As large corporations face the pressures of globalization and worldwide economic development, alliances like the one between the automobile manufacturers Nissan and Renault will become much more common in the 21st century, Carlos Ghosn, the CEO of both automakers, said yesterday in a lecture at the Yale School of Management.
The second speaker this year in the Yale School of Management Leaders Forum, which brings major figures in the private, public and nonprofit worlds to speak at the school, Ghosn addressed a crowd of about 100 on the state of the automobile industry and Nissan’s recent success. Ghosn is widely credited with reviving the slumping carmaker’s fortunes by helping it overcome a $20 billion debt and return to profitability one year after becoming CEO in 2001.
In both his introductory remarks and the subsequent question and answer session, Ghosn spent the bulk of his time explaining the alliance between Nissan and Renault, a 1999 move that was unprecedented in the industry. Nissan owns a 15 percent stake in Renault, and Renault owns 44 percent of Nissan, while the vast majority of management and oversight of the companies remains separate. The carmakers coordinate research and development, marketing strategy and other aspects of their businesses. Ghosn said the partnership is an attempt at synergy rather than a merger of the two.
“It is a kind of constitution, a disciplined partnership between two companies that remain completely independent,” he said.
In a globalized economy, companies have to be present in every market in the world to remain competitive, and this alliance has helped Nissan gain exposure to previously untapped markets, Ghosn said.
In response to questions, Ghosn made predictions about the immediate future of the automobile industry. He said he does not think hybrid gas-electric technology will attract a large consumer base in the next decade, and automaker CEOs are generally focused on short-term profits in this area rather than the long-term development of these promising technologies.
“People under the pressure of short-term bombardment are eventually going to succumb to it,” Ghosn said.
But Nissan is currently developing fuel cell technology, which Ghosn said is about 10 years from reaching the market.
Ghosn also predicted that the big major American automakers — Ford, General Motors and Daimler Chrysler — will soon recover from their financial woes and one could potentially serve as a third partner with Nissan and Renault.
Many SOM students said found Ghosn’s explanation of the power of corporate alliances intriguing.
Nelson Ko SOM ’07 said he appreciated listening to a vaunted figure in the business world.
“I didn’t come planning to hear anything specific, but this guy turned around Nissan … I thought it was great what he had to say,” he said.
But Steve Kleha SOM ’07 said that he wished Ghosn had spoken more about his personal experience running a multinational corporation. He also said he thought Ghosn’s predictions about the future of the American automobile industry were overly favorable.
“He seemed pretty optimistic about U.S. carmakers, and I’m a little more skeptical,” Kleha said. “I kind of wished he went into a little more detail about how U.S. carmakers are going to have to reposition themselves.”
Frederick W. Smith, the founder and CEO of FedEx, will deliver the third lecture of the Leaders Forum next Tuesday. Speakers in past years have included Michael Dell, Thomas Friedman and World Bank CEO James Wolfensohn.