Nissan Shedding Jobs

The last year has been a difficult one for Nissan and Motoring Weekly has written about the arrest of its CEO, Carlos Ghosn, who also controlled Renault and Mitsubishi in an alliance. Nissan were always unhappy that they were the money-makers whilst Renault (and through their ownership, the French Government) controlled all decisions. Speculation was rife that Ghosn was removed to enable Nissan to have a bigger say in the group.

After Ghosn was removed, separate managers were installed at each of the three partners and a new oversight structure was put into place. However in May, Nissan announced nearly 5,000 jobs would go and then in July, they posted a 95% drop in net profits for the 1st Quarter and to rebalance the business they announced a further 7,000 jobs would go. 6,400 have already been eliminated and the rest will go over the next three years at various locations.

As part of the restructuring, several models will get discontinued and production capacity wound back. This is the opposite of what Ghosn was espousing. He wanted Nissan, Renault and Mitsubishi to look at where their sales were and to build locally, thus putting production capacity for Nissan into existing Renault factories and for Renault to maybe use Nissan facilities to gain access to other markets.

Nissan has been struggling globally although reports cited the US as a big issue for the company and only this week, they announced that Infiniti would be leaving Australia due to a lack of sales. They have become a larger player in the electric car market with the UK built Leaf, however they haven’t been able to translate that into sales of higher profit cars such as in the Infiniti range. Fundamentally the sub-market that Infiniti sits in is now over-crowded with vehicles from Germany who can build a massive range with common components and coupled with successful marketing has really hurt the Japanese brand.

It seems that Ghosn’s plans are being rolled back to the detriment of the overall alliance. Nissan has gone from being a cash cow to being a dog in the business and it could mean that Renault actually achieve what they have wanted for years – to absorb Nissan into their fold. The ousting of Ghosn may well have back-fired on Nissan!

A concern for the industry is that if Nissan slides, it could trigger others to follow. Car sales in general are sliding and if Nissan discounts heavily to get sales, that would cause others to follow – or allow the Chinese competition to gain a stronger footing in the market. This is a difficult time for the industry.