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Carlos Ghosn, left, after being transferred to Brazil
Carlos Ghosn

Carlos Ghosn (6) Turbulence and triumph in Brazil

A transfer across the Atlantic sees Ghosn hone his reform chops

The first thing you noticed about Francois Michelin was his height. What you learned by working beside him was that he was also sophisticated, dignified and polite. He was appointed co-owner of the Michelin tire company in 1955 and held that position for more than 44 years. He was much more than the manager of the family business: Michelin's globalization was a result of his acumen and ability.

He offered me a job working at Michelin headquarters under Behrouz Chahid-Nourai, the chief financial officer. Two experiences would be critical to my career. The first was the development of cross-manufacturing -- a principle that would serve me well in this job and all others. This concept emerged based on my analysis of Kleber-Colombes, a tire manufacturer focused on automobiles, vans and farm equipment that Michelin had taken financial control of years earlier. The company was doing poorly, but Michelin didn't want to abandon it. Instead, Michelin absorbed Kleber-Colombes' automobile tire business as a budget brand and utilized the same production line to manufacture both brands.

Another key opportunity was the chance to work with Chahid-Nourai. He taught me the concepts and practices of cutting-edge corporate finance, including the techniques for optimizing resources. Seven years after I joined the company, Francois Michelin sent me to Brazil, which opened a big door for me.

In 1985, I was finally transferred to Rio de Janeiro, where I could be close to my parents and sisters. My family was happy about my new assignment. However, the plight of Michelin Brazil made it far less than an ideal situation. The country was mired in political unrest, dealing with a financial crisis and had, until recently, been ruled by a military regime. Hyperinflation had exceeded 1,000% a year, and businesses there were experiencing massive losses. In fact, huge debt was becoming Michelin's primary concern in Brazil.

Despite these challenges, I considered the country to be a potential treasure trove of opportunity for Michelin. Brazil's natural resources were abundant, and its enormous market potential was comparable to that of China, Russia and India.

I worked hard to implement reforms. Michelin had purchased two huge rubber plantations in Brazil. Performance had stagnated, but it was primarily due to external factors, mainly the price controls decreed by the government. I initiated negotiations with the government, trying to secure approval to raise prices. Simultaneously, we emphasized meticulous management and control of cash flow. Extreme measures were required. And while the people at Michelin headquarters in Clermont-Ferrand were frustrated, I was steadfast in my resolve. In the end, I was able to resurrect the Brazilian operations and establish segment leadership in the marketplace.

Around this time, however, the labor union movement grew more violent, and worker strikes became more frequent. One day, despite being cautioned against it by the managers around me, I went alone to a factory whose workers were on strike to hear their concerns. I did not encounter any hostility; all they wanted to do was talk.

After three years of turbulence, the Brazilian operations stabilized. Because of the strict cash flow management measures we had put in place, our subsidiary was producing great results. Trust from headquarters increased. I was 31 years old at the time. If I think about it now, my actions represented youthful indiscretion, but I believe I was right to maintain a bullish approach toward growth.

One day I received a message from Francois Michelin saying, "The old married couple would like to visit Brazil." I was grateful. The boss I trusted was watching over me. He came to Brazil with his wife in 1987. I spent 10 days with him, touring factories and plantations all over the country. He showed interest in everything and treated everyone with respect, regardless of social class or title -- a worthy leader in this era of globalization.

After he returned home, I was presented with another challenge that would reshape my career: I was to go to the U.S., a fiercely competitive region and Michelin's biggest overseas market. I was told that Francois Michelin wanted to leave everything to me. After the Christmas holidays, my young family and I left my homeland once again.

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

Read more installments of My Personal History: Carlos Ghosn

 

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