bn yen (1.4bn).

"This is a prudent forecast," Mr Ghosn said. "The preliminary figure illustrate Nissan's highest achievement in the last 10 years. And it is fair to say this is only the beginning."

Net profits are now forecast to reach 250bn yen (1.584bn), compared to a loss of 684.4bn yen (4.337bn) for the year to March.

'Le cost killer'

Brazilian-born Mr Ghosn, who was educated in Paris, earned the nickname as "le cost killer" for a record of tough restructuring plans, including a US rationalisation implemented in 1989 following Michelin's merger with Uniroyal Goodrich.

After joining Renault in 1996, he helped haul the firm back into profitability, and at Nissan is charged with implementing a revival plan which axe 210,000 jobs and cut costs by 20%.

He has also earned the nickname "seven eleven" for the long hours he works.

DaimlerChrysler follows

Meanwhile DaimlerChrysler is using the turnaround Mr Ghosn has achieved at Nissan as the inspiration for a restructuring at Mitsubishi Motors, reports said on Monday.

Jurgen Schrempp, chairman, DaimlerChrysler
Jurgen Schrempp: taking the Ghosn model to Mitsubishi

DaimlerChrysler, which owns 34% of Mitsubishi, is to install Rolf Ecrodt as chief operating at the ailing Japanese carmaker next year.

"We see Carlos Ghosn doing a good job," Jurgen Schrempp, DaimlerChrysler chairman, told the Financial Times. "There are similar things we have to do at Mitsubishi."

Mitsubishi has been hit by a scandal over suppressing customer complaints. The firm, which has been the subject of a police investigation, has recalled more than 900,000 vehicles following the discovery of the cover up.

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See also:

28 Aug 00 | Business
Police raid Mitsubishi headquarters
31 Jul 00 | Business
Blair in talks over Nissan jobs
14 Jul 00 | Business
Nissan repeats Sunderland threat
18 Apr 00 | Business
Sterling forces Nissan cuts
02 Jul 00 | Business
Aid offer to Nissan
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