Speed Kills
The Cluster Effect
Who Will Survive?
Behind the Story: Suicide Watch
The French Ministry of Health has classified the first two deaths as workplace accidents, a category that few suicides fall under unless they are indisputably linked to job conditions. The designation ensures that the victims’ families receive life insurance payments and a pension from the government. Potentially more problematic is the fact that the company could face charges. French labor inspectors recommended to the government prosecutor in Versailles that Renault be investigated for “moral and institutional harassment of workers,” according to a source in the prosecutor’s office. At the time of the suicides, French employees could not work more than 35 hours a week; that policy has since been overturned. The prosecutor has already begun an inquiry, which will include taking depositions from the director of the Technocentre and the immediate supervisors of the suicide victims, and local police are working to determine whether employees were forced to put in longer hours than legally allowed. Authorities plan to decide in the coming months whether or not to file charges.
When Carlos Ghosn became C.E.O. of Renault in 2005, he took over a company with a superb reputation for innovation but little strategic direction. For decades, its engineers designed cars that were mechanically and aesthetically different from virtually everything else on the road. It was the first car manufacturer to put turbochargers and hatchbacks into widespread production, among other innovations.
However, under Ghosn’s predecessor, Louis Schweitzer, a former high-ranking official in the French government, Renault swung from one new idea to another with little apparent rationale. The company had long specialized in economical cars for the masses, but beginning in 2001, Schweitzer made an embarrassing foray into upmarket autos by introducing the Avantime, an eccentric three-door coupe-minivan, and a staid model called the Vel Satis, a luxury car that retailed for about $50,000. Neither sold well, in large part because Schweitzer had tried to enter a market that was dominated by models from companies like BMW. And during that period, while Schweitzer was distracted by the launches, the quality of Renault’s less expensive models dropped significantly. “Traditional customers began to question where the brand was going and why the cars they wanted weren’t as good as they used to be,” says Stephen Norman, Renault’s senior vice president of global marketing.
It was no surprise, then, that Ghosn inherited distressing numbers. Revenue in 2005 had risen only 2 percent compared with the previous year, and Renault’s market share in Europe had dipped to less than 10 percent for the first time in years. Ghosn had seen this before, or something like it, anyway. The Brazil-born Lebanese executive had first come to Renault in 1996 as an executive vice president. Before that, Ghosn was North American C.E.O. of Michelin, a title he achieved by his late thirties, when he forged a reputation for relentlessly slashing expenses. Renault was the perfect venue for such skills. Schweitzer had set a target of trimming about $600 from the manufacturing cost of each vehicle, but when Ghosn arrived as V.P., he established a plan that would triple the projected savings. Some of his initiatives provoked strong reactions. After he closed a large Renault factory in Belgium, hundreds of workers staged work stoppages and clashed with police. Workers in France also protested, out of solidarity. Political leaders from both countries demanded that the facility remain open, but Ghosn got his way. The factory was shuttered, and by 1998, Renault’s profit margin had recovered to a healthy 5 percent.
By 1999, Renault had rebounded to such an extent that it was able to rescue a competitor, Nissan, which was then nearly bankrupt. Renault paid $5 billion for 44 percent of Nissan’s stock, and Ghosn took over the top spot. He quickly restructured the company by slashing budgets and laying off workers. A year after Ghosn took over, Nissan was profitable, and within three years it was virtually debt-free. With its newly streamlined cost structure, the company pushed its operating margins to 10 percent, comparable to those of industry leaders Toyota and Honda.
Ghosn had become the auto industry’s best-known high-wire act: the C.E.O. who would publicly proclaim an improbable set of goals for a company and somehow manage to achieve them. A Japanese comic-book series about his exploits, The True Story of Carlos Ghosn, became a bestseller, and business school students, without irony, compared Ghosn to famous historical figures in works like “The Change Efforts of Douglas MacArthur and Carlos Ghosn in Japan.” His press coverage could be hyperbolic; the Detroit News, for example, ran an article with the headline “Nissan C.E.O.: The Making of a Superstar.” Anytime an auto company had a down quarter or two, Ghosn was rumored to be in line to save it.

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