How Nissan nearly went bust | Inside The Storm | Full episode

[Music] every year over five million cars roll off Nissan's production line onto the world's roads and racetracks [Music] in Asia one in every 15 cars is in this and inside the company it's a cause for celebration it took was Edmund equator you will give us [Music] but rewind just over a decade earlier the company had posted a six billion u.s. dollar loss and the employees spirits were not so high Nissan cars started to become very common and blend looking this idea that if you just simply put almost an infinite variety of options out there you're going to hit everyone in the market in so many ways that was a failure I'm here to communicate to you the Nissan revival plan will implement the following plant closures Murayama black Nissan shot by Kyoto plan with unprecedented access inside the company we look at how this Japanese car giant was forced to look further afield for its savior and find out how one man was able to kick Nissan back into gear [Music] located in the heart of Yokohama Nissan's headquarters is a testament to the company's popularity in Japan the ground floor serves as a public gallery showcasing their most popular cars and it attracts more than just your average petrol head from young fans to nostalgic old timers will bother you no no totally master it is only thirty site of acara nothing they repeat a fashionista are you the authorities [Music] this sentiment is shared across the country as Nissan built a brand intimately connected to Japan it's something that's professor Audrey Chia thinks setting this an apart from its early rivals as a brand in Japan Nissan is the only car company that has the name Japan in its name so nice tan means made in Japan so it carries national pride in its name there is no other car company that has that kind of symbolism the best example I have about the emotional attachment to Nissan as a brand actually came from a Nissan employee that I met and he told me with great pride my grandfather worked for Nissan my father worked for Nissan and now I work for Nissan so such as the attachment that even some employees have a family tradition of working in Nissan and being proud to be Nissan employees the iconic cars that reflect this history are kept under lock and key in another warehouse [Music] Ryuji Nakayama is in charge of preserving and protecting listens history inside it's a motor enthusiasts dream with cars dating back to the 1930s when Nissen marketed their cars overseas under the Datsun brand name you must know it we could another game with a motif or not and each time I'll try with every mistake cocooning not on the seasons and all it took to save is River hassel in no time Hans you gotta take it what ashes oh nice undies or so she knows it or not say Hinton your mother a no criminal history day it Oh nan go how could I realize that's great not atop the muscle so keen on the skismo take turbos from 500 cars a year to over 500,000 as throughout the 1950s 60s and 70s the company experienced a phase of phenomenal expansion is the age of the automobile [Music] car ownership in Asia increased by over ten times and missin was riding the crest of this wave making a name for itself by producing affordable and reliable cars it was a sunny day it took or any home the one no my car is not ov you know he right on the equal to the dream about making a good mother screams mom what am i honey I know CAI Jia Yu's decided take what you know a leadership open it Nimmo used to Saturday urea no nihongo my car motor minutes Matsui sorry new demo coyote but the real drivers of Nissan's growth were on the racetrack and when the plucky Japanese car brand took on Porsche and Alfa Romeo and won the world began to take notice wins on the racetrack propelled Nissan from a local Asian manufacturer to a respected global brand and in America actor Paul Newman became the company's number one marketing tool well they say winning isn't everything it's just all there is that's why I will settle for second best great cars bass backup great value [Music] no courts could walk in 1971 missons 240z became one of the fastest selling sports cars of all time one of these sports cars was sold every 10 minutes in the USA mikono color running go started david p okay we're gonna see it oh ma meantime I need a game kinoshita do a all moto Mia's good cuckoo let's go see a dynamic adopters licensed cars in the US were associated with fun and they also associated with sturdiness and strength and if you are in a big country like the u.s. sturdiness its strength of the car matters a lot [Music] but by the 90s Nissan was varying drastically off-course classic designs like this seem to be a thing of the past the company's designers appear to have become complacent as missiles new models weren't turning any heads I think the first science of Nissan's flagging energy or decline became from its design so we saw that around the late 70s and the 80s on Nissan cars became very commonplace but they also started to become very common and blend looking Nissan was bracing itself for a bumpy road ahead and the reputation they'd built up over decades was about to come crashing down when the companies as large as Nissan was the spiral down is not a media actually it becomes obvious Paulie when it's already reached a critical mass and it's very difficult to turn around and it kind of led to a collapse with over half a century of history and expertise Nissan had become a powerhouse of the automobile business embodying Japanese design and manufacturing prowess and imagining the wind flowing cuban-born American Alfonso L baeza has been with the company for thirty years pushing through cars with globally appealing designs I'll never forget my first trip to Japan I walked into a studio and I saw the 300zx shape that was effortless simple powerful and immediately I saw the power of Japan but by the mid 90s the company was heading in the wrong direction some of the cars of that era struggled in the marketplace and the way the company reacted was really a kind of hint of what was coming as sales figures dropped Nissan panicked in an attempt to increase productivity and profits they flooded the market with a series of bland and forgettable sedans that were aimed at the family market they were practical cars but a world away from the sleek designs the company had established its reputation on first of all they had very strong brand very strong positioning and that naturally tends to lead to a certain complacency no marketers like to say that a strong brand buys time it gives you time to actually make a mess of things so then to realize you're making a mess of things it buys patience with customers and maybe gave them a little bit too much time these cars were fairly successful in the US but in Japan and they were not resonating with the Japanese customers and then management pulled back and we started chasing other companies maybe a zoo zoo has an interesting SUV so then that fundamentally changed our vision of SUV the SUV or sports utility vehicle hit the roads in the mid 90s and began to dominate the market Nissan's Asian rivals Toyota and Honda moved quickly to add this new must-have car to their arsenal yet miss and delayed they dismissed the SUV as a passing fad and only released the SUV years later I think that that's a part we lost in the 90s that yes some of the modern cars stumbled but then our reaction wasn't rational our reaction was reactive and maybe lacked depth so this is I think one of the reasons that happened and we lost confidence as a company a company that loses confidence loses focus in 1993 Nissan posted a 1 billion US dollar loss the first time the company hadn't turned a profit in 50 years [Music] twelve months later the losses doubled and in subsequent years Nissan were forced to make plant closures and staff layoffs now being offered a portfolio of uninspiring cars the royal fans of Nissan were also turning away from the brand Dino Dahle carbon Aras labor of love is his Nissan GTR from his workshop just outside Tokyo he's painstakingly upgraded and we upgraded the car over the last 20 years I think I've been playing around with the car pretty much since I bought it new in 99 so it's it's been kind of simple mods initially for the first 10 years or so the way the older engines feel it just adds to the whole I guess character of the car and the way it feels when you drive it it's just a more satisfying drive for me [Music] so what did this superfan think of Nissan's cars in the 90s I don't think they were exciting design wise that's for sure I mean it was very boxy designs big 4-door sedans and saloons and in the 80s and 90s if he saw somebody driving Mercedes you would automatically assume that he was a successful businessman whether if you were just driving a Nissan just very common nothing special there and these unexcited cars revealed far more about the problems inside the company the customers first glance at an automobile of course is heavily reliant on design when a design is great not only they they feel that the company is cutting edge but then also the relationship of design and engineering is seamless so generally design I think is a reflection of the health of the company but Nissan was far from a healthy company their cars were symptomatic of an organization that chose to prioritize engineering over design technology in itself is only in a neighbor it's the users that we put that technology to and if you glorify the technology take excessive pride in arts what you're doing is very often engaging in engineer self-satisfaction that's completely disconnected from the regards of the the customers die hardness son lovers of earlier generations the mired Misun for its pizzazz it's Flair panache and performance that grew out of technological capabilities but wasn't primarily about the technology Misun was stuck in a downward spiral the company's global sales falling by more than 10 percent in just five years in a desperate attempt to recapture their customers the Sun began increasing production customers had this astonishing Protheroe of options thousand different steering wheel options combined with so many different interior options and what not all that was fine but the volumes on each of those different parts became relatively low so your overall supply chain becomes more complicated the inventory costs become much more complicated and it just simply drove up overall costs in the US for every Nissan car sold the company lost a thousand US dollars because of sky-high manufacturing costs when they should have been streamlining production they were offering you your automobile a la carte I guess the the metaphor is you feel much more comfortable going into a restaurant which takes pride in five or six things they do well rather than having a hundred and twenty things on the menu this idea that if you just simply put almost an infinite variety of options out there you're going to hit everyone in the market in so many ways that was a failure [Music] in 1999 Nissan did the unthinkable they started shopping around for a foreign buyer to save this proud icon of Japanese business the French car makers Renault were in pole position and their CEO Carlos Kern was well aware how desperate in the sun's situation was there were many problems that the profitability was a big issue I mean the brand was an issue second the international operation of Nissan were completely disconnected from the headquarter so that was absolutely no exchanges between the regions and and and the company a lot of important function did not even exist or when they existed that were really insignificant behind the scenes gone had found a company that was dangerously disconnected Misun had ballooned with design studios manufacturing plants and R&D hubs dotted all over the globe one of them was in California where Alfonso and his small team of 13s and designers were based [Music] to work in an overseas studio was a interesting contradiction we lived in a sandbox it was a hub of dreams but we were alone to be honest we were an outpost on Mars [Music] we became painfully aware what was during the spiral down because the company started to need to sell things the project's would get cancelled we knew the company was in a very shaky position but we didn't necessarily feel any we could do anything about it that our voice would not be heard with debt spiraling to over 20 billion US dollars Nissan was just weeks away from bankruptcy and with Renaud's offer on the table their hand was forced I don't think that the management of Nissan had a lot of choice it was making an alliance some kind of an alliance or a merger or facing bankruptcy Nissan was very close to it because the bank stopped lending money to Lisa had this kind of funny feeling all of us cuz we didn't know that Brno was in in the bidding process we had heard rumors of some companies and some companies denial was painful some companies were saying to invest in our company would you'd be better off just putting millions of dollars in the trunk and sinking it in the Pacific on the 27th of March 1999 Renault bought a 36.8% of Nissan the renault-nissan Alliance was born and now the French car company had a big role to play in this son's future I think that would have been incredibly painful for them we have to give credit to the president at the time for actually you know being prepared to do that you had to come out and say this is our first best option and anything else is just delusional for someone who considers himself a Nissan man not nice we're no longer Nissan we are now needing help which of course the initial days doesn't feel that great but then you realize oh Renault is a design powerhouse this is our chance to show our power the 90s was a decade to forget for Nissan registering financial losses in consecutive years the company had debts totalling 20 billion u.s. dollars but as the new millennium dawned there was a new hope Renault president Carlos gown was immediately appointed chief operating officer of Nissan with one brief to save the company the first reaction is always reaction of curiosity about the company about how the company got to the situation what are the root causes of the decline of the company and there was also mixed with that a high level of curiosity about Japan I would say it was a lot of excitement because the challenge was big in cone Nissan at hired a man with vast experience in the automobile industry first working his way up the ranks at tire company Michelin to become their South American CEO Oh at the age of just thirty he then joined Renault as vice president in 1996 where he masterminded their successful revival earning him the nickname Lacoste killer in the French press because of his tenacious approach to cutting costs but this would be different in Nissan and Japan he was seen as an outsider I'm here to communicate to you the Nissan revival plan when Carlos Cohen came to Nissan in 1999 there were many problems that he faced first of course was staff morale as you can imagine people were discouraged um there have been a whole series of Japanese CEOs and here was this foreigner you know what could he do for the company so here's hard driving high-performing CEO and how was he going to fit with the Japanese culture I think that was a big question at the time first educated in Lebanon before receiving his engineering degree from Ecole Polytechnique in France gern was familiar with the global markets but in Japan international CEOs are a rarity and going would have to navigate their unique business culture you obviously have a lot of handicaps ooh first a handicap of the language in management communication is extremely important and when you do not speak the language of the country where you're going to be operating it's a big handicap not knowing deeply the habits of the country and instincts and the values of the country also is a handicap but there are also some advantages being an outsider nobody could suspect that you have been accomplished in any way of what happened before in girls first significant press conference he outlines how he was planning to change Miss M at the heart of the revival plan you have the products we are car manufacturers and as long as we are not able to put in a consistent manner attractive exciting cars technologically advanced cars our revival will be precarious and he addressed the question of whether he would have full authority as a non-japanese leader what type of problems do you expect to face and getting workers to go along getting the people of the country to go along especially seeing many of these cuts ordered by primarily what they will see as an outsider people in Nissan have really enough of struggling with unprofitable company company losing market share as long as we are focusing on the revival of our company people will accept why we are doing this people know that our intention is mainly to put back Nissan back on track it was clear that he had been brought in to make significant changes in his son and his outsider status actually enabled him to make some very tough but necessary decisions for Nissan's survival true to his management principles at Renault and his nickname Lacoste killer gun closed five factories and cut over 20,000 jobs we'll implement the following plant closures what I am a black Nissan shut IQ table one of the reason the most common reason for which company usually do not make money is they have a very high level of costs we had a lot of plants which were empty we had a lot of headcount which was not really needed and these decisions should have been done a long time in the past but there was more to his recovery strategy than just a slashing the company's wage bill he knew he needed to galvanize the demoralized staff and to do this he personally visited all of Nissan's sites around the world even Alfonso's design outpost on Mars very early on a month or two months into the Alliance mr. GaN comes to our studio in California small 35 people middle of nowhere in San Diego and he sat down with us he was so curious about what our vision is what is our understanding of Nissan what is our connection to headquarters do we feel empowered do we feel we can help steer the ship he allowed us to join in the voices that helped steer the company and this immediately triggered a volunteerism of the team [Applause] one of the wonderful things he did was also to recognize that Nissan had great depths of talent that the company wasn't in decline because its employees were not good right but rather he recognized that there was plenty of energy and potential in the company that perhaps had not been used and his job as CEO was really to catalyze and energize the company go and cut his teeth in the automobile industry as a manufacturing plant manager so he knew the importance of an efficient production line especially in Japan that had enormous symbolic significance in Japan there is very much the celebration in Japan particularly in a car industry of gimbap the place you know where where things actually happen you go to the gimbap so you go to the factory floor you go to the sales floor and that is the very antithesis of the American style consulting model where you know the smart NBA kids you know come in and they tell the company you know what they've been doing wrong and bring their friendly model bring their analytics many people inside the company who are engaged in the company and in its quest to empower staff gern was prepared to ruffle a few feathers he scrapped one of Japan's most traditional business principles the seniority rule which prioritizes an employee's age as a reason for promotion Ethan was a very traditional Japanese company traditional obviously when we said traditional it's not positive before it was impossible age was a discriminator I didn't want H to be discrimination I want H on the contrary to become a factor of respect for senior people a factor of experience but certainly not something which just forbid young high potential to be promoted inside the company he kind of came in and he said well you folks know exactly what's wrong with this company you just haven't been able to have honest conversations so he really just empowered people to speak really frankly people knew that they had too many plants that they had too many suppliers that they had too many models too many options that they were paying too much everybody knew these things but in particular cultural context you just couldn't have that conversation one of the fundamental pillars is that the power comes from within meaning us and that our survival our revival is going to come from us this is how you get an employee by this is how you get the the 120% attention of your teams [Music] Gohn had sparked in this ants global staff back to life and now that they were talking to each other again he made them work together in what he calls cross-functional teams a technique he first implemented while at MIT chillin he would now apply within listen when I created the cross-functional teams is married to force people from different functions to work together on company problems at the same time that I've done this I mixed people I took people who are more senior which people younger we have mailed females we had Japanese and non japanese i freed them from many of the constraints that they had and they've been essential to to for the revival of the company rather than feeling helpless and uninvolved and watching the company declined further they became energized they became challenged and it became excited to become part of Nissan's recovery to succeed in the world we must reflect the world the world is a undefinable diverse community of human beings and then even many of the markets that we live in are diversified but our company was not and so all of these steps of diversity with women with non-japanese I think help to to form a very realistic philosophy of life in our company in 2001 just over a year after joining the company NGO and announced annual profits of almost 3 billion u.s. dollars but now having stabilized the company he and his vice president of design Alfonso needed to modernize Nissan's new cars [Music] nearly two decades since Carlos Geun took control as CEO miss Ana once again one of Asia's top car brands [Music] and today at their main manufacturing plant in a Palmer in South Japan they're making a big company announcement the production line has been stopped the workers assemble and the nation's media and let in and here comes the guest of honor Iranian a semester on otamatea hawks you on the guy decimals he needs a vocal amos sorry only not a toast anova psychology or the amount ecco this sunday sunday e they saw your students do you think you know we can OCS anti cigar sing it's hot you got no wonder people say monday with you here Otis like our took over from gona's nissan CEO in April 2017 and he's particularly proud of the new Nissan Leaf so report or polishing underneath but it got up I thought she did sure this neck can you donate more simple evening and it seems the employees share their boss's enthusiasm [Music] [Music] [Music] but the leaf is not just any new model the car symbolizes Nissan's return to a position as industry pioneers a fully electric powered vehicle the leaf was ahead of the curve when it was first released back in 2010 allowing this Ann to get a jumpstart on their closest rivals it was absolutely a game-changer really strikingly so but there was a heck of a lot of criticism of the reavie strategy it was considered to be naive you know going jumping straight to Evo and the battery capability was so limited all the range anxiety issues and whatnot quantum never admit this but in response to that on the went and create new Eevee program Toyota - and both Toyota and Honda now look like laggards and consumers rushed to buy the cutting-edge leaf Nissan's sales target for six months was exceeded in pre-sales alone before the car was even released when we received word that the entire company is going to bring to the market an electric car that's a real car five passenger everyday working it's not some niche thing we're like oh my god like what do we do what is this what is the manifestation of this dream of the company the dream of the engineer and and how do we make customers who are unaware of this technology aware so the first leaf needed to stand alone slightly outside of our portfolio because we wanted everyone to notice revolution is here now Nissan has sold over a quarter of a million of these cars making it the world's best-selling fully electric vehicle but the leaf has its roots in Carlos Kahn's revival plan but the engineers and designers work together in harmony engineers are bringing to us even while we're sketching new ideas that they have about making this bullet fly through the air effortlessly and then all of these things get incorporated a lot of them are invisible so all these little tiny surfaces are actually allowing the wind to leave the car cleanly and this reduces drag and allows the car to go even further since the renault-nissan Alliance missiles approach to design has changed significantly located in the heart of miss Anne's modern facility the work done in their design studios is a closely guarded secret [Music] Nissan's designers are encouraged to experiment with new ideas on all aspects of the automobile from the interface of the GPS system to the shape of the cars and today's designs are a far cry from the box like this an sedans of the [Music] [Music] biggest change is that by setting up structures in the company to make ideas become real this is true freedom to know that your dream can actually happen brought the sense of responsibility to our teams of designers and because we knew that these efforts that we're doing the journeys that we're embarking actually are going to become real engine in gray originally the estate economy you know it's more [Music] but whereas 20 years ago customers turned away from Nissan's models now they are actively consulted and helped solve problems such as the design of a steering wheel [Music] you can tell me as nice to pass its intended sky to last night give up get up it's good or what chuckle to you there's an idea more focused on this way the most up to you though so the Common Era don't you I cannot you took a more epic eat a meat there some money kitty you know whatever I'm Josh [Music] this sense of foundation that the customer is our ultimate target to understand to be curious about their life and to understand what their needs from day to day are but also what the ambition their dreams are like this practice allows Nissan to follow consumer trends much more closely the Singapore missile now lead the market in so called crossover cars vehicles that combine the style of an SUV and the practicality of the hatchback Ron Lim head of sales in Singapore's flagship Nissan dealership has witnessed this trend first hand right now crossover Sue's make up almost 70 percent of our total sales so you can see very strong sign here that consumer preference have changed a lot and crossover has taken over the position of sedan now one in every ten new cars bought in Singapore is a Nissan and the Nissan Qashqai is one of the best-selling crossovers in the country even the course of the fresh design and more stylish design we are able to capture younger buyers which is important for the sustainability of the brain yet some Singaporean customers choose to buck the trends I think buzz wide full school virtual staff car collector mark Cho is part of a growing community in Singapore who craved the uniqueness and style of older models I like the shape off-site all the cars Holly any electronics in it rejoice pointed so it's a really simple basic car it's like very reliable when I Drive around it's yellow like you know interested look some people like what we want cars is four ways is wrong where is it from how old is or like sometimes see people giving me thumbs up in the traffic light so it's quite nice to know that you are driving something unique [Music] [Laughter] please welcome miss an AMX zero emission concept whether it's classic cars or electric cars of the future Nissan's reputation is now as strong as ever in 2016 they recorded an annual income of almost 7 billion u.s. dollars and their profit margins are now 50 percent higher than the industry average the man responsible Carlos Cohn stood down as CEO and president of Nissan in April 2017 he joined the company as an outsider and left it as a celebrated honorary Japanese citizen he became quite a celebrity not just because of his success but also because of his charisma which was very evident and a manga was created to document the adventures of Carlos goal for seen as a corporate superhero now the company is under the leadership of a new and perhaps more traditionally japanese-style CEO he wrote o psyche our yet under him miss Anne's values of diversity and innovation that goes Stroh so hard to implement will be preserved it's the legacy of an international partnership the renault-nissan Alliance that ensures that miss Ann will remain healthy long into the future this was not about political games this was not about let's be together and then figure out what we can do this was a lot of things we can do together how about we work together at the end of the day Nissan's uniqueness is that we are mixed we are one of the oldest Japanese car companies but on the other hand are the spirit of Western partners is completely embedded in our DNA I consider myself at the guardian of these values and I made sure that in every meeting in every decision the respect for the culture of people was real and that every time we were working together it has only one objective is a better performance for each company [Music] [Music] you

Channel: CNA

Views: 349,604

Rating: 4.7443829 out of 5

Keywords: inside the storm, business documentary, nissan, nissan business, business stories, business insider, nissan back from the brink, tv video

Id: 6ay249EN7bA

Length: 45min 51sec (2751 seconds)

Published: Tue Aug 21 2018