They must really be in deep doo-doo.
https://www.motor1.com/news/760701/nissan-sell-headquarters-report/
Makes the Honda merger look even better. The alliance may have rationalized the Nissan lineup in much the same way as proposed in the article, and may not have shut down the two plants. I imagine Renault has a major say in both situations.
Nissan didn’t want to be a subsidiary. They wanted a merger of equals. What were they smoking? Always need to remember the golden rule “He who has the gold makes the rules”.
Honda was smart. Nissan management would have wanted influence. Not!
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From my limited research, when two companies merger, one strong and one circling the drain, both end up going down the drain. But I don’t know of any mergers in Japan like this so it might turn out different.
What happens is that the executives in the poor performing company have survived many “cut backs”. They know how to keep their positions while forcing better managers out. The strong company has not had to deal with cost cutting and reductions in staff so the executive there are not prepared for this environment. When the merger happens, there will be an excess of management and executives, and guess who is best prepared to survive.
A recent example is Boeing. When Boeing merged with McDonald Douglas, it is the old MD execs who ran MD into the ground now running Boeing into the ground, like a 737 Max with MTACS.
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Boeing was much larger than MacDak. There’s no way that the significantly smaller parter was going to take over. Both Honda and Nissan are large and the comparison loses some applicability. IMO Honda wouldn’t budge on who would be the senior partner and that led to termination of the merger.
There are several examples of a strong company taking over one circling the drain that worked out very well in the tech industry and audio industry.
The one that comes readily to mind is the Packard/Studebaker “merger”. Packard actually bought Studebaker, but they wouldn’t have done it if they hadn’t been shown books that were “cooked” to make Studebaker look like it was in better financial shape than it really was.
They merged in 1954, and w/in 2 years there were no more Packards. Fast forward another ten years, and Studebaker disappeared from the marketplace.
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And yet, that is exactly what happened. Boeing was run by engineers, MD was run by businessmen and relied mostly on government contracts. The got used to being bailed out by the government.
One example before the merger, Boeing developed (at their own expense) a 747 tanker for inflight refueling. The demonstrated to the Air Force who immediately saw its advantages over the KC-135, a variant of the Boeing 707. But powers that be in the government overruled the Air Force and ordered the Air Force to buy a variant of the DC-10, now called the KC-10. The KC-10 did not have the range or capacity of the 747, but the businessmen at MD knew how to harness political power.
When Boeing and MD merged, Boeing had a lot of government contracts that the engineers at Boeing did not know how to administrate. That is how so many managers at MD survived the merge and they began to displace the engineers in management positions.
Fast forward to today, all or almost all of the original engineer/managers are gone and Boeing is being run by the survivors from the merge. And now Boeing has poorly designed products and poor quality control.
The MCAS in the 737 Max is an example of really bad engineering. Even a boot engineer knows that you NEVER install a system that takes control of an aircraft from the pilot. I have to wonder how they got that concept past the FAA, but I guess that is what political juice does for you.
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I did a study on Douglas profitability starting with 1959 when the first DC-8s got delivered. (As a standalone before the McD merger and as a commercial segment after up until the BoMc merger.)
Douglas Commercial barely broke even over the years. Averaged about $10 mills a year. About 1 jet’s worth. Then in 1995 they took a bath and booked a $1.8 bill loss almost all on the MD11. They merged with Boeing in 1997.
How/why Boeing let McD run the show was a mystery to me. Your eloquent analysis shed the light for me. Thank you.
If you like doing studies on this type thing, I think you would find ITT very interesting. In the 1980’s, the were one of the largest if not the largest corporation in the world. They were mostly know as a telecom company, the second largest in the world, AT&T was the third largest.
They began to buy up other corporations and soon were into every thing. In their pursuit to be in every thing, they bought up a small laser printer company in silicone valley. As a prat of the deal, the owner of that company became the CFO of ITT. Soon after, ITT started to unravel. It sold its telecom division to Alcatel (France). There were three main product lines in the telecom division, PBX (office phone systems), call center PBX (a larger version of the office phone system mostly used by help lines and robo-callers) and central office switches (where your old land line connected to).
The central office line was developing the most advanced central office in the world and that is what Alcatel wanted. BTW, it never made it to production as Alcatel told all the engineers on the project that as soon as they were finished, they would be terminated, so guess what, they never finished.
Alcatel sold off the other two lines, to, guess who, the former CFO and previous owner of the printer company. He formed two separate companies, a call center company called BCS and a PBX company called Cortelco. I worked for Cortelco.
Cortelco was a well run little company that grew into the 6th largest PBX company in the US and gaining. BCS, not so much. They were struggling. So the owner decided to merge the two companies, named to new company EON, and go public. Somehow it wasn’t long before the sharks at BCS took over and pushed out everyone at Cortelco. I lasted about three months after the merger. The stock dropped faster than a fat man without a parachute, I lost a s*** load of money on that deal.
Eventually the merged company was circling the drain when it got bought up by another company that was also circling the drain and as far as I know both are now gone.
BTW, last I heard, the FAA is still using the BCS call center switches for their telephone system.