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Fanuc: Reliable, predictable and easy to repair

Interview - August 2, 2017

As the world’s preeminent process automation robotics company, Fanuc takes responsibility to ensure that some of the worlds’ greatest companies don’t suffer downtime through their unified service in the business domains of FA, robotics and robomachinery.


Can you tell us more about the origins and current vision of FANUC?

FANUC was established 61 years ago as one department in Fujitsu that focuses on making Computer Numerical Control (CNC) equipment for machine tools. We became independent 45 years ago and quickly developed into a manufacturer for CNCs, Robots and Robomachines. Today, FANUC is not thinking of expanding in terms of size. Our efforts are currently focused on enhancing our corporate strength. As a corporate body, we want our company to last forever. We believe that companies can be compared to living species for they are surviving and advancing through switching environments. In order for us to win and to be at the top of the game, we believe that we must put great emphasis on building up our corporate strength. What our stakeholders value most, beyond size and expansion, is the core strength of the company they invest their money in. Our stakeholders value longevity and sustainability, and that is what we emphasize. This mentality also applies to our employees. We want to ensure that our employees - old and new, have the correct work environment to enjoy their lives to the fullest. In order to be strong and in order to create a positive work environment for years to come, we are currently making efforts to become even stronger as a company. We are the pioneers of automation and robotization of manufacturing sites.Throughout our years of operation, we have developed unique set of skills based on experience. This accumulation of expertise allows us to advance and progress in a tough competitive environment. If we decide to expand our robots beyond industrial usage, creating entertainment and service oriented robots, our market would drastically increase. However, that is not what we are pursuing. We have catered for B2B operations for our entire history, where expanding our R&D on robots other than industrial robots would further toughen the already fierce competition. We are therefore, very careful when expanding our corporate activities. This technical expertise is coupled with the preciseness of Japanese manufacturing. From R&D to end-products, FANUC’s manufacturing and R&D operations are all conducted in Japan. Now, in terms of sales, service and support, we operate internationally. This allows us to stay close to our customers. Our network includes 45 countries and 257 bases around the world. Approximately 90% of our manufactured products, including indirect exports, are exported all around the world. While our company is clearly global, our core philosophy and practices are very Japanese -  a unique approach which we value.


As a company that operates globally, what markets have the highest potential for future growth?

Our target markets differ depending on the products at stake. In terms of FA (Factory Automation) which includes CNCs, Servo Motors, Servo Amplifiers and Lasers, our sales volume is the highest in Japan and China, followed by Europe. For Robomachines, the largest market is China. With respect to Robots, our biggest markets are Americas, Europe, China and Japan. Previously, Europe, Americas and Japan used to be our three biggest markets. However, China is clearly catching up. Looking at the future, China will be taking the lead in terms of volume. In ten years, India will catch up, and in twenty years Africa’s demand will dramatically increase. For our industry to know future axis of growth, we carefully monitor the automobile production volume. Currently, the automobile production in the US is 17 million units, while China produces 28 million units. Soon, Chinese production will boost exponentially. India’s production of automobile has reached beyond 4 million units, but in the future, we are expecting incredible growth. In terms of production volume, China, US, Japan and Germany rank the highest. Even if India and Africa experience sustained growth, this production volume will not be much affected for a while.

From the perspective of our FA segment, Japan, China and Germany will still play central roles in the future. In terms of Robomachines, we are expecting further rising demand for China.


Along with the 4th industrial revolution comes an increasing demand for automation processes. As machines are taking over human labor, many individuals are scared to see their jobs replaced by robots. Do you believe that this phenomenon is a negative on, for it will reduce the amount of jobs; or rather an opportunity to delete monotonous work and further harvest human potential?

Historically speaking, we are seeing a clear pattern of repetition. With the invention of steam engines, England’s industrial revolution boosted the efficiency of manufacturing processes. In today’s revolution, the steam engine has been replaced with IoT and Robotics, but the outcome will be the same - greater efficiency and greater speed. It is therefore logical to assume that man-made manufacturing jobs will steadily decrease. We are currently in an era where leisure time and work-life balance have taken a great deal of importance, and the automation of processes will further allow for that to happen. Japanese people currently work eight hours a day and five days a week. With the enhancement of manufacturing productivity through robots, we could imagine a society where there would only be three work days of five hours for an even better result and delivery. The decrease of manufacturing work will also create an increase for service-oriented jobs. There will be changes in terms of societal structure, and this transition will require new professional formations. We should be prepared that such kind of change is likely to come in the near future. I personally am very optimistic as to the changes which advancements of robotization and automation can bring about. 


The fourth industrial revolution can potentially answer Japan’s negative demographic line. Nikko Asset management has recently created a very specific product to invest in the Robot Fund, and you are part of those investments. How important is it for the Japanese private sector to embrace the fourth industrial revolution?

Relying on automation processes and robots will be one of the solutions to answer our decreasing workforce and ageing population. However, this solution is clearly not limited to Japan for it will be applicable to the entire world. Our industry is focused on developing robots that can help human beings. The idea is to have machines, robots and such, do the heavy and monotonous labour, while humans focus on precise and unique work.


If the third industrial revolution was all about mass production, the fourth one is about creating high added-value products. What do you believe should be other priorities for development?

Security and safety must be the core priority. The safety standards for robots are similar to the ones for machinery. As a matter of fact, manufacturing countries already share internationally accepted standards, such as ISO’s norms and CE Marking’s requirements. In terms of robot safety, we have developed our own extremely strict safety standards in addition to the required ones, where these are currently being implemented for all our robots.  Collaborative robots are developed to co-exist with humans along the manufacturing process, which makes errors of movements absolutely un-allowed. We put great deal of attention for safety and reliability at the R&D stage of our products. To secure the safety of our robots, we have implemented our unique Dual Check Safety (DCS, a kind of dual circuit) function for all our robots, so that if one of our robots does something wrong, it immediately stops  itself autonomously. Of course, it is impossible to be 100% certain that errors will not occur, however, we have successfully created an extremely low margin of error. Alongside of this DCS function, we also apply optical sensors so that if a human ever puts a hand in the way of the robot, the latter is able to recognize it and stop.These two examples are but a drop of the many activities that we conduct to ensure utmost security of our robots.


What is the role of software in your products?

Software such as sensor and motion software are increasingly becoming differentiation factors for many products. AI software that utilizes machine learning and deep learning technologies enable the robots to autonomously think for themselves and to work collaboratively amongst one another. All of our software are built and designed in-house which is our strength.


What technologies are you currently researching to increase your product’s efficiency?

While FANUC continues to aspire to deliver our ultimate products manufactured at our factories to our customers, we have developed a unique open platform namely – the “FIELD system” (FANUC Intelligent Edge Link & Drive system), which is based on an edge-heavy concept. All machines and robots are connected under this one platform where the status of every operation can be visualized. This allows smoother operation and enhanced efficiency of all machines and robots. One of the key characteristics of this FIELD system is that it enables robots to robots communication, machines to machines communication, as well as communication amongst robots and machines.  This open platform allows for the entire production line to be autonomously automated by adopting AI technologies including machine learning and deep learning technologies. FIELD system is able to connect non-FANUC machines, even old machines that were made 20 to 30 years ago as well as new ones. In the 2016 Nov. JIMTOF (The 28th Japan International Machine Tool Fair), we did a demonstration of this FIELD system, where we successfully connected 250 different types of various manufactures’ machines under this one platform. It was the highlight of our booth, receiving great attention from the visitors. 


Would you say that this FIELD system is the main competitive advantage of FANUC?

FANUC is now focusing on finalizing this FIELD system that will be officially launched soon. This will definitely become one of our competitive advantages. Under this FIELD system, FANUC provides an open platform to all third party application developers who are certified under FANUC’s FIELD system criteria. After being certified, they officially become our FIELD partners. These partners are then able to design application packages for the end user customers, based on our FANUC’s FIELD system platform. Just like smart phone application shopping via application shops, the end user customers are able to choose any third party’s application package that suits their needs. As of today, we have over 300 FIELD partners which we work together with. We expect that our partners will increase further, and together offer satisfying results to our end user customers.


What is FANUC’s main competitive advantage?

For 61 years, we have been pioneers in the fields of CNCs and robots. The valuable expertise we have acquired by focusing on our forte through these years, gives us the technical strength and knowhow to win against our competition. Furthermore, we have established very long and fruitful relationships with many of our customers. We have built relationships of trust and confidence between FANUC and our customers. One of our corporate philosophies, “Service First” have strongly contributed to enhance tight bonds with our valued customers. Based on our policy of lifetime maintenance, we never terminate repairs and services of our products as long as our customers use them. Thus, even today, units that were manufactured at our factory 30 to 40 years ago, comes back to us for it to be repaired at our Repair Factory. To always be ready to service our customers, we need to have sufficient stocks of service and repair parts in our warehouse. To do so, we forecast the demand of these parts for 20 years ahead, based on our actual past data and purchase them in advance to be kept in our warehouse. Moreover, in the case when that certain part is out of stock in our warehouse, we compensate it by redesigning the unit, seeking out ways to make it work again without that out of stock part. For example, if one part for a 30 years old Printed Circuit Board (PCB) is out of stock, we redesign certain sections of that PCB as needed, so that it can be compensated with the part that we have in stock. This earnest service activity is something easier said than done. I can say that we are extremely proud of this service activity and philosophy we have persistently stuck to with the belief of “Service First”, which is something that cannot be practiced overnight, even if our competitors may want to do something similar. Such efforts have contributed to building the great reputation we enjoy with our customers.


How important is it for FANUC to be a compatible and flexible company that tailors its offer to the needs of its clients?

In the past, requirements for CNCs and robots used to be much more simple and uncomplicated. However, the current trend of IoT and AI, made connectivity of machines as one of the major requirements in various industries ever more than before. One reason why we have introduced our FIELD system is to cater to this trend in a flexible manner. With the open platform which I just described, we give both our customers and the certified third party developers the flexibility and leeway to develop and choose the application that mostly satisfies their needs. This open mind effort will lead to enhance our customers’ satisfaction.


2017 is set to be a turning point for Japanese equity. Japanese companies are making efforts to attract more foreign investors, as embodied by FANUC’s increase of dividends per share. How would you define your relationship with shareholders?

Fundamentally speaking, we focus on delivering the best products to our customers. We believe that this stance and direction - to earnestly and steadily channel our limited time and abiding efforts to manufacture ultimate products to our customers - is the best IR activity we can return to our stakeholders. I believe that  increasing IR activities does not necessarily lead to increased sales and profit, but focusing on our actual business activities does. That is why we preferred not to invest too much time on our IR activities. That being said, there was one specific event that made us rethink that along with delivering top quality products, a certain degree of IR activity may also be necessary for the good of all stakeholders. Three years ago, there was an article released from one reputable global newspaper, which labelled us as a “Yellow Cult,” asking the question “What hides behind the yellow veil?”  While our Japanese customers knows us well enough to understand that this is not true, the same interpretation may not be made from the eyes of the people abroad who does not know about FANUC. They might then be less inclined to have any kind of association with a company that is painted as being “suspicious.” What worried us most was that if our stakeholders were seen from others that they are dealing with a “Yellow Cult”, we would damage their reputation, which we wanted to avoid at all costs. Since then, we decided to conduct IR activities in an appropriate frequency so that such misinterpretation will not occur, and for all stakeholders to be able to recognize FANUC exactly as we are.


As the Chairman and CEO of FANUC, what would you like your legacy to be upon departure?

My main responsibility is to hand down the company in a very healthy state, and I am very confident that I will be able to deliver on this responsibility. Since we specialize in technology, I also want FANUC to stay at the forefront of technological advancements. At FANUC, we always ask ourselves: What more can we do?