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Carlos Ghosn said his family was treated to "Southern hospitality" in South Carolina.
Carlos Ghosn

Carlos Ghosn (7) Warm welcome, big challenges in America

Lessons in integration -- and from Iacocca -- in the world's toughest market

In February of 1989, I arrived in the U.S. to start my new assignment. My family and I would be living in Greenville, South Carolina, a small town with traces of the Old South. It was a highly religious and welcoming place, and we basked in the warmth of southern hospitality.

When I got there, we were a family of three. Our second and third daughters, and our first son, would be born in the U.S. It was a happy time in my life, not only because of our growing family but also because of the rewarding work. My mission was to lead Michelin's acquisition of Uniroyal Goodrich, a major U.S. tire company, during a time of economic downturn.

At the time, the U.S. had the biggest auto market in the world, and Michelin had to establish a strong presence if we wanted to be a contender. I felt considerable pressure from headquarters, and competition was fierce. Goodyear, a U.S. company, was the industry leader in tire manufacturing, and Japan's Bridgestone had just acquired the legendary U.S. brand Firestone. Michelin had no time to waste.

The acquisition of Uniroyal was approved in the early 1990s, and we faced some problems right away. Uniroyal had a large inventory of old equipment and had not invested in replacing key parts, making production slow and inefficient. Under the terms of the acquisition agreement, Michelin had negotiated the closures of three plants in North America, which was met with heavy criticism. We simply could not afford them. This earned me the nickname "The Cost Cutter." But I didn't mind -- I knew cost-efficiency was the pathway to recovery.

Cost cutting was only part of the strategy. We also needed to fully integrate the business to achieve maximum synergies. To do this, I created an executive committee composed of the most talented people from Michelin and Uniroyal. This would be the first, unsophisticated, model of the "cross-functional team" utilized with success in the Nissan Revival Plan a decade later.

The fusion of cultures was the first big challenge for Michelin. As a provincial company from France's Auvergne region, its way of doing business was different than that of U.S. companies. If we wanted to leap forward as a global company, the U.S. focus on short-term profit would need to come together with the European family-owned management style, which focuses on long-term results. We made a number of other operational changes: We adopted a multibrand strategy in North America, in which we assigned Uniroyal to the main battlefield of the aftermarket, where brand power was more important than in the original-equipment marketplace. But we kept Uniroyal's head office at its traditional headquarters in Akron, Ohio.

This was a time for me to personally learn by doing. In Brazil, I had battled against the government to raise prices, but in the U.S. I battled rivals in the market. Competition was everything.

We had meaningful successes. Uniroyal was one of the most significant suppliers of tires for what was then the world's largest carmaker, General Motors. GM was a generous company and willingly accepted the takeover by Michelin. We were also able to establish contact with Japanese automakers. I traveled several times to the North American plants of Toyota Motor, Honda Motor and Nissan Motor, including Nissan's plant in Smyrna, Tennessee. Japanese carmakers were on a roll at this time, and I had a feeling that they would climb to the top of the world's automotive industry, and soon.

I also learned a great deal about leadership. There were many impressive leaders in the automotive industry, including Lee Iacocca and Robert Lutz, who left Ford Motor for Chrysler and served as vice president under Mr. Iacocca. Lutz was an open-minded man. I invited him to a seminar at Michelin, and he told the crowd: "Before, I couldn't imagine who would buy a Chrysler vehicle." I was shocked he would say something like this at first, but I realized that he was a master of communication. He told it like it was and didn't use fabrications or flattery. I could tell the audience was impressed. To be honest, so was I. He was an important influence on my leadership and communication style, and we have stayed in contact over the years.

In short, things in the U.S. were going very well. Then I received a call from Francois Michelin. He was sending his son to come work for me.

Carlos Ghosn is chairman and CEO of Nissan Motor Co., Ltd.

Read more installments of My Personal History: Carlos Ghosn

 

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