nissan revival plan€¦ · nissan revival plan s, g & a distribution structure streamlining m...

NISSAN REVIVAL PLANNISSAN REVIVAL PLAN

TOKYO October 18, 1999TOKYO October 18, 1999

REVIVAL PLAN OUTLINEREVIVAL PLAN OUTLINE

IntroductionIntroductionI) Diagnosis

¦ Past Performance: Facts/Figures

¦ Past Performance: Analysis + Opportunities

II) Revival Plan

¦Elaboration

¦Key Contents

¦ Impact

III) Commitments

Conclusion

CALENDAR OF EVENTSCALENDAR OF EVENTS19991999

March 27:March 27: Alliance Signed with RenaultAlliance Signed with Renault

May 28: May 28: Transaction ClosesTransaction Closes

June 25: June 25: AGM Elects new Board of DirectorsAGM Elects new Board of Directors

June 25:June 25: Board Appoints CEO, COO, EVP, SVPBoard Appoints CEO, COO, EVP, SVP

July 1: July 1: New Executive Management TeamNew Executive Management Team

Sept 1:Sept 1: 17 Expatriate Renault Managers17 Expatriate Renault Managers

Assigned to NissanAssigned to Nissan

Oct 18:Oct 18: Announcement of Revival PlanAnnouncement of Revival Plan


IntroductionIntroductionI)I) DiagnosisDiagnosis

¦¦ Past Performance: Facts/FiguresPast Performance: Facts/Figures

¦ Past Performance: Analysis + Opportunities

II) Revival Plan

¦ Elaboration

¦Key Contents

¦ Impact

III) Commitments

Conclusion

GLOBAL MARKET SHAREGLOBAL MARKET SHARE1988/19981988/1998

4.95.25.5

5.75.8

6.16.2

6.66.4

5.8

6.2

4.0%

4.5%

5.0%

5.5%

6.0%

6.5%

7.0%

88 89 90 91 92 93 94 95 96 97 98(calendar year Jan-Dec)

(% m

ark

et

sh

are

)

2.81

3.063.022.96

2.68

3.08

2.74 2.73 2.74 2.75

2.46

2.2

2.4

2.6

2.8

3.0

3.2

88 89 90 91 92 93 94 95 96 97 98

(fiscal year April - Mar)

(mill

ion

un

its)

615,000 vehicle615,000 vehicledecreasedecrease

GLOBAL PRODUCTIONGLOBAL PRODUCTION 1988/1998 1988/1998

DOMESTIC MARKET SHAREDOMESTIC MARKET SHARE1988/19991988/1999

13.3

14.715.415.5

16.316.116.7

17.217.817.7

18.6

17.4

19.720.420.0 20.4

21.821.4

22.222.423.223.423.723.6

12%

14%

16%

18%

20%

22%

24%

26%

88 89 90 91 92 93 94 95 96 97 98 99*(fiscal year april-march -- 99 first half results)

(% m

ark

et

sh

are

)

Total Market Ex. Mini's

EARNINGS PERFORMANCEEARNINGS PERFORMANCENET INCOME 1988 - 1999NET INCOME 1988 - 1999

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

88 89 90 91 92 93 94 95 96 97 98 99e

(fiscal year)

%

NNEEGGAATTIIVVEE

NET INDEBTEDNESSNET INDEBTEDNESSEXCLUDING SALES FINANCEEXCLUDING SALES FINANCE

0

0.5

1

1.5

2

2.5

3

89 90 91 92 93 94 95 96 97 98

(trillion yen)




¦¦ Past Performance: Analysis + OpportunitiesPast Performance: Analysis + Opportunities

II) Revival Plan

¦ Elaboration

¦Key Contents

¦ Impact

III) Commitments

Conclusion


REASONS EXPLAINING PAST PERFORMANCEREASONS EXPLAINING PAST PERFORMANCE

1) Lack of profit orientation1) Lack of profit orientation

2) Not enough focus on customers2) Not enough focus on customers

3) Lack of cross-functional, cross-border,3) Lack of cross-functional, cross-border,

intra-hierarchical lines workintra-hierarchical lines work

4) Lack of a sense of urgency4) Lack of a sense of urgency

5) No shared vision or common long-term plan5) No shared vision or common long-term plan

CLEAR OPPORTUNITIES FOR PROGRESS CLEAR OPPORTUNITIES FOR PROGRESS


NISSAN’S STRONG BASE FOR RECOVERYNISSAN’S STRONG BASE FOR RECOVERY

¦¦ International presence and global reach International presence and global reach

¦¦ World leading manufacturing system World leading manufacturing system

¦¦ Leading edge in selected technological fields Leading edge in selected technological fields

¦¦ Alliance with Renault Alliance with Renault

¦¦ Nissan’s people Nissan’s people





II) II) Revival PlanRevival Plan

¦¦ ElaborationElaboration

¦Key Contents

¦ Impact

III) Commitments

Conclusion

NISSAN REVIVAL PLANNISSAN REVIVAL PLANElaboration:Elaboration:

¦¦ 9 Cross Functional Teams 9 Cross Functional Teams

¦¦ Decided by Executive Committee on July 5 Decided by Executive Committee on July 5

¦¦ Business DevelopmentBusiness Development ¦¦ Marketing & SalesMarketing & Sales

¦¦ PurchasingPurchasing ¦¦ SG & ASG & A

¦¦ ManufacturingManufacturing ¦¦ Financial ManagementFinancial Management

¦¦ R & DR & D ¦¦ Product Phasing OutProduct Phasing Out

¦¦ Organization & Decision Making ProcessOrganization & Decision Making Process


ElaborationElaboration::

¦¦ 200200 people people directlydirectly involved from Japan, USA, Europe involved from Japan, USA, Europe

¦¦ 2,0002,000 ideas assessed ideas assessed

¦¦ 400400 proposals submitted to Executive Committee proposals submitted to Executive Committee

¦¦ Decisions made official by Board Meeting Oct 18th Decisions made official by Board Meeting Oct 18th







¦¦ Key ContentsKey Contents

¦ Impact

III) Commitments

Conclusion

NISSAN REVIVAL PLANNISSAN REVIVAL PLANBUSINESS DEVELOPMENTBUSINESS DEVELOPMENT

Target:Target: Profitable GrowthProfitable Growth

ActionsActions::¦¦ New product opportunitiesNew product opportunities

¦¦

¦¦ Associated businesses developmentAssociated businesses development

¦¦ Brand identity and brand powerBrand identity and brand power

¦¦ Lead time reductionsLead time reductions




BUSINESS DEVELOPMENTBUSINESS DEVELOPMENT

¦¦ Car/powertrain development timeCar/powertrain development time

¦¦ Order to delivery timeOrder to delivery time

¦¦ Foreign market “Start of Sales”Foreign market “Start of Sales”

Reduce Product Lead TimesReduce Product Lead Times




¦¦ Associated businesses developmentAssociated businesses development

¦¦ Brand identity and brand powerBrand identity and brand power

¦¦ Lead time reductionsLead time reductions

¦¦ Alliance with RenaultAlliance with Renault

NISSAN REVIVAL PLANNISSAN REVIVAL PLANPURCHASING STRATEGYPURCHASING STRATEGY

Target:Target: 20% front-loaded cost reduction over 3 years20% front-loaded cost reduction over 3 years

- 8%

- 7%

- 6.5%

75

80

85

90

95

100

FY99 FY00 FY01 FY02

(co

sr b

asel

ine)


Target:Target: 20% front-loaded cost reduction over 3 years 20% front-loaded cost reduction over 3 years

Actions:Actions:

¦¦ Centralize parts and material purchasing Centralize parts and material purchasing

¦¦ Include services in global purchasing strategy Include services in global purchasing strategy

¦¦ Reduce the number of suppliers Reduce the number of suppliers

NUMBER OF SUPPLIER GROUPSNUMBER OF SUPPLIER GROUPS1999/20021999/2002

50% Reduction in Number of Suppliers

1,145

600

1999 2002

(gro

up

su

pp

liers

)


Target:Target: 20% front-loaded cost reduction over 3 years 20% front-loaded cost reduction over 3 years

Actions: Actions:

¦¦ Centralize parts and material purchasingCentralize parts and material purchasing

¦¦ Include services in global purchasing strategy Include services in global purchasing strategy

¦¦ Reduce the number of suppliers Reduce the number of suppliers

¦¦ Partnerships with competitive global suppliers Partnerships with competitive global suppliers

¦¦ Challenge “specifications and standards” Challenge “specifications and standards”


NISSAN GLOBALMANUFACTURING 1999/2002

NISSAN GLOBALNISSAN GLOBALMANUFACTURING 1999/2002MANUFACTURING 1999/2002

Target:Target: Achieve optimum manufacturing efficiencyAchieve optimum manufacturing efficiency

and cost effectivenessand cost effectiveness

Actions:Actions:¦¦ Reduce vehicle assembly and powertrain manufacturing Reduce vehicle assembly and powertrain manufacturing

capacity capacity

1.652.00 2.40

0.0

1.0

2.0

3.0

1999 1999r 2002

Capacity at 4,400h/yr.(fully loaded 2-shifts)

Capacity at 3,660h/yr.

MANUFACTURING CAPACITYMANUFACTURING CAPACITYIN JAPAN 1999/2002IN JAPAN 1999/2002

Capacity utilization


53%53%

77%77%

50%

100%

0%

30% reduction30% reduction

MANUFACTURING CAPACITYMANUFACTURING CAPACITYIN JAPAN 1999/2002IN JAPAN 1999/2002

1.652.00 2.40

0.0

1.0

2.0

3.0

1999 1999r 2002

Capacity at 4,400h/yr.(fully loaded 2-shifts)

Capacity at 3,660h/yr.



53%53%

82%82%

50%

100%

0%

NISSAN REVIVAL PLANNISSAN REVIVAL PLANMANUFACTURINGMANUFACTURING

Assembly Plant Closures:Assembly Plant Closures: Date:Date:

¦¦ Murayama PlantMurayama Plant March 01March 01

¦¦ Nissan Shatai Kyoto PlantNissan Shatai Kyoto Plant March 01March 01

¦¦ Aichi Kikai Minato PlantAichi Kikai Minato Plant March 01March 01

Powertrain Closures:Powertrain Closures: Date:Date:

¦¦ Kurihama PlantKurihama Plant March 02March 02

¦¦ Kyushu Engine ShopKyushu Engine Shop March 02March 02


Target:Target: Achieve optimum manufacturing efficiencyAchieve optimum manufacturing efficiency


Actions:Actions:mm Reduce vehicle assembly and powertrain Reduce vehicle assembly and powertrain

manufacturing capacitymanufacturing capacity

mm Rationalize and simplify industrial organizationRationalize and simplify industrial organization

NISSAN’S CAR ASSEMBLYNISSAN’S CAR ASSEMBLYSYSTEM 1999 (Japan)SYSTEM 1999 (Japan)

OppamaOppama

MurayamaMurayama

TochigiTochigi

KyushuKyushu

ShonanShonan

KyotoKyoto

AichiAichi

0

1

2

3

4

5

6

7

Mar

ch/C

ube

Sunny

/Alm

era

Prese

a

Bluebir

d

Primer

a/G20

Crew

Cefiro

/I30/

Max

ima

Skylin

e/La

urel

Cedric

Glor

ia w

Cedric

Glor

ia

Cedric

seda

n

Cima/

Q45

Presid

ent

Silvia

Fairlad

y

Wing

road

Avenir

Pra

irie

Stage

a

R'ness

a/Pre

sage

Seren

a

Terra

no/C

arav

an/E

lgran

d

Safari

Civilia

n

Datsu

n

7 plants7 plants 24 platforms24 platforms


0

1

2

3

4

5

6

7

BSM

Crew

Cefiro

/I30/

Max

ima

FF-L

Cedric

seda

n

Cedric

Glor

iaFR-L

Avenir

Pra

irie

Presa

ge

Seren

a

Terra

no/E

lgran

d

Carav

an

Safari

Datsu

n

4 plants4 plants 15 platforms15 platforms* plus Kyoto producing only Civilian -- low volume* plus Kyoto producing only Civilian -- low volume

OppamaOppama

TochigiTochigi

KyushuKyushu

ShonanShonan


0

1

2

3

4

5

6

7

B

FF

-L LF

R-L

SM

Old

M

Old

S

CV

CV

-L RL

LL

CV

M

4 plants4 plants 12 platforms12 platforms* plus Kyoto producing only Civilian -- low volume* plus Kyoto producing only Civilian -- low volume

OppamaOppama

TochigiTochigi

KyushuKyushu

ShonanShonan


Target: Achieve optimum manufacturing efficiencyTarget: Achieve optimum manufacturing efficiency


ActionsActions::

mm Reduce vehicle assembly and powertrain manufacturing capacity Reduce vehicle assembly and powertrain manufacturing capacity

mm Rationalize and simplify industrial organization Rationalize and simplify industrial organization

mm Reduce operating costs by globalizing : Reduce operating costs by globalizing :

mm logistics logistics mm best practicesbest practices mm benchmarkingbenchmarking

mm Extended use of F.M.S. (Flexible Manufacturing System) Extended use of F.M.S. (Flexible Manufacturing System)

NISSAN REVIVAL PLANNISSAN REVIVAL PLANS, G & AS, G & A

Target: Target: Reduce S, G & A costs by 20%Reduce S, G & A costs by 20%

Actions:Actions:

mm Incentive reductions by brand power restorationIncentive reductions by brand power restoration

mm Main-source global advertisingMain-source global advertising

mm Distribution structure streamliningDistribution structure streamlining


Distribution Structure StreamliningDistribution Structure Streamlining

mm Revamp domestic dealer organizationRevamp domestic dealer organization

mm reducing dealer affiliates by 20%reducing dealer affiliates by 20%

mm closing 10% of the retail outletsclosing 10% of the retail outlets

mm opening longer hoursopening longer hours

mm create Prefecture business centers (common back offices)create Prefecture business centers (common back offices)

mm Streamline regional structure in North AmericaStreamline regional structure in North America

mm Restructure European dealer network byRestructure European dealer network by

mm leveraging the Alliance with Renault with common hubs and back officesleveraging the Alliance with Renault with common hubs and back offices

mm E-commerce alliance with CarpointE-commerce alliance with Carpoint


Target: Target: Reduce S, G & A costs by 20%Reduce S, G & A costs by 20%

Actions:Actions:

mm Incentive reductions by brand power restorationIncentive reductions by brand power restoration

mm Main-source global advertisingMain-source global advertising

mm Distribution structure streamliningDistribution structure streamlining

mm Reduce fixed overhead costsReduce fixed overhead costs

NISSAN REVIVAL PLANNISSAN REVIVAL PLANFINANCIAL MANAGEMENTFINANCIAL MANAGEMENT

Target: Target: Improve Financial ManagementImprove Financial Management

Reduce Financial CostsReduce Financial Costs

ActionsActions: :

¦¦ Centralize financial operations worldwideCentralize financial operations worldwide

¦¦ develop global financial controls and risk managementdevelop global financial controls and risk management

¦¦ create global treasury, funding and cash managementcreate global treasury, funding and cash management

¦¦ No shareholdings are considered strategic No shareholdings are considered strategic

¦¦ Dispose of land, securities and non-core assets Dispose of land, securities and non-core assets

¦¦ Reduce inventory to sales by 30% Reduce inventory to sales by 30%


NISSAN REVIVAL PLANNISSAN REVIVAL PLANR & DR & D

Target:Target: Optimize R & D CapacityOptimize R & D Capacity

ActionsActions::

¦¦ Move to globally integrated organization Move to globally integrated organization

¦¦ Promote joint cost reduction activities with suppliers Promote joint cost reduction activities with suppliers

¦¦ “Nissan 333” program“Nissan 333” program

¦¦ Focus on core technologies Focus on core technologies


NISSAN REVIVAL PLANNISSAN REVIVAL PLANORGANIZATIONORGANIZATION

Target: Move from multi-regional to global organizationTarget: Move from multi-regional to global organization

ActionsActions:¦¦ Create a worldwide headquarter Create a worldwide headquarter

¦¦ strategy strategy

¦¦ corporate planning corporate planning

¦¦ management control management control

¦¦ brand management brand management

¦¦ Globally controlled functions Globally controlled functions

¦¦ R & D R & D ¦¦ FinanceFinance ¦¦ Manufacturing systemManufacturing system

¦¦ Purchasing Purchasing ¦¦ H.R. H.R.

NISSAN REVIVAL PLANNISSAN REVIVAL PLANORGANIZATIONORGANIZATION

Target:Target: Move from a multi-regional to a global Move from a multi-regional to a global organizationorganization

Actions:Actions:¦¦ Empowered Program Directors for cross-functionality Empowered Program Directors for cross-functionality and profit orientation and profit orientation

¦¦ Performance oriented compensation: bonuses, Performance oriented compensation: bonuses, stock option schemes implemented in 2000 stock option schemes implemented in 2000

¦¦ Performance based career advancement Performance based career advancement








¦¦ ImpactImpact

III) Commitments

Conclusion

NISSAN REVIVAL PLANNISSAN REVIVAL PLANNissan Group EmployeesNissan Group Employees

127

148

131

110

120

130

140

150

Apr 99 Apr 99 FY 02

Future consolidationFuture consolidationmethodmethod

Previous consolidationPrevious consolidationmethodmethod

(including temp & part time at start of FY99)

ForecastForecastlevellevel

Reduction ofReduction of14% (21,000)14% (21,000)••Natural attritionNatural attrition••Increase in part-Increase in part- time -- flex time time -- flex time••Spin-offsSpin-offs••Early retirementEarly retirement

NISSAN REVIVAL PLANNISSAN REVIVAL PLANIMPACTIMPACT

HEADCOUNT REDUCTIONS:HEADCOUNT REDUCTIONS:

¦¦ 21,000 people worldwide21,000 people worldwide

BreakdownBreakdown

¦¦ 4000 in manufacturing4000 in manufacturing

¦¦ 6500 in Japanese dealer network6500 in Japanese dealer network

¦¦ 6000 S, G & A6000 S, G & A

¦¦ 5000 spin-off’s5000 spin-off’s

¦¦ (500) R&D(500) R&D

NISSAN REVIVAL PLANNISSAN REVIVAL PLANIMPACTIMPACT

Financial Impact: Financial Impact:

¦¦ 200 billion Yen provision* 200 billion Yen provision*

booked in FY 99 booked in FY 99

* Provisions cover write-down of assets and social costs* Provisions cover write-down of assets and social costs

NISSAN REVIVAL PLANNISSAN REVIVAL PLAN1 TRILLION YEN COST REDUCTION1 TRILLION YEN COST REDUCTION

0

25

50

75

100

FY 98

Purchasing 60%

Manufacturing 11 %

Misc. 3%

R&D 3%

SG&A 23%

2%Others

10%

28%SG&A 60%

Purchasing

Manufacturing

Actual CostsActual Costs Planned ContributionsPlanned Contributions








¦¦ ImpactImpact

III) III) CommitmentsCommitments

ConclusionConclusion

NISSAN REVIVAL PLANNISSAN REVIVAL PLANCommitmentsCommitments

Profitability targetsProfitability targets

FY 00FY 00 Return to profitabilityReturn to profitability

FY 02FY 02 Operating profit Operating profit >> 4.5% of sales 4.5% of sales

NET INDEBTEDNESSNET INDEBTEDNESSEXCLUDING SALES FINANCEEXCLUDING SALES FINANCE

0

0.5

1

1.5

2

2.5

3

89 90 91 92 93 94 95 96 97 98 99 02

(trillion yen)

target

50%decrease








¦¦ ImpactImpact

III) III) CommitmentsCommitments

ConclusionConclusion

nissan revival plan€¦ · nissan revival plan s, g & a distribution structure streamlining m...

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