TOKYO - Japanese interests worried that new Nissan Motor Co. Ltd. Chief Operating Officer Carlos Ghosn - whose moniker of "le cost killer" can scarcely be considered to have come to him affectionately - would do the unthinkable to "save" wallowing Nissan: close plants and cut jobs.

The fears were well-founded: On the eve of the recent Tokyo Motor Show, Mr. Ghosn revealed to a startled (but not surprised) Japanese economy his "Nissan Revival Plan" that employs as key elements the shuttering of five Nissan (or Nissan-affiliated) plants and the layoff of 21,000 workers.

"The Plan," as it became popularly referred to by an industry that prepared for months to hear the details, seeks to set in motion the revival of the troubled Japanese automaker, which has operated at a loss in seven of the past eight years and had at the end of 1998 amassed something approaching $19 billion in interest-bearing debt.

Mr. Ghosn, formerly executive vice president of the Renault Group, was appointed Nissan's COO following Renault's acquisition of a majority stake in Nissan last March. From the beginning, his mandate was clear: to turn around an automaker that not long ago symbolized Japan's economic might in general and its carmaking prowess in particular.

But years of mismanagement (how else can it be characterized?) and a well-intentioned but unrealistic focus on engineering regardless of cost had swept the business colossus that is Nissan to the brink of collapse.

Judged to be harsh to a national automobile industry with a tradition of lifetime employment and a history of few outright plant closures, Mr. Ghosn says the plan is vital to assure Nissan's long-term survival.

"The key facts and figures point to one reality," Mr. Ghosn says. "Nissan is in bad shape."

With The Plan, Mr. Ghosn seeks to reverse Nissan's downward spiral by reducing operating costs and chopping the company's ponderous debt to about $6 billion by the end of fiscal 2002.

Although cost reduction is a major component, The Plan appears rooted in attacking more than just costs and endeavors equally to fix Nissan's fundamental problems.

"While cost-cutting will be the most dramatic and visible part of the plan, we cannot save our way to success," Mr. Ghosn asserts.

Nonetheless, he presents to a trepidacious Japanese public a plan that by 2001 calls for, closure of the Nissan Murayama plant in Tokyo, the Nissan Shatai plant in Kyoto and the Aichi Machine Industry plant in Minato. Two powertrain plants also will be shut down.

The plant closings - along with some minor cutbacks in other operations - will bring an eventual workforce reduction of some 21,000 people, or about 14% of the company's total. Nissan will make the reduction in jobs through spin-offs, early retirements, natural attrition and an increase in part-time and flexible-time workers.

In a later interview with WAW and other U.S. reporters, Mr. Ghosn says the company did examine the possibility of plant closures or cutbacks in other regions, but that the Japanese operations are the most redundant.

Apart from manufacturing, the $10 billion cost-reduction program centers on two other major areas: global purchasing and sales, general and administrative costs, or SG&A.

The other shoe dropped on Japan's cozy supplier community. Mr. Ghosn says Nissan will chop purchasing costs by 20%, largely by reducing its number of suppliers by half, from more than 1,100 to just 600. Additionally, all Nissan purchasing activities will be centralized on a global basis. The move is certain to rankle Japan's close-knit supplier cartels, but Mr. Ghosn insists that supplier reduction is crucial and of immediate concern.

"Our suppliers are vital to our success," he says, adding that "speed is of the essence," and "we will help those (suppliers) who help us." To further the goal, Mr. Ghosn plans to chair a new supplier advisory council that will help to facilitate supplier relations and ease Japanese suppliers' emergence from the laissez faire.

"Nissan is collapsing its keiretsu (supplier) system," says Kunihiko Shiohara, vice president, Goldman Sachs (Japan). "Only six of the 1,145 suppliers are certain to remain independent." One result: a wave of new mergers, acquisitions, joint ventures and technological tie-ups in Japan's supplier sector, and a buying spree as foreign companies hunt avidly for bargains.

Another analyst, Koji Endo, deputy head of research for Schroder Securities Japan, estimates that as many as 50,000 supplier employees could lose their jobs.

Mr. Ghosn says the plant closings may be painful but are necessary to help Nissan to produce at a more profitable level. He says that Nissan's estimated fiscal 1999 domestic production is 1.28 million vehicles, which translates to capacity utilization of just 53%. He plans to raise that to a healthy 82% by 2002. A drastic cut in the number of vehicle platforms from 24 to 12, as well as a 30% reduction in the number of powertrain combinations will ease the reduction in the number of plants.

"Nissan is way too big for its current level of production, operating at only 53% of capacity and unable to make a profit," says Mr. Endo.

Nissan's market share in Japan has dropped from a peak of 32% in 1972 to 19% and has declined worldwide from 6.6% in 1991 to 4.9% (see charts).

It's much too early to make any firm judgment call on the odds of success, which some put at 70%. And there's concern that failure to solve the problems of Nissan Diesel Motor Co. Ltd., a subsidiary in worse shape than its parent, could seriously disrupt the revival plan. Although some industry experts expect to see initial signs within three months and more obvious indicators a year from now, others feel it more likely will be three years before it's really clear whether the patient is on the road to recovery.

Most important in terms of the stuff presented to consumers during the adoption of The Plan, Mr. Ghosn stresses that cost reduction efforts will not come at the expense of product development and re-establishing Nissan's core brand attributes.

"Product development will be at the heart of Nissan's revival," he says, noting that the company plans to launch several new products in both the U.S. and Europe.

The U.S. will lead the way with four soon-to-be-released products that are entirely new, including a new Sentra compact car in the first quarter of '00; an all-new Infiniti flagship and an all-new Quest minivan.

Others believe that the upcoming revival of the vaunted "Z" sports car - the product singularly symbolic of Nissan's former product-development acumen - will be the barometer of the efficacy of the comeback: the new Z still is two years away, and many industry pundits say if Nissan gets the new Z right, it probably will signal that the company has its problems under control.

"The targets and the level of management's commitment were much more aggressive than we expected," says Seiji Sugiura, senior analyst with Nomura Securities in Tokyo. "Carlos Ghosn appears to have grasped the company's strengths and weaknesses. It is quite possible he will be able to revitalize Nissan."

* 20% purchasing cost reduction

* Closure of 3 assembly and 2 powertrain plants

* Employee reduction of 21,000 (from today's 148,000 to 127,000)

* Reduce number of suppliers by 50%

* Reduce global production capacity from 3.9 million units to 3.15 million

* Once a product is launched in Japan, reduce time taken to launch counterpart in foreign market from 12-18 months to three months

* Reduce average $1,000 U.S. transaction-price differential with competing models by 35%

* Reduce sales, general and administrative (SG&A) costs by 20%

* Revamp Japan dealer organization and streamline North American regional structure

* Exploit Renault alliance to "significantly increase" presence in South America, streamline product development and share research and engineering efforts

* Establish global headquarters in Tokyo