The economic situation for Japanese automaker Nissan is not an easy one. Having suffered losses in recent years, the company now faces a drastic regimen of budget cuts. The goal for Ivan Espinosa*, a key Nissan executive, is to cut $1.7 billion from the company's budgets.
To achieve this, difficult decisions have already been announced, including the closure of seven of its 17 factories, scheduled to take effect in 2027. But the automaker also needs to find a way to reduce its production costs. To do so, they have called on a cost-cutting czar, Tatsuzo Tomita.
Mr. Tomita has therefore spent most of the last few months surveying employees and suppliers to find budget-cutting solutions that, as he explained in an interview with Automotive News, "must reduce costs without consumers noticing."
Tons of Ideas
The ideas submitted were numerous, arriving by the hundreds. Many were quickly dismissed, but several others, completely outside the box, were subjected to close study.
This is particularly the case for Nissan's vehicle headrests.
The Japanese manufacturer wants to reduce their variety, which would significantly lower costs. According to company studies, employees responsible for installing headrests walk about 30,000 steps a day in a warehouse the size of two tennis courts. According to Mr. Tomita, by halving the number of headrest models offered, they could cut the required distance and surface area in half.
Outdated Methods
Other ideas also involve updating outdated operating methods. For instance, Nissan uses a special dye on its seats to resist the sun's UV rays, thus preserving their color. However, new technologies have made it possible to include UV-resistant glass in new windows. The use of a unique, more expensive dye is therefore becoming less necessary.
In total, more than 4,000 ideas were collected from employees and partners, but some 1,600 were selected for more serious study. Several of these solutions will be implemented in the short term to ensure Nissan returns to the path of profitability.
Too Many Sales, Too Fast
"Costs skyrocketed as Nissan sought to increase its sales volume. In its drive to sell more cars more quickly, Nissan became less rigorous in controlling its expenses. When sales stabilized, the company was left with high costs and complex, expensive technical solutions," Tatsuzo Tomita explained to Automotive News.
In addition to the budget cuts, Nissan's program also aims to reinvest in research and development to find less costly manufacturing methods.
