Financial news

Nissan’s Makoto Uchida: Seeking the right direction in times of crisis

By  | 

Via Financial Times

Just weeks after Makoto Uchida was appointed to lead Nissan in early December, news of the coronavirus outbreak in China reached the Japanese carmaker.

His wife and two children were still based in Wuhan, the early centre of the pandemic that has now killed more than 64,000 people worldwide. The city is home to the headquarters of Nissan’s joint venture with China’s Dongfeng Motor.

“My employees are my family too, so we wanted to make sure they were safe and treated well. That comes first,” says the 53-year-old who used to head the company’s operations in China before becoming chief executive.

Mr Uchida says he was also extra careful in how the company communicated its response to the virus: “We should not be exaggerating the situation or unnecessarily inviting panic mode or uncertainty among our employees.”

Since the outbreak, Nissan has given regular updates and guidelines to employees on health and safety, and tips on how to stay connected while working virtually through Zoom or Skype. Mr Uchida and other executives also communicate regularly with HR and line managers.

For both the company and the wider car industry, the lessons drawn from the 2011 Tohoku earthquake and tsunami proved vital. The detailed list of parts suppliers that had been compiled after that earlier disaster helped Nissan to figure out which parts were imported from China and where the shortages might occur, so it could set up back-up plans to produce them elsewhere, according to Mr Uchida.

Even so, Nissan, with its heavy reliance on hundreds of components made in China, became one of the first global carmakers to cut production at home because of a parts shortage. “We need to make a lot of planning. I still cannot foresee how much impact this uncertainty will have” with the pandemic now spreading to the US, Europe and elsewhere, says Mr Uchida.

Even before Covid-19, the CEO had enough problems to deal with. The carmaker was facing a serious crisis since the 2018 arrest of its former chairman Carlos Ghosn on financial misconduct charges, which the ex-chair denies. Losses were building up on tumbling sales worldwide, and its 21-year alliance with France’s Renault had nearly collapsed. Mr Uchida’s arrival was meant to mark a new start for the company. Instead, his former boss stole the spotlight as he made an audacious escape from Japan to Lebanon, launching a public tirade against Nissan executives for plotting to bring him down — a claim strongly disputed by the company.

READ ALSO  Hedge funds braced for second stock market plunge

“People were a bit demotivated. In a way, they were worried about what direction the company was moving towards,” Mr Uchida says.

Now, Nissan’s plants located all over the world have been temporarily shut down because of the lockdown of cities and supply chain disruptions caused by the spread of coronavirus, triggering a two-notch downgrade of its debt by rating agency Moody’s to just above junk territory. Shares in the company have nearly halved this year.

Still, in a message to employees at the start of the new financial year on April 1, Mr Uchida said: “We will have to endure inconvenience and uncertainty for some time. However, we can definitely weather the storm.”

As he started the role of CEO, he placed top priority on visiting the gemba — the factory floors and design centres in Japan, the US and Europe — where he held town hall meetings with employees. Staff asked their new boss how they could help the management to repair the Nissan brand. “Our individual capability is much higher than what we are delivering today,” Mr Uchida says.

“It’s my job and the management’s job . . . to move the company in the right direction.”

As part of efforts to rebuild its brand, Mr Uchida has talked often about the new “Nissan Way” with employees, saying the group’s corporate culture needs to be transformed to put an even bigger emphasis on customer needs in each market. “If you take it seriously and act proactively, I believe that Nissan’s future will be brighter,” Mr Uchida said in a message to employees in February.

READ ALSO  Continued fall in recruitment as firms delay taking on staff – report

Restoring that direction will entail pain, Mr Uchida says. Following years of aggressively pursuing a higher market share and sales volume during the Ghosn era, the company has shifted its focus to profitability. But that has meant Nissan will be concentrating more on areas where it is strong and withdrawing from markets where its position is lagging. The division of roles within the alliance, which also includes Mitsubishi Motors, will be more explicit, with each partner taking the lead in markets and technologies where it has an edge.

Under his predecessor, the carmaker had outlined plans to cut 12,500 jobs, but the rapid deterioration in business conditions and plant shutdowns caused by Covid-19 mean there will be many more jobs lost. “We may need to rightsize more dramatically,” Mr Uchida says, without elaborating on the details.

Mr Uchida is an outlier among Japanese executives inside Nissan, who have mostly stayed at the company since graduating. He spent many years of his childhood outside of Japan as his father, who worked at an airline, was posted to places such as Egypt and Malaysia. “That’s where I found the diversity, culture and adaptability to different circumstances,” he says.

After studying theology, Mr Uchida spent more than a decade at a trading house now known as Sojitz. His first experience with the automotive industry was during the five and a half years he spent in the Philippines, where the trading house had a joint venture with Mitsubishi Motors. He then joined Nissan in 2003, starting in the purchasing division before being assigned roles in South Korea and later in China.

The multicultural experience was one of the key factors why the company’s nomination committee selected Mr Uchida as its new CEO to lead during a period of uncertainty and tension within the alliance.

Following two decades of one-man leadership under Mr Ghosn, Nissan is experimenting with a troika management team that also includes Ashwani Gupta, who is now the chief operating officer. The approach is untested, and critics say it makes it unclear who is actually leading the company. But Mr Uchida says: “If we set the right direction, I think this company has a lot of strength to revive itself.”

READ ALSO  The U.S. should not revoke Hong Kong's special status: Jimmy Lai

Three questions for Makoto Uchida

Who is your leadership hero?

I don’t really have one but six years ago, I listened to a Japanese lecturer from a different industry on leadership. There is one thing he said which is still with me, and which I try to do everyday. He said: “Leadership means how much you can open your capacity to listen to people”. Every morning, I try to ask myself, am I opening my capacity to listen to people? If we start ignoring listening to our people, that would cause mismanagement. I am not managing to do it perfectly but I think this is important.

If you were not a CEO/leader, what would you be?

I would be doing totally different things. I wanted to be a chef. I love eating. I like cooking. I like people saying it’s delicious. If you do the effort, the outcome is there when it comes to food. The result is always promising as long as you do it the right way. It’s more or less the same with business. If you do it the right way, the result always comes.

What was the first leadership lesson you learnt?

In Nissan, it was definitely diversity. This is the reason why I have to remind myself that trust, transparency and respect is very important. In the beginning when I joined (the alliance with Renault), it was very challenging because even the English is different. There is the French way of English. For example, they always say global and global in French English means holistic. In Japanese English, when you say “basically yes”, that means no. We have different cultures in the alliance, which is also very beautiful. Whether it’s working with French, Japanese or Americans, every single kind of lesson gives you the flexibility to work under diverse circumstances.

Print Friendly, PDF & Email

Latest from finanz.dk