Ghosn’s demise exposes France in showdown with ally Nissan

Bloomberg

An hour’s drive north of Paris along the River Seine lies Flins, home to Renault SA’s biggest and oldest factory, where 2,700 workers and 900 robots toil in tandem to churn out a steady stream of compact cars. More than half of the vehicles rolling off the line, however, don’t carry the Renault diamond badge.
Instead, the factory’s most important car is the Nissan Micra, of which Flins produced 94,000 last year. The site’s shift towards the Japanese model is emblematic of Nissan Motor Co.’s heft in
an alliance it’s nevertheless failed to dominate since its inception almost two decades ago. Even French President Emmanuel Macron has been drawn into photo ops with management to tout Nissan’s plans in France, rolling up last month at Renault in the northern city of Maubeuge, where a Nissan van will be made. While Flins is ramping up the Zoe electric car, the vehicle still accounts for less than a fifth of output.
But the French-Japanese alliance is now threatened by the downfall of the man central to the functioning of the partnership: Carlos Ghosn. The executive was re-arrested on more expansive charges of corporate wrongdoing. The Nissan side has sought to harness the leadership void to address what it perceives as French favoritism by Ghosn. The French government, on the other hand, has moved to protect the pact as Renault’s biggest shareholder, saying it has helped secure business over the years, a view shared by the workers of Flins.
“The factory needs the alliance,” said Dominique Bertrand, who represents the Force Ouvriere labor union at Flins, where he started on the assembly line more than four decades ago. “Electric cars are the future, but they won’t keep the whole plant busy.”
The stakes are high in France, where unemployment is above 9 percent and Renault is one of the biggest employers, with almost 48,000 people on the payroll. Macron has endured a combative month. Demonstrators clad in yellow vests swarmed the streets of Paris to protest his policies, in a clash that has morphed into an explosive movement against inequality.
While Ghosn’s decline and fall has gripped the corporate and political world in Japan and France, the response has been fractured.
In the wake of a lengthy investigation by Nissan, executives in Asia removed Ghosn from his posts, while the European side kept him in place, arguing he should be presumed innocent until proven otherwise.
The shareholding agreement gives Renault a 43 percent stake in Nissan, while Nissan holds 15 percent of Renault, with no voting rights.
The agreement also stipulates that Renault’s CEO heads the alliance.
When the alliance began in 1999, Renault was about the same size but in much better shape financially than Nissan, which was on the verge of collapse.

‘Governance failures need to be addressed’
Bloomberg

Nissan Motor Chief Executive Officer Hiroto Saikawa sought to reassure staff that the carmaker is addressing corporate-governance shortcomings that have ensnared the company in the scandal involving former Chairman Carlos Ghosn.
The company is looking closely at its governance “which permitted the situation to continue, which clearly calls for grave reflection,” Saikawa said in an internal memo obtained by Bloomberg News and confirmed by Nissan.
More facts related to the case will be revealed, including results from the company’s internal investigation, he said.
“When they come to light, I believe that you will understand that they are serious enough to make the company’s actions absolutely necessary,” Saikawa said.