Ghosn expects growth in '12 but urges more work on yen

by Sayo Sasaki


Nissan Motor Co. President Carlos Ghosn expects Japan to grow in 2012 on recovery from last year’s devastating tsunami, although he cautioned that curbing the yen’s strength is crucial since it is already resulting in job losses and a hollowing out of industries.

“In 2012, we will see a rebound compared to 2011 because 2011 has been such a terrible year,” Ghosn said in an interview, referring to the March 11 earthquake and tsunami that ravaged northeastern Japan, disrupted global supply chains and crippled the output of Japanese manufacturers, including the automakers that have been leading the nation’s economic growth.

Saying Japan has everything necessary for growth in the coming years, such as great infrastructure, advanced technology and abundant capital, Ghosn stressed Japan now needs to focus more on policies that help its industries to grow.

“Make sure that there’s more willingness to focus the policy toward growth, which means, obviously, supporting investments to new technologies and supporting the exporters,” he said, adding that he wants to see the currency in a “neutral position.”

Amid worries about the course of the global economy, the yen, considered a relatively safe asset, has advanced to historically high levels against the dollar and the euro in recent months, eating into Japanese exporters’ profits overseas when they are repatriated.

Noting the yen at such levels to the dollar is a struggle for many exporters, Ghosn said he is worried that Japanese companies do not voice their concern but react instead.

“What worries me is that Japanese companies have a tendency not to whine. They just act, so they are shifting production outside, they are doing everything, and (in) the end, we are losing a part of the Japanese society.”

Calling the Japanese currency “artificially strong,” Ghosn reiterated his call on the Japanese authorities to take action against the appreciation of the yen, noting how Switzerland conducted unlimited intervention in the currency market to stem a similar upsurge of the Swiss franc against its major counterparts.

“Some people say there’s no solution. Well, I look around and I see that the Swiss have solved their problem very well, and Switzerland doesn’t have the power of Japan, by no means,” he said.

Looking back at the past year, he said the global economy was relatively strong although it had two sour spots — Japan, because of the disaster and the strong yen, and Europe, because of its financial crisis.

The European economy has been hit by investor worries about the eurozone debt problems and questions regarding its common currency, which have kept global financial markets volatile despite European leaders taking a series of actions to tame the jitters.

Ghosn warned that Europe’s problems may not be resolved in 2012 and he is preparing for that contingency.

“I don’t think we are going to have a great year for Europe in 2012 and we are prepared for a tough year in Europe. The only question is, how tough is tough?”

Saying Europe will be “stable” under an optimistic scenario and will face recession under a more pessimistic scenario, Ghosn noted that even in the case of a recession its impact on Japanese carmakers will likely remain limited due to Japan’s relatively small share of the European car market, where there is tough competition.

Another issue that hit the Japanese auto industry in 2011 was the flooding in Thailand that triggered supply-chain disruptions for Japanese automakers there, just when they were recovering from similar disruptions caused by the March disaster.

Numerous automakers saw net profit decline from the impact of the flooding in addition to heavy losses from the strong yen and the disasters in Japan.

In contrast, Nissan suffered a relatively light impact from the disaster in Thailand and even upgraded its net profit projection for the full business year through March 31 on strong global sales of its vehicles.

Regarding how to manage a crisis, Ghosn said a leader must follow basic steps to assess the situation, make short-term action plans and medium-term plans to correct it, share the vision of the plans with employees and empower those working at the forefront of the crisis.

“In Thailand, for example, when they had the floods, the executive vice president in charge of Asia flew to Thailand and . . . he could change product, change parts, make decisions . . . make investments, everything,” he said.

Ghosn also said people “need to see the top engaged” and not relaxing at headquarters when faced with a crisis.

“Every crisis gives you lessons, and there’s something to learn from a crisis, so you can enrich your own knowledge, company knowledge, about how to react,” he said.

“If you do this, crisis (is) never a loss.”

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