Fanuc Ltd.

International Directory of Company Histories, Volume 75 (2004) by Douglas Sun, David Salamie

Fanuc Ltd.

3580, Shibokusa Aza-Komanba Oshino-mura Minamitsuru-gun Yamanashi 401-0597 Japan Telephone: (0555) 84-5555 Fax: (0555) 84-5512 Web site: http://www.fanuc.co.jp

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

Headquartered at the base of Japan's Mount Fuji, Fanuc Ltd. is the world's leading manufacturer of computerized numerical control (CNC) equipment for machine tools, devices that put the automation into automated factories. CNC devices also serve as the "brains" of industrial robots, and Fanuc, whose name is an acronym for Fuji Automatic Numerical Control, has been a world leader in robotics since the 1970s. Much of the company's sales are channeled through GE Fanuc, a 50-50 automated machinery joint venture with General Electric Company. Countering the prevailing outsourcing trend in global business, Fanuc does all of its manufacturing in Japan at highly roboticized factories; nevertheless, its business is consistently and highly profitable, racking up double-digit profit margins that often approach and sometimes exceed 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 automation business. Its first employees were a team of 500 engineers, and Fujitsu chose from among them a young executive engineer named Seiuemon Inaba to head the subsidiary. It was a move that would prove beneficial for both the company and the man. Inaba, who received a doctorate in engineering from Tokyo Institute of Technology after joining Fujitsu in 1946, remained at the top of Fanuc's chain of command until June 2000 when he was named honorary chairman. His name became virtually synonymous with that of the company.

At first, Fujitsu Fanuc devoted itself solely to research and development. U.S. companies led the way in automation technology at that time; in fact, no Japanese company produced numerical control (NC) machine tools until the mid-1960s. Once the Japanese NC industry entered the 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 Fanuc Ltd., retaining a substantial minority interest. The remaining shares were put on the open market. In 1975 Seiuemon Inaba became president of the new company.

Fujitsu Fanuc, as it continued to call itself until 1982 (when it changed its name to Fanuc Ltd.), began its life as an independent company with numerous marketplace advantages. As a major Japanese NC manufacturer, it was well suited to spearhead the Japanese NC industry's entry into the export market. In 1975 it licensed U.S. manufacturer Pratt & Whitney to market its NC drilling machines in North America. In the same year it entered into a licensing agreement with German engineering firm Siemens AG, which was also a minority shareholder in the company, giving Siemens the exclusive right to market Fujitsu Fanuc 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 manufacturing operations abroad, building a plant in South Korea. By 1982, it had captured half of the world NC market.

Leading Position in Robotics: 1980s

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 Fanuc granted Taiwan's Tatung Co. sole import rights for its robots. In 1983 it also joined with the 600 Group, a British machine tool manufacturer, to form 600 Fanuc Robotics, which would sell Fanuc robots in the United Kingdom.

Fanuc's most important move in 1982 was to enter into a joint venture with General Motors Corporation (GM), called GMFanuc Robotics Corporation, to produce and market robots in the United States. The new company was 50 percent owned by each partner and was based in Detroit, with GM providing most of the management and Fanuc the products. This was not the first alliance between Japanese and U.S. robotics concerns; Japanese companies on the whole lacked the advanced technology necessary to create sophisticated robots, while the U.S. plants lacked Japanese manufacturing skill. By linking up with its largest single potential customer in the United States, Fanuc all but assured itself of a lucrative share of the U.S. market. In its early years, GMFanuc Robotics 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 considering bids from suppliers. GMFanuc sales described a steep upward curve, and within six years it became the world's largest supplier of robots.