Nissan Legend Yoshikazu Hanawa: Towards Today's Global Nissan

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Profile

Yoshikazu Hanawa was born in Tokyo in 1934. He joined Nissan Motor in 1957 upon graduating from the Faculty of Economics at Tokyo University. He worked mainly in the human resources field and was appointed a director in 1985 and promoted to representative director and president in 1996. He served as representative director, chairman, and CEO in 2000 and was named representative director and chairman in 2001. He retired and was appointed advisor and honorary chairman in 2003. When he was asked about hobbies, he replied: "I never gave any thought to hobbies while I was working. I was always busy and had no time for such things, and I thought that hobbies were for people who had retired. So now I enjoy visiting Buddhist temples and appreciating statues of Buddha. And golf."

A DESIRE TO SERVE SOCIETY

This tenth and final installment of our series "Nissan Legends" explores the origins of today's Nissan from the perspective of top management. We get an insider's view from Yoshikazu Hanawa, the person who concluded the Alliance between Nissan and Renault, through an interview conducted by Tetsuya Kato, the president of Car Graphic Co., Ltd., the publisher of Car Graphic magazine, which has handled this project. Mr. Kato also shares with us how he perceived Mr. Hanawa in his management position with the company.

Tetsuya Kato: I've been looking forward to this opportunity a great deal because I've always been interested in knowing the executive who led the Alliance with Renault to such success.

Yoshikazu Hanawa: Thank you. I've been looking forward to it myself.

Kato: You were born in 1934. When you were young, were cars so commonplace that you often saw them on the streets?

Hanawa: I was a young child before the war, and I recall seeing small cars called Datsuns. We lived in Suginami Ward in Tokyo and the Koshukaido, one of the city's, and even the country's, major roads was near our house. That's where I saw these cars once in a while. However, a while after the war broke out, we moved to Setagaya Ward and we didn't see any cars any more.

While in elementary school, with friends from the neighbourhood (Hanawa is at far right)

Kato: Did those Datsuns make you curious about cars and lead you to develop an interest in them?

Hanawa: No, they didn't (laughter). It was fairly rare to see cars, and cars were not part of our daily life. The war broke out when I was in the second grade of elementary school and ended when I was in the sixth grade. In other words, we were in wartime when I was an elementary school pupil. It was natural that my dream at the time was to operate a tank and fly a fighter plane. Even when I started junior high school, Japan was still going through a time of confusion. It was also a time of food shortages and cars were not the principal concern of most people.

Tokyo around 1945. Hanawa was in junior high school during the chaotic times following the end of the war, which were epitomized by the devastated condition of Tokyo.

Kato: You went on to study in the economics faculty at university. Was American culture starting to penetrate among Japanese youth when you were at university?

Hanawa: Not at all. When I started university, it was just about the time that people were finally starting to be able to get enough food to eat. It was a little later that American culture started to be felt in Japan. I was far removed from any such trend even if it existed when I was a student, considering that I wore Japanese wooden clogs to school!

Kato: You then chose to work for Nissan. Was it because you finally became interested in cars?

Hanawa: The professor leading one of the seminars I was enrolled in had an acquaintance who worked in Nissan's human resources division, and the professor introduced me to that person. This was before car manufacturing became one of the key industries in Japan. I remember that immediately after I joined the company, the governor of the Bank of Japan at the time said something implying that Japan didn't need an auto industry. I actually became worried that I might lose my job even though I had only just started (laughter).

Hanawa often went hiking in the mountains while he was a university student (Hanawa is on left).

Kato: Did you think that Japan would become the power in the auto industry that we see today?

Hanawa: I suspect that nobody at the time dreamed that the Japanese auto industry would flourish as much as it has.

Kato: Which department were you first assigned to?

Hanawa: I worked in the human resources section at headquarters. The head office was located in Shinkoyasu, near Yokohama. I commuted from Setagaya in Tokyo and every day I was late for work because the first train in the morning did not get me to work on time (laughter).

In the early days after joining Nissan (Hanawa is on right)

Kato: How was the atmosphere inside the company at that time?

Hanawa: I found it easier to be at work than I had expected. As a student I had no idea of what a company was like, so I imagined that the workplace would be a rather severe environment where seniority was strictly observed and employees were inculcated with the corporate philosophy. In reality, the company had a liberal atmosphere and all of my superiors were very kind.

Kato: After all, this was the company that embraced such unconventional figures as Yutaka Katayama.

Hanawa: I didn't know Mr. Katayama at the time, but yes, it was a company where a dynamic person like that could work to his full capacity (laughter).

With his colleagues in the HR department at the Oppama Plant (Hanawa is seated at far left)

WHAT IS WORKING

Kato: Did you have a driver's license back then?

Hanawa: Yes, I did. The reason was that when I took the entrance exam, the person from the human resources division said that they wouldn't hire anyone who didn't have a license. It turned out that he was making a joke, but I took it seriously and immediately started to practice driving with a friend's car. I was driving without a license (laughter). The company held training sessions lasting about a month prior to our official enrolment in the company and I was assigned to the design department. My superiors there taught me how to drive on the company's grounds. I passed the test for my license on the fourth try (laughter). The exam was pretty tough in those days.

Kato: Do you remember the first time you drove a car?

Hanawa: Well, I enjoyed it a great deal. It went so fast when all you did was press down the throttle and it would take you anywhere you wanted to go.

Kato: So did you immediately buy one for yourself?

Hanawa: No, I didn't. At the time very few employees owned their own cars. I bought my first car around 10 years after I started to work at the company. My first new car was a Sunny if I remember correctly, while before that I drove a second-hand Datsun Bluebird 310.

Hanawa (left) and Kato (right) during the interview

Kato: The Japanese auto industry grew at an extraordinary rate during that period.

Hanawa: It was an extremely busy time. In normal conditions in the corporate world, an employee should receive thorough education and training, which takes time, and only after that should his or her workload increase, but things were moving so rapidly that we didn't have the luxury of asking for such ideal procedures. If we wanted senior employees to teach us something, they would say, "I don't have time for that, so you have to work it out for yourself." That was the general atmosphere. Considering that I thought I might be losing my job when I first joined the company, it was worthwhile and challenging to be working hard, although of course it was difficult at times. In addition, there was this sense throughout the country that we had to work hard to reconstruct the economy, which had been ruined by the war.

Kato: Did you work in the human resources division at headquarters all those years?
Hanawa: I was working in the human resources division in the start-up offices of different plants, including Zama and Oppama.

Kato: Was it difficult to secure human resources?

Hanawa: It was not that hard to find people to work in the office, but the plants faced chronic labor shortages. I worked in the human resources section at head office for four years and then in different plants for 10 years and then spent six years in the research section at headquarters.

Kato: Then you went to the U.S.

Hanawa: It was company policy at the time to assign a local to be in charge of the U.S, branch, so we served as the liaison between the U.S. branch and the head office in Japan. I learned a lot in the U.S. We went over to the U.S. thinking that we would teach the Americans, including management. At the time we believed that we were the top automobile industry in the world, including in management methods. But the Americans we met were quite capable and excellent people. Japan might have had better production technologies, but it was obvious that Americans were way ahead of us in terms of engineering and management techniques.

Kato: Did you enjoy life in the U.S.?

Hanawa: Although of course there were a lot of difficulties, I did enjoy it. I may have a relatively high ability to adapt to different environments. In those days, the company wouldn't tell you how long your assignment overseas was going to last, so you wouldn't even know when you would be back in Japan. But it was my job, so I did what I was expected to do.

Kato: I'm surprised that you could be so matter-of-fact about such a thing.
Hanawa: We were thankful for the fact that we had jobs at all. It was usual that we would not express negative feelings about our jobs, such as not liking something or finding something too much trouble. I always told myself that there was no such thing as enjoyable work and that it was not reasonable to look for enjoyment in work in the first place. I believed that it was enough if I could serve society.

THE QUINTESSENTIAL IMPORTANCE OF THE PARTNER

Renault is a French automaker that has long been the leader in Europe in terms of unit sales. Yoshikazu Hanawa discussed, negotiated, and concluded the Alliance with this huge corporation essentially all by himself. I therefore expected to meet an aggressive, self-confident guy with an overpowering presence and a silver tongue. Instead, I encountered a quiet gentleman who was rather reticent and humble, but who at the same time did not hesitate to say what he thought and what needed to be said.

Tetsuya Kato: You spent five years in the U.S. and came back to Japan in 1985 to be the head of the Planning Division. Soon after that you were named the director in charge of the Planning Division.

Yoshikazu Hanawa: That's right. At the time we were working on how to deal with life after the Plaza Accord. The stronger yen was going to lead to a dramatic reduction in exports and we were looking into ways to scale down the business. Then we had the bubble economy. We didn't believe that it would last forever, but as a company we came to the conclusion that we had to ride the wave so long as it was favorable. The atmosphere at the time was such that it would have been difficult to voice the opposing view that "caution is called for all the same."

In Saudi Arabia, while Hanawa was serving as Vice President, Overseas Sales

Kato: Then the bubble burst.
Hanawa: I was in charge of production and sales in the U.S. at the time and I was also supervising the overseas business as a whole. So I was not too familiar with the domestic market, but when I saw the data at meetings, they alarmed me. It was difficult to offset the erosion of the domestic market with exports owing to the strong yen.

Kato: Then in 1996 you were appointed president, in which capacity you sat down at the negotiating table with Renault.

Hanawa: Yes. I had had experience with negotiations overseas because I had lived abroad. At the time I thought that Nissan should globalize more, considering that three-quarters of our sales were generated overseas. Half of production was done locally and half of domestic production was exported. Still, within the company there was this feeling that we were a domestic company, and a perception that there was a great distance between the domestic market and overseas markets. I always felt that this was not good. I was always thinking about how we could create contacts between Nissan and foreign cultures.

Right after he was appointed president

Kato: It was around this time that the expression "the four million club" appeared.

Hanawa: That's right. I don't know who started it, but what it meant was that it would be difficult to survive as an independent carmaker if unit sales were below that level.

Kato: Which auto company did you contact first for your partner?

Hanawa: It was Renault. The press talked about Daimler, but that was only for the large truck division, so it didn't involve negotiations for Nissan but rather for Nissan Diesel. Daimler initially thought that Nissan also made trucks and so we introduced the company to Nissan Diesel. When the media started to report that we talking to Daimler, it took both Nissan and Daimler completely by surprise. We didn't think it would be such a big deal. However, later we started to negotiate for Nissan with several carmakers, including Daimler.

ENCOUNTERED CARLOS GHOSN

Kato: Was it Nissan who initiated the process?

Hanawa: No. We received a letter from Mr. Louis Schweitzer, who was then the CEO of Renault. The circumstances under which talks like these take place can vary. Sometimes you have a go-between and sometimes conversations between the leaders of the two companies can lead in a certain direction.

Kato: What kind of person is Mr. Schweitzer?

Hanawa: A great person. Intelligent, and more than anything, he's someone who sticks to his beliefs. He always keeps his word and once he makes a decision, he won't go back on it no matter what is said by whom. You just feel this strength in him.

Kato: In short, you found him trustworthy as a potential partner for Nissan.

Hanawa: I felt that way from the beginning. At first we didn't know much about Renault, but over the course of several meetings I began to think that we had similar ways of thinking.

Signing ceremony for the Alliance

Kato: Do you mean the negotiations went relatively smoothly?

Hanawa: Yes.

Kato: Did you wheel and deal in the negotiations? I mean, negotiating strategies and tactics or machinations.

Hanawa: We promised at the beginning that we would speak frankly and would keep nothing from each other. If we told a lie, it would come to light in the end and when that happened relations would stall.

Kato: Was it just the two of you when you met?

Hanawa: Most of the time it was just the two of us. We met in Paris, in Tokyo, and in other countries. We had a meeting about once every two months for two years in 1998 and 1999.

With the other people involved following the signing ceremony (Hanawa is fifth from left)

Kato: You concluded the Alliance and along came Carlos Ghosn. Did Nissan change?

Hanawa: It changed 180 degrees. Mr. Ghosn was a management specialist. I was amazed. He made Nissan into the company I had pictured in my mind.

Kato: What do you mean?

Hanawa: As I said, I believed that Nissan needed to be more globalized, and that achieving that would require a change in our mind-set. To attain our goals, we couldn't have an old person like me leading the company. We needed an energetic young person. When I was offered the position of president, I said that I wasn't suitable. After all, I had served as president for a total of four years and I had geared up for a reform to turn the company around in the first two years, but it had failed. In contrast, Mr. Ghosn accomplished the transformation beautifully.

With Carlos Ghosn when he first started at Nissan

Kato: You mean Nissan became a company that you considered ideal. Did you put any specific requests to Mr. Ghosn?

Hanawa: You can't delegate with conditions, saying you can do anything here but don't touch anything there. A person cannot execute the totality of his concept if anybody interferes with him. So I told him that I wouldn't say a word and that I would support him 100%. I told him that handling external contacts as the president was time consuming, so I would take care of that and I asked him to concentrate on tackling the internal issues.

Kato: Viewed from the outside, Mr. Ghosn seems to be a person with an extremely strong, but somehow twisted character.

Hanawa: He's not twisted at all. He speaks very frankly about everything, so it's easy to understand what he's thinking. Everything is clear with him. And he excels at grasping others' feelings and eventually gets the other person on his side. Right after Mr. Ghosn came to Japan, we made an opportunity for the vice presidents to meet him on their own, without Mr. Schweitzer and myself being present. After the meeting, all of the vice presidents said that they could work very well with him. I was convinced then that it would work.

Members of the Executive Committee after the conclusion of the Alliance, in 1999

Kato: During a time of tumultuous changes, Nissan went through difficult periods and emerged a renewed company.

Hanawa: That's absolutely right. Our people made extreme efforts. However, when things get better, human nature dictates that we start to think we no longer need a partner. A partner is like air — even when we think its presence is less critical, we can't live without it. I hope that we will always remember its importance and never forget to be grateful.

Kato: That's a message from you to the people who work at Nissan now, isn't it?

Hanawa: That's right.

During the interview

After the interview
When Mr. Hanawa joined Nissan, it was right before the Japanese auto industry started to ride the great wave of the post-war economic boom, when unit sales doubled every year for many years in a row and many people were convinced that the good times would last indefinitely. But even under those circumstances, Mr. Hanawa believed that the situation could not last for long. His cool and objective perspective did not change during the bubble economy years in the 1980s, and he was proved right when not only Nissan but also the entire Japanese economy ended up going through extremely difficult times, as he had expected. In other words, Mr. Hanawa lived from the very best days of the Japanese auto industry to its decline to rock bottom while he was with Nissan. However, his experiences must have helped him steer the Alliance with Renault to success.

The areas of excellence of Renault and Nissan are subtly different and if these are well matched, it can boost the sum of 1 + 1 to 10 or even 20. In this regard, Renault and Nissan must maintain their respective unique traits to produce such synergies. We have to avoid having 1 + 1 only yield 1. Not only car enthusiasts like myself but also none other than Mr. Hanawa probably would not want to see that result.

Profile of the writer Tetsuya Kato
Tetsuya Kato was born in Tokyo in 1959. He joined the publishing company Nigensha in 1985 and was assigned to be an editor for Car Graphic magazine. He was appointed editor-in-chief of the magazine in 2000 and made editor-in-chief of Car Graphic's sister magazine NAVI in 2007. He became the president of Car Graphic Co., Ltd. upon its establishment in April 2010.

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