Fanuc bets future on ‘cranes with brains

Fanuc bets future on ‘cranes…
Fanuc Ltd., the world’s largest maker of controls that run machine tools, is shifting focus toward robots to capitalize on China’s automation boom, the company’s founder said.

The company will build a plant next fiscal year to more than double production capacity of robots costing as much as 50 million yen ($600,000) each, Honorary Chairman Seiuemon Inaba said this week in his first interview with the non-Japanese media in two decades. The plant at the base of Mount Fuji will raise monthly production to 5,000 from 2,000, he said.

“Robots are our number one priority,” Inaba said through an interpreter at the company’s headquarters in Oshino-Mura, west of Tokyo. “Everything comes down to China. That’s where the growth is.”

Inaba built Fanuc into an automation empire over three decades, focusing on making the controls that run more than half of the world’s computerized tools. Now, the 85-year-old executive is targeting growing demand for robots that weld cars, assemble electronics and package food in China, a market that’s forecast to almost double by 2013.

“They’re betting on robots but I’m not quite sure they’ll be successful,” said Yuuki Sakurai, who helps oversee the equivalent of $8.4 billion as chief executive officer at Fukoku Capital Management Inc. in Tokyo. “It really depends on the growth of the global economy.”

The stock surged 44 percent last year, overtaking Fast Retailing Co. as the biggest component of Japan’s benchmark Nikkei 225 Stock Average. Fanuc slipped 1.2 percent to 12,890 yen at the 11:00 a.m. lunch break on the Tokyo Stock Exchange.

The use of thousands of robots in its own factories -- the company’s newest tool plant can run mostly unattended for 700 hours each month -- is one of the reasons for Fanuc’s profitability, Inaba said. The company’s operating margin rose to a record 44 percent in the quarter ended Sept. 30, ranking it third on the Topix 100, according to data compiled by Bloomberg.

Fanuc’s biggest business is making the computer numerical controls that give the world’s factory tools the agility to shape metal into Apple Inc. iPhone cases or the ribs of Boeing Co. airplanes. The division, which competes with Germany’s Siemens AG, made up about 55 percent of total revenue in the second quarter, followed by the tool division’s 28 percent and the robot division’s 16 percent.

Worldwide spending on machine tools is estimated to have risen 12 percent to $56 billion in 2010, led by China, a market expected to increase as much as 20 percent a year through 2015, according to U.K.-based researcher Oxford Economics Ltd.

Now Fanuc is aiming to challenge ABB Ltd. and Kuka AG for the lead in China’s robot market, where shipments are expected to grow to 16,500 units in 2013 from 8,500 units last year, according to the International Federation of Robotics.

Second-half sales at Fanuc’s robot division will be at least 50 percent higher than the 34.1 billion yen generated in the preceding six months, the chairman said.

A mechanical engineer who ran the $37.7 billion company for almost three decades after it spun off from Fujitsu Ltd. in 1972, Inaba invented the electro-hydraulic pulse motor in Fanuc’s first controls.

While his 62-year-old son, Yoshiharu Inaba, is the company’s president, the elder Inaba says he’s still in charge. As Inaba led the way this week to the company’s technical center, where he showed off Fanuc’s latest robots, employees opened doors for him and stooped to sweep leaves out of his path.

“My hobbies are gardening and work, so I never get tired,” said the chairman, who says he regularly puts in 11- hour days. “I still make all the decisions.”

Fanuc’s latest machines include the Super Heavy Payload, a swiveling 6-meter-tall (20-foot-tall) robot resembling a mechanical Tyrannosaurus Rex that Inaba called a “crane with a brain.” General Motors Co. uses it to haul car chassis around its factories.

China’s auto industry, which overtook Japan as the world’s biggest vehicle producer in 2009, is driving demand for automation. GM, the country’s biggest foreign automaker, plans to increase spending on factories worldwide by 40 percent this year, according to Chief Executive Officer Daniel Akerson.

Cars aren’t the only use for robots. Lotte Confectionery Co., South Korea’s largest maker of sweets and chocolate, bought a fleet of Fanuc’s new Genkotsu robots, Inaba said. The robots, equipped with vision sensors, can grab more than 100 pieces of candy a minute off conveyor belts.

“It was a big surprise when we got the order from Lotte,” Inaba said. “They showed me the factory where they’re using the robots to package ice cream, which is sold even in Shanghai. The market is going to grow.”

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