Fanuc Ltd. - Company Profile, Information, Business Description, History, Background Information on Fanuc Ltd.
Oshino-mura
Minamitsuru-gun
Yamanashi 401-0597
Japan
Company Perspectives:
There is a Japanese proverb which says, "Breeding counts for more tha n birth," meaning that any underprivileged person can make up for his or her disadvantages at birth through rigorous effort and personal i nitiative. In the engineering world, however, FANUC believes that bir th is more important than breeding. In other words, without a good, s olid design from the beginning, it would be more difficult and costly to produce low-cost, high-quality products for today's markets. No m atter how hard we strive to make improvements at a later stage of a p roduct's life cycle, a weak initial design is difficult and costly to overcome. This is the reason why FANUC has always placed Research &a mp; Development as its top priority and as the foundation of its mana gement practice for the entire enterprise.
History of Fanuc Ltd.
Headquartered at the base of Japan's Mount Fuji, Fanuc Ltd. is the wo rld's leading manufacturer of computerized numerical control (CNC) eq uipment for machine tools, devices that put the automation into autom ated factories. CNC devices also serve as the "brains" of industrial robots, and Fanuc, whose name is an acronym for Fuji Automatic Numeri cal Control, has been a world leader in robotics since the 1970s. Muc h of the company's sales are channeled through GE Fanuc, a 50-50 auto mated machinery joint venture with General Electric Company. Counteri ng the prevailing outsourcing trend in global business, Fanuc does al l of its manufacturing in Japan at highly roboticized factories; neve rtheless, its business is consistently and highly profitable, racking up double-digit profit margins that often approach and sometimes exc eed 20 percent.
Founded As a Subsidiary of Fujitsu
Fanuc was founded as a wholly owned subsidiary of Fujitsu Limited in 1955 after that electronics giant decided to enter the factory automa tion business. Its first employees were a team of 500 engineers, and Fujitsu chose from among them a young executive engineer named Seiuem on Inaba to head the subsidiary. It was a move that would prove benef icial for both the company and the man. Inaba, who received a doctora te in engineering from Tokyo Institute of Technology after joining Fu jitsu in 1946, remained at the top of Fanuc's chain of command until June 2000 when he was named honorary chairman. His name became virtua lly synonymous with that of the company.
At first, Fujitsu Fanuc devoted itself solely to research and develop ment. U.S. companies led the way in automation technology at that tim e; in fact, no Japanese company produced numerical control (NC) machi ne tools until the mid-1960s. Once the Japanese NC industry entered t he field of play, however, Fujitsu Fanuc dominated the game. By 1971, it controlled 80 percent of the domestic market for NC equipment. In 1972 Fujitsu spun off its highly successful subsidiary as Fujitsu Fa nuc Ltd., retaining a substantial minority interest. The remaining sh ares were put on the open market. In 1975 Seiuemon Inaba became presi dent of the new company.
Fujitsu Fanuc, as it continued to call itself until 1982 (when it cha nged its name to Fanuc Ltd.), began its life as an independent compan y with numerous marketplace advantages. As a major Japanese NC manufa cturer, it was well suited to spearhead the Japanese NC industry's en try into the export market. In 1975 it licensed U.S. manufacturer Pra tt & Whitney to market its NC drilling machines in North America. In the same year it entered into a licensing agreement with German e ngineering firm Siemens AG, which was also a minority shareholder in the company, giving Siemens the exclusive right to market Fujitsu Fan uc products in Europe. In 1985 the European Economic Community would find that the deal violated its rules regarding monopolies and fined the companies $840,000. In 1978 Fujitsu Fanuc took its manufactur ing operations abroad, building a plant in South Korea. By 1982, it h ad captured half of the world NC market.
Leading Position in Robotics: 1980s
Its position as an NC manufacturer notwithstanding, the company's com mitment to the related field of robotics brought it the most attentio n and acclaim. Fujitsu Fanuc started selling robots in 1975, but they accounted for only a tiny percentage of sales at first, Kawasaki and Hitachi being the leading Japanese robotics companies at the time. I naba sought to change that situation in the 1980s. In January 1981 Fu jitsu Fanuc opened a showcase plant in Yamanashi Prefecture, in which robots and NC machine tools made parts for other robots. The factory , which would otherwise require 500 workers, was run by a staff of 10 0 people, whose duties consisted of maintaining the robots and assemb ling the parts into finished products.
This vision of robots manufacturing other robots caught the fancy of the press and, evidently, other robotics companies. A string of joint ventures followed the opening of the new plant. In 1982 Fujitsu Fanu c granted Taiwan's Tatung Co. sole import rights for its robots. In 1 983 it also joined with the 600 Group, a British machine tool manufac turer, to form 600 Fanuc Robotics, which would sell Fanuc robots in t he United Kingdom.
Fanuc's most important move in 1982 was to enter into a joint venture with General Motors Corporation (GM), called GMFanuc Robotics Corpor ation, to produce and market robots in the United States. The new com pany was 50 percent owned by each partner and was based in Detroit, w ith GM providing most of the management and Fanuc the products. This was not the first alliance between Japanese and U.S. robotics concern s; Japanese companies on the whole lacked the advanced technology nec essary to create sophisticated robots, while the U.S. plants lacked J apanese manufacturing skill. By linking up with its largest single po tential customer in the United States, Fanuc all but assured itself o f a lucrative share of the U.S. market. In its early years, GMFanuc R obotics chiefly made automobile assembly robots and sold them to GM. Although both companies denied it at the time, few industry observers doubted that GM gave preferential treatment to GMFanuc robots when c onsidering bids from suppliers. GMFanuc sales described a steep upwar d curve, and within six years it became the world's largest supplier of robots.
Inaba's goal of increasing Fanuc's robot sales was not simply a busin ess matter, but a reflection of his personal interest in robots. Know n in Japan as the Emperor of Robots, Inaba said in 1981 that it was h is dream to develop within four years a robot that would help assembl e Fanuc's robot-made robot parts into finished robots. By the middle of the decade, Fanuc had indeed developed assembly robots, which were used to put together parts for motors at its motor factory.
Fanuc's success in robotics brought Inaba to the attention of the U.S . financial press. There was his passion for the color yellow, for in stance, because, as he put it, "In the Orient, yellow is the emperor' s color." Fanuc factories, offices, and assembly lines were all paint ed in such a shade. The workers' jumpsuits were also yellow, head to toe. Inaba was known for his demanding and authoritarian management s tyle; at meetings, his subordinates were not allowed to speak unless spoken to.
In the mid-1980s, sales of automation equipment dropped substantially . Manufacturers who pumped large amounts of capital into automation e quipment suddenly found themselves with weak cash flows and were unwi lling to invest further. GM cut back on its commitment to robotics, G MFanuc sales fell, and Fanuc was further hurt by the relative strengt h of the yen against the dollar, making its products more expensive i n the United States. Fanuc, nevertheless, managed to maintain a healt hy profit margin despite these difficulties, and it kept expanding it s activities.
In 1987 it tightened its grip on the U.S. market by entering into a j oint venture with another pillar of U.S. industry, General Electric C ompany (GE). The two companies formed GE Fanuc Automation to manufact ure computerized numerical control (CNC) devices. The deal marked som ething of a defeat for GE, which had failed in its attempt to become a factory automation powerhouse. GE stopped making its own CNC equipm ent and turned its Charlottesville, Virginia, plant over to the new c ompany, which equipped it to produce Fanuc CNC devices.
In 1988 Fanuc once again joined forces with General Motors, this time to form GMFanuc Robotics Europa, to market robots in Europe. In 1989 it took advantage of relaxed East-West tensions to increase its pres ence in the Soviet Union. It joined with Mitsui & Co., Ltd., a hu ge Japanese trading company and with Stanko Service, a Soviet machine -tool service organization, to form Stanko Fanuc Service, which would maintain and repair Fanuc products there.
Fanuc's success had always stemmed from the perception that its produ cts were the most reliable as well as the least expensive on the mark et. In a cutting-edge field such as automation, a huge commitment to research and development was required, and fully one-third of Fanuc's nearly 1,800 employees were engaged in such activity in the late 198 0s, the highest ratio of any Japanese manufacturer. As with every oth er facet of the company's operations, Fanuc's R&D bore the person al stamp of Seiuemon Inaba. He once gave his Product Development Labo ratory a clock that ran ten times faster than normal, as a gentle rem inder of the importance of staying ahead of the competition. Inaba ma de the German engineering slogan Weniger Teile, which means "f ewer parts," Fanuc's slogan; machines with fewer parts are cheaper to produce and easier for automatons to assemble.
Difficult Years in the 1990s
Inaba also garnered publicity for the extensive benefits he provided his employees. At the Yamanashi Prefecture plant, located in a rural setting at the base of Mount Fuji, Inaba included a medical center, g ymnasium, 25-meter heated swimming pool, culture center, employee liv ing quarters, and restaurant. In the late 1980s and early 1990s, thes e attractive benefits helped Fanuc counter a labor shortage affecting many Japanese firms.
In the early 1990s, however, Fanuc faced more than just a difficult l abor market. Revenues and earnings declined as the entire machine too l industry in Japan suffered from slackened demand compared to the he yday of the 1970s and 1980s. In 1992, in the midst of this downturn, Fanuc gained an increased presence in foreign markets when it purchas ed GM's half-interest in GMFanuc and renamed it Fanuc Robotics Corpor ation, which became a wholly owned subsidiary of Fanuc Ltd. Fanuc Rob otics, in turn, held two subsidiaries: Fanuc Robotics North America, Inc., based in Auburn Hills, Michigan, and serving the North American and Latin American markets; and Fanuc Robotics Europe GmbH (formerly GMFanuc Robotics Europa), based in Luxembourg, which served the Euro pean market. Also in 1992 Fanuc moved into the emerging market of Chi na through Beijing-Fanuc Mechatronics Co., Ltd., a joint venture with the Beijing Machine Tool Research Institute created to manufacture, sell, and provide service on CNCs.
To maintain Fanuc's dominant position in automation technology in the face of the industry slump, Inaba determined to further bolster Fanu c's R&D. In 1994 the Fanuc Berkeley Laboratory was established in Union City, California. Inaba also sought to reduce costs by purchas ing more raw materials outside of Japan, taking advantage of the stre ngth of the yen. Longer term, Inaba committed Fanuc to a strategic em phasis on robots.
Unlike other Japanese robotics firms, Fanuc did not shift production to the United States during this period. Demand for robots was growin g dramatically in North America in the early 1990s thanks to a reboun ding automobile industry. Fanuc could continue to profitably manufact ure in Japan based on two factors. First, Fanuc's production process was cheaper than competitors because of its highly automated "lights out" plant, which was capable of producing one thousand robots a mont h. Second, Fanuc could take advantage of its world leadership in prod uction of CNCs, a key component in robots, to keep its production cos ts down.
These strategies seemed to pay off as Fanuc's revenues and earnings r ebounded in 1994 and 1995. Sales and profits remained on an upward tr ajectory through the fiscal year ending in March 1998. In 1997 Fanuc entered into a second joint venture in China, Shanghai-Fanuc Robotics Co., Ltd. This partnership with Shanghai SMEC Corporation was involv ed in robotics manufacturing, sales, and service. Fanuc ended the 199 0s with its sales and profits on the decline due to the worsening eco nomic climate at home. The firm nevertheless set a goal of boosting i ts share of the worldwide robot market from 20 percent to 50 percent.
Leadership Changes and a Strong Rebound in the Early 2000s
The new decade began with a historic change in leadership at Fanuc. I n June 2000, at age 75, Inaba stepped down from the board of director s, while remaining involved at the company he largely built, as honor ary chairman. Ryoichiro Nozawa was named chairman, while Shigeaki Oya ma assumed the presidency. Earnings fluctuated early in the decade as the worldwide economic downturn cut into demand for CNCs and robots, and Fanuc faced increasing competition, particularly from those manu facturers setting up shop in low-wage China. Fanuc responded not by s hifting its own factories to China but by making its factories in Jap an more efficient. In the summer of 2002 production began at a fully automated plant in Oshino that was capable of 720 hours of uninterrup ted operation.
Fanuc's ability to remain strongly profitable through a most difficul t economic period for Japan enabled the firm to build up a huge hoard of cash: ¥385.51 billion ($2.89 billion) by March 2002. At t his same time Fujitsu and other Japanese electronics companies were s truggling in a highly competitive, profit-poor environment, and for t his reason seeking to raise cash by dismantling at least a portion of Japan's complicated tangle of interlocking shareholdings. In August 2002, then, Fujitsu began gradually selling off its 39 percent stake in Fanuc, eventually reducing it to 7.8 percent by March 2005. Fanuc used part of its pile of cash to buy back some of these shares itself .
In June 2003 Oyama was named chairman of Fanuc, and Yoshiharu Inaba w as elevated to president and CEO. Inaba, the only son of the company founder, had been groomed for company leadership from an early age an d had earned a Ph.D. in engineering from the University of Tokyo. He took over at an auspicious time as the Japanese economy rebounded str ongly from its prolonged doldrums, prompting Japanese companies to fi nally resume their capital spending and leading to robust sales of CN C systems and industrial robots. Shipments elsewhere in Asia, particu larly to China, India, and South Korea, expanded strongly as well. Ne t sales at Fanuc jumped from ¥214.26 billion ($1.78 billion) in 2003 to ¥330.35 billion ($3.09 billion) in 2005. Net incom e nearly doubled during this period, hitting ¥75.76 billion ($ ;708.1 million) by 2005.
In order to bolster its production capacity and develop ever more sop histicated robots, the still cash-rich Fanuc significantly increased its capital investment program starting in fiscal 2005. It began popu lating its factories with so-called intelligent robots, ones equipped with sight and force sensors, enabling them to recognize shapes and positions in three dimensions and to fine-tune their grips on objects , thereby increasing manufacturing efficiency and precision and enabl ing robots to handle entire assembly operations. Late in 2004 Fanuc b egan soliciting orders for sets of robots capable of assembling car p arts, home appliances, and medical equipment. The company was also wo rking to develop larger robots able to assemble entire car bodies. As demand for its products was increasing, the Japanese market continue d its recovery, and such markets as China, India, and Russia were exp ected to grow strongly, Fanuc significantly raised its medium-term sa les forecast, now aiming to achieve sales of ¥500 billion by the fiscal year ending in March 2008.
Principal Subsidiaries: Fanuc FA Service Ltd.; Fanuc Robot Ser vice Ltd.; Fanuc Laser Service Ltd.; Fanuc Pertronics Ltd.; Fanuc Ser vo Ltd.; Fanuc DD Motor Ltd.; Fanuc Robotics America, Inc. (U.S.A.); GE Fanuc Automation Corporation (U.S.A.; 50%); Fanuc America Corp oration (U.S.A.); Fanuc Robotics Europe S.A. (Luxembourg); GE Fanuc A utomation CNC Europe S.A. (Luxembourg); Fanuc Robomachine Europe Sale s GmbH (Germany); Fanuc Robomachine Deutschland GmbH (Germany); Fanuc Europe Service GmbH (Germany); Fanuc France S.A.S.; Fanuc U.K. Limit ed; Fanuc Italia S.p.A. (Italy); Fanuc Iberia, S.A. (Spain); Fanuc Tu rkey Ltd. (80%); Fanuc Bulgaria Corporation; Fanuc Czech s.r.o. ( Czech Republic); Fanuc South Africa (Proprietary) Limited; Fanuc Mits ui Automation CIS LLC (Russia; 50%); Fanuc Korea Corporation; Fan uc Taiwan Limited; Beijing-Fanuc Mechatronics Co., Ltd. (China; 50 7;); Fanuc India Private Limited (95%); Shanghai-Fanuc Robotics C o., Ltd. (China; 50%); Fanuc Robomachine (Shenzhen) Ltd. (China); Fanuc Thai Limited (Thailand); Tatung-Fanuc Robotics Company (Taiwan ); Fanuc Mechatronics (Malaysia) Sdn. Bhd.; PT. Fanuc GE Automation I ndonesia (50%); Fanuc Singapore Pte. Ltd. (50%); Fanuc Oceani a Pty. Limited (Australia); Fanuc Philippines Corporation.
Principal Operating Units: FA Group; Robot Group; Robomachine Group.
Principal Competitors: Siemens AG; IWKA AG; ABB Ltd.; Rockwell Automation, Inc.; Comau S.p.A.
Chronology
- Key Dates:
- 1955: Fujitsu Limited enters the factory automation field by f orming Fujitsu Fanuc, headed by Seiuemon Inaba.
- 1972: Fujitsu spins off the subsidiary as Fujitsu Fanuc Ltd., retaining a substantial minority stake.
- 1975: Fujitsu Fanuc begins the sale of robots.
- 1982: Company changes its name to Fanuc Ltd.; enters into a jo int venture with General Motors Corporation called GMFanuc Robotics C orporation.
- 1987: Fanuc forms GE Fanuc Automation joint venture with Gener al Electric Company.
- 1992: Company purchases GM's half-interest in GMFanuc, which i s renamed Fanuc Robotics Corporation.
- 2000: Inaba steps down from the company board, becoming honora ry chairman.
- 2003: Yoshiharu Inaba, son of the founder, is named president and CEO.
Additional Details
- Public Company
- Incorporated: 1972 as Fujitsu Fanuc Ltd.
- Employees: 2,000
- Sales: ¥330.35 billion ($3.09 billion) (2005)
- Stock Exchanges: Tokyo OTC
- Ticker Symbols: 6954; FANUF
- NAIC: 335314 Relay and Industrial Control Manufacturing
Further Reference
- Bylinsky, Gene, "Japan's Robot King Wins Again," Fortune,< /I> May 25, 1987.
- "Fanuc Edges Closer to a Robot-Run Plant," Business Week, November 24, 1980.
- "Fanuc Throws One-Third of Its Entire Labor Force into the Most P owerful R&D Setup of the Industry," Business Japan, April 1989.
- Glain, Steve, "Competitive Drill: Fanuc Faces a Challenge from PC -Driven Systems," Asian Wall Street Journal, May 20, 1997, p. 1.
- ------, "Open Systems Narrow Fanuc's Lead in Sector," Asian Wa ll Street Journal, June 13, 1997, p. 13.
- "GM to Sell Its 50% Stake in GMFanuc, a Robotics Firm, to Jap anese Partner," Wall Street Journal, June 4, 1992, p. B4.
- Guth, Robert A., "Fujitsu May Lower Its Fanuc Stake," Asian Wa ll Street Journal, June 18, 2002, p. M1.
- Imada, Toshihiko, "CEO Puts Fanuc on Growth Path," Nikkei Week ly, June 7, 2004.
- Inaba, Seiuemon, Walking the Narrow Path: The FANUC Story, translated by Inyong Ham, n.p., 1992, 91 p.
- Kodaki, Mariko, "Fanuc Goes on Offensive with Robots," Nikkei Weekly, February 24, 2003.
- Marsh, Peter, "Green Tea with Yellow Robots," Financial Times, September 5, 2003, p. 14.
- Nakamura, Minoru, "Trouble in the Robot Kingdom," Tokyo Busine ss Today, June 1994, pp. 44-45.
- Sugawara, Toru, "Fanuc Stuck with Excess Funds," Nikkei Report , June 18, 2002.
- Wiegner, Kathleen K., "The Dawn of Battle," Forbes, Octobe r 26, 1981.
- Winter, Drew, "Eastward Ho: Japanese Robot Builders Shift Product ion to U.S.," Ward's Auto World, July 1995, p. 81.