[Company analysis] FANUC Corporation (ファナック)

「FANUC Corporation (ファナック)」is specialized in FA equipment, and it has the world's top share machine tool manufacturer with 70% Japanese market share and 50% global market share in CNC equipment for machine tools. It has a 20% share of the world market for industrial robots, and is one of the four largest industrial robot manufacturing companies in the world along with「Yaskawa Electric Corporation, Limited(安川電機)」,「ABB」and「KUKA」. In 2017, 「FANUC」has an average annual salary of ¥ 15.71 million, which is the second highest level in the Japanese manufacturing industry after 「Keyence」. The number of consolidated employees is approximately 7,163.

 

1. Company Profile

2. Summary and Features

3. Major Business

4. Financial Information

 

 

 

1. Company Profile

 

※Unit is JPY million, as of 2019

Company name	FANUC Corporation
Company name (Japanese)	ファナック
Date of establishment	1972
Headquarters location	〒401-0597 山梨県南都留郡忍野村[1]忍草字古馬場3580
Capital	69,000
Consolidated sales	635,568
Consolidated operating profit	163,297
Consolidated total assets	1,625,340
Consolidated capital	1,445,146
Capital adequacy ratio	88.9%
Consolidated number of employees	7,163

 

 

 

2. Summary and Features

 
In 1955,「Fujitsu(富士通)」established a subsidiary specializing in the field of computer numerical control, and this is the beginning of the current「FANUC」. They supplied their own numerical control device to the machine tool manufacturers such as「Makino Milling Machine Co., Ltd.(牧野フライス製作所)」. Then in 1972, the computer numerical control department became fully independent, and「FANUC」was officially established. At that time, the 10 largest CNC manufacturing companies in the world were all located in the United States, but by 1982,「FANUC」won the half of the world's CNC market. From this point, the standard of「FANUC」became the global standard in the CNC industry.

「FANUC」, whose main products are CNC equipment for machine tools and industrial use is a famous for their passion to the research and development. their one-third of all employees are researchers. Based on the technological superiority obtained by this, the patent competitiveness is evaluated to be extremely high. The slogans are “Reliable”, “Predictable” and “Easy to Repair.", and according to this slogan, product reliability is the biggest competitiveness of「FANUC」.

The strength of「FANUC」is the quality and performance of their product itself. Their R&D expenses are more than ¥ 530 billion in annual and this assure them to possess long-term profitability. This is more than the 400 billion yen bigger than their competitor,「Yaskawa Electric Corporation(安川電機)」. In terms of the ratio of sales to R & D expenses,「FANUC」was 7.9%, while Yasukawa was only 4.6%. Another advantage is that they have excellent human resources based on their high salaries. They also manufacture core parts such as servo motors, vision centers, in-house level,  and they are using their industrial robots in their own factory to boost the effificiency.
   
Another feature is that they are extremely cautious about technology leaks and are obsessed about domestic production in Japan. Except for the China factory, which assembles semi-finished products, all products are manufactured at the Yamanashi head office factory. Nevertheless, overseas sales account for more than 80%, and despite the fact that there are many exports to South Korea and China, only payments in Japanese yen are received, so the impact caused by changes in exchange rate is relatively small. Their profit rate of 34.3% in 2017 and 25.6% in 2018, which is surprisingly high considering that the average profit rate of the manufacturing industry is in the 5% range.

「FANUC」looks like an ideal company, but it also has some unusual aspects. There are some happenings such as sudden cancel of the financial results briefing for stockholders, closing the Japanese website from January to July 2011. As above mentioned, they are very cautious about technology leakage, and their corporate constitution is old fashioned and closed minded. It is said that promotion speed for employees are very slow, there is no systematic new employee development system compare with other companies of the similar size. And the power of the founding family is extremely strong. Some people don't like it because it's a closed minded, weird, yellow-filled company that's completely isolated from the outside.

 

 

 

3. Major Business

 

 ■ CNC motor
As for the CNC equipment for machine tools, they have secured a half of the global market share and are ranked second in the world in terms of total patent strength. The major copetitors of「FANUC」are「Siemens」, 「Mitsubishi Electric Corporation」and「Yasukawa Electric」. At the same time, they manufacture servo motors and CNCs, which are essential for machine tool control, and have become the de facto Japanese standard for NC programming.

■ Laser
They have the world's top share in the carbon dioxide laser division for metal processing. Recently, they started the fiber optic laser division, and are aiming to expand their occupation rate by strengthening cooperation with their own CNC equipment and industrial robots. In 2015, they made partnership with「Furukawa Electric Co., Ltd.」to establish「FF Laser Co., Ltd.」. In 2017, 「FANUC」announced that they are going to start core device business for metal 3D printers.

■ Robot
「FANUC」has high technological capabilities in the field of industrial robots. They are good at vertical articulated robots used in arc welding, etc., and are compatible with large models. The patent competitiveness in this vertical articulated robot category is the highest level in the world.

■ Robo Machine
A small machine, electric injection molding machine, and ultra-precision nano machine are called Robo Machines. 「FANUC」uses their own CNC and servo motor to control this robot machine. their small cutting machine "ROBODRILL" is used for iPhone case processing.

 

 

 

4. Financial information

 

※Unit is JPY million

		2016	2017	2018
Consolidated sales		536,942	726,596	635,568
Consolidated operating profit		153,217	229,604	163,297
Consolidated total assets		1,564,769	1,729,080	1,625,340
Consolidated net assets		1,369,457	1,467,630	1,445,146
Breakdown of sales	FA business	175,016	222,254	211,088
	Robot business	190,043	227,827	217,526
	Robo machine business	93,939	190,182	115,056
	Service business	77,944	86,333	91,898