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RANTS by Peter M. DeLorenzo

The Madness of King Carlos.

Detroit. Now that the real picture of Nissan's move to Tennessee is emerging, Carlos Ghosn's "vision" for its U.S. operations to be part of a globally competitive Nissan seems to be unraveling. As much as the apologists still associated with the company are going out of their way to defend the move and the potential savings (which official estimates peg at around $50 million), the reality of the situation is something altogether different - for any number of reasons.

Ghosn's original boast that "most" of the people at Nissan headquarters in Gardena, CA, would make the move to Tennessee is proving to be a complete bust. Not only are fewer than half of the employees making the move to Nashville, it's the number of essential, high-caliber people leaving the company that have the more realistic insiders left at Nissan gravely concerned. Not only is Jed Connely, Nissan North America's sales chief, leaving, Jack Collins, NNA's highly-regarded product development VP is exiting the company too. These two led a team that was single-handedly responsible for Nissan's resurgence. Carlos Ghosn may have gotten the credit, but even he was smart enough not to mess with the well-oiled machine that NNA had become under Connely and Collins. But these two executives are only two of the most visible of the key players leaving. It's the exodus of the key people at levels just below Connely and Collins - in a broad spectrum of critical areas - that is decimating NNA and ripping the heart out of an organization that at one point was considered to be one of the hottest car companies in the world.

It's amazing to me that this is the one blind spot that Ghosn and his loyalists not only fail to acknowledge, but they almost derisively refer to it as a non-issue. Anyone with at least a modicum of perspective who can actually sit there and think that you can just "plug and play" a new organization (in any field - not just the automobile business) with only slight hiccups and be able to perform at previous levels in short order is either pathologically delusional or so arrogant that they're blinded by their own brilliance.

NNA is on the verge of several key launches of vehicles that must hit the U.S. market with no mistakes and no excuses. That's the price of entry in the automobile business in this country these days - the toughest market in history. Nothing can fall through the cracks, nothing can be left to chance, and an organization has to be functioning on all cylinders and on all levels.

And Ghosn picks this exact moment in time to uproot NNA's entire organization and send it across the country in the interest of financial savings that are already proving to be a pipe dream? Even conservative alternative financial estimates say that the move won't save Nissan a penny in the short term - and that in fact it may cost Nissan dearly, what with bonus payouts to employees who choose to stay for an agreed upon amount of time mounting.

But the very essence of the problem here is that while Ghosn and his cronies are calculating the incentive package from the state of Tennessee and predicting the savings they'll ultimately garner, the one cost they're blissfully leaving out of their equations is the human capital that will be squandered in the process - and the devastating effect it will have on the ability of NNA to function as before.

Even under a best-case scenario, I estimate that there will be a painful gap of as much as 18 months, if not more, before this new organization is up to speed. And that's only a best case. This will be an organization that will be expected to gel overnight, largely stocked with refugees from the Detroit-based car companies (something we predicted on this site the moment we first heard of the news). That's just notgonnahappen.com. It doesn't happen in major league sports even when a team is stocked with "all stars" - team chemistry is never a given - so why should we expect it to happen in Tennessee for Nissan when more than half the organization is new to the task at hand and new to each other?

This move is shaping up to be nothing short of Carlos Ghosn's Waterloo. Ghosn has made all of his calculations based on the idea of cutting costs and expenses and preparing Nissan for its role in the global automobile business - where cost and expense are, of course, paramount. But in focusing on just one dimension to this move, he is underestimating the daunting challenges and equipping his former well-oiled organization with a series of built-in handicaps that will prove to be devastating.

What it comes down to is that Ghosn has achieved legendary status around the world - and he is too arrogant to retreat or admit failure. He would never admit that the idea was flawed or that he is setting up his North American organization for a disastrous undertaking - it's just not in his makeup.

As I've said many times before, Ghosn is a proven corporate turnaround artist, but his ability to lead organizations after the turnaround plateau is reached and then take it through the crucial next phase has always been suspect in my book. And by orchestrating the move of Nissan's U.S. headquarters to Nashville, Ghosn is demonstrating to me that my gut feelings about him are indeed correct. He is willing to trash the current NNA organization - destroying the culture and the chemistry of the team that did all of the heavy lifting and delivered the goods in the process - as long as it conforms to his "vision" for the company's future. In other words, his "vision" is more important than the reality of the situation - or the welfare of the company itself.

Carlos Ghosn may be the King of all he surveys, but this move is pure madness.

And it will prove to be the undoing of what once was a pretty damn good car company.

Thanks for listening, see you next Wednesday.

Automotive consultant Peter M. DeLorenzo founded Autoextremist.com - an Internet magazine devoted to news, commentary and analysis of the automotive industry, automotive marketing, strategy and product development - on June 1, 1999. Since then, Autoextremist.com has become a weekly "must-read" for leading professionals within and outside the industry, including top executives at the car companies, suppliers, dealers, journalists, financial analysts, enthusiasts, and people directly involved in motorsports. Prior to launching the site, Peter spent more than two decades in automotive advertising and marketing, holding top-level positions as Creative Director and Executive CD at ad agencies in Detroit and New York. In addition to his editorial opinion work on Autoextremist.com, Mr. DeLorenzo regularly consults for enlightened automobile companies and is a national commentator on the auto industry. The opinions expressed by Mr. DeLorenzo are his and his alone and do not necessarily reflect those of his clients.

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