Nissan Suppliers Agree To Cut Costs By 20%

TOKYO: More than 80% of Nissan Motor Co. Ltd.'s suppliers have accepted its plan to cut costs by an average 20%, Carlos Ghosn, chief operating officer, said Feb. 8, while addressing a seminar of Japanese industrial leaders. The supplier cost cuts are part of a major restructuring Nissan announced in October under the guidance of Ghosn, who was imported from top shareholder Renault SA to steer through the painful changes. The plan involves cutting supply costs by 20% over three years and halving to 600 the number of suppliers the company uses. It also means closing five Nissan plants, shedding 21,000 jobs, and halving the company's interest-bearing debt to 700 billion yen by March 2003. Ghosn welcomed the suppliers' response. "This is very encouraging for the future," he said. "This means that we have a base of suppliers that understand the challenge Nissan is facing, which is willing to support Nissan during this difficult period, as long as Nissan listens to their concerns and helps them to reduce their costs, and gives them a little more business to remain profitable." Ghosn said many of the suppliers had been telling Nissan for years about ways to cut costs, but for various reasons they had not been heeded. Renault took a 36.8% stake in financially troubled Nissan in May 1999, becoming the top shareholder in Japan's second-largest automaker. The alliance created the world's fourth-largest carmaker.