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Optex FA: the go to partner for factory automation

Interview - March 5, 2023

Optex FA, part of the Optex Group, provides photoelectric, displacement and image sensors used for quality control and automation in factory production lines


Japan is facing increasing competition from regional competitors in Taiwan, China, and Korea, who have replicated Japanese monozukuri processes and technologies, but at much cheaper labor costs through the benefits of economies of scale. Yet, we still see Japanese firms retaining this niche leadership in high-mix-low-volume fields. Can you give us your take on why Japanese firms are still so successful in these fields, and in the case of your firm, what is the unique and competitive advantage that allows you to bring your products worldwide?

In general, as you explained in the B2B fields, I think that Japanese companies still retain a lot of advantages with their products designed for the B2B market. However, in the B2C field competition is quite fierce, and is driven by mass production. Japanese companies are struggling in this field because it is more focused on consumption by consumers. In the B2B field, what we want from the customers is not consumption, but rather investment. We as a company need to focus on what the customer can gain in exchange for that investment. In this respect, I think that Japanese companies still have a lot of valuable experience, especially when compared to some emerging Asian countries.

I think that this tendency is strongly highlighted by the sensor industry right now. Most of the major sensor companies are located in either Japan or Germany. Of course, there are some sensor companies in both China and South Korea, but they aren’t comparable in competitiveness. I think that this has come about thanks to Japanese companies’ ability to provide solutions.


Many customers nowadays are really focused on SDGs, and as a global company, it is essential to adhere to these goals. We know that some of your products are the smallest in their class, and one example might be the Compact Laser Displacement Sensors CD22 Series, which is the smallest of its type in the world. This, of course, reduces the material that is needed to manufacture the product, which is great from the company’s perspective. Could you tell us how your products help improve productivity and in turn meet these SDG goals?

As you mentioned, we are trying to make our products smaller so that we can reduce the amount of material used during production. When we design these products, we are trying to make them consume less electricity as well as prevent the use of toxic substances. Through the process of product development, we are trying to contribute to global SDG goals.

Our products are mostly for factory automation, which is used by companies worldwide to increase their productivity. We are trying to offer products that use less energy and help those companies make better quality products. In that sense, we are also contributing to those companies’ SDGs.

We offer a camera that checks the expiration date on the label of food products, and we have the number one share worldwide of this particular product. One-fourth of complaints received in the food industry are related to labeling. If there is any mistake on the label there will be serious complaints from customers. This camera is very important in checking expiration dates and additionally helps reduce food loss. I think this product is a good example of something that we are doing that is contributing to industry-wide SDGs.


You mentioned one of the big focuses on your company was factory automation, and automation itself has been discussed widely over the last decade, but specifically even more so recently with the COVID-19 pandemic preventing workers were not able to go to factories. Of course, Japan also has an ageing and declining population compounding the effect of these current events. What is your vision for the future of factory automation, and what potential for growth do you see in the next 5 years?

For the next 5-10 years I think this trend will continue. The COVID-19 pandemic and Japan’s aging society have created favorable conditions for this trend to continue. The COVID-19 pandemic created a situation where we needed to operate with fewer workers and zero contact to the extent possible. These necessities accelerated the need for automation.

Aging is a serious problem for Japan, but I feel that other advanced countries like China are about to face these issues too. The need for automation to alleviate the burden of manual labor is going to continue this upward trend worldwide. This is creating opportunities for companies like ourselves.


The use of conventional sensors to check products on a production line is no longer good enough. Customers need customized sensors that can adapt to new substrates, colors, materials, and packaging as their production lines are adapted to new market demands. How do you build that customizations capability into your displacement sensors to ensure that clients can adapt it to their own materials and production line changes?

In terms of customization, unfortunately, I cannot disclose the name of the client, but we did receive a request from a large semiconductor-related company. They had requested a customized device from us, and we were able to successfully make a customized solution that was tailored only for that company.

Ideally, however, I would say that we want to create one displacement sensor that can meet the needs of as many customers as possible. In order to achieve this goal, we are installing IO-Link in our displacement sensors as well as our other standard sensors.

IO-Link is a communication tool that allows users to change the configuration of the sensors, and in some cases, customers really need to change the configuration because of a change in the environment. In those cases, the IO-Link allows customers to adjust the configuration of the sensors externally, without the need to physically open the device.

Another feature of the IO-Link relates to achieving SDGs. The IO-Link will actually report to the user the lifetime of the device, the display, or the sensor component. It will allow you to use the device up until the end of its lifetime and allows customers to plan when they switch a device.


The semiconductor field is experiencing a time of great change now as we are seeing fabrication plants opening across the world, with a joint venture between Sony and TSMC opening a plant in Kumamoto. Besides this industry are there any applications that your company is targeting or that you would like to further expand into?

As previously mentioned, our focus is on customers in the food industry, as well as medical and pharmaceuticals. We are also targeting the semiconductor, electronic devices, and electricity industries. We always keep our eyes on social trends and try to identify where demand is both high and low. Based on that information we make smart investments. I think right now the hottest sector is the electronic industry, particularly with EV-related devices. Ideally, we would like to increase the applications of our products in this particular area.


In today’s business climate, not only are large-scale businesses partnering up, like TSMC and Sony, but we are also seeing SMEs partnering to take advantage of unique technologies and exciting business opportunities. We know your company has had a partnership with Mitutoyo since last year, which essentially is a sales agreement between your two companies. Could you tell us the benefits of working with Mitutoyo and are you looking for new partners, especially foreign ones in order to enter overseas markets?

Yes, we signed a sales agreement contract with Mitutoyo in 2021, and we have seen very good mutual effects from this partnership so far. Mitutoyo's major products are sensors with contact, and our products are all non-contact types. These products don’t overlap, however, we do target the same customers. I see some very good synergy between our companies, and we have now reached a point where we are selling each others’ products.

In general, when speaking about partnerships with other companies, I would say that Optex is very open to finding new partnerships. We don’t have any restrictions in place, which essentially means we are eager to find like-minded companies that can create synergies with us both domestically and overseas. With SICK in Germany, we have been partners now for 34 years, so I think it is safe to say that once we find a partner, we look to provide long-term solutions rather than temporary ones.


Optex FA was established in 2002 and spun off as the photoelectric sensor division of the Optex Group. Could you run us through the relationship with the group itself, and what are some of the synergies this structure allows?

As you mentioned, we were a spin-off from Optex, and that happened in 2002. That was because we saw very good prospects in the sensor area. Factory automation in particular showed great potential for future growth. From the perspective of optimization, it is very hard to invest all the financial and human resources into one area, and rather it is determined that it would be better to act as an independent company. We then later came back to the umbrella of the Optex Group.

After we spun off from Optex, there were a lot of new companies related to factory automation, and as a result, there were a lot of M&As in this area. We felt that we wanted to focus on synergy in industrial automation, and it was the reason we returned under the umbrella of the group.


China is colloquially known as the "Factory of the World" on account of its expertise in cost effective manufacturing. Your company has been present there since 2013 and in the past ten years it has changed rapidly. Firstly, it is becoming much more expensive for companies to manufacture there, in fact the iPhone 15 will be the first generation produced outside of China. Secondly, thanks to COVID-19, we have seen huge lockdown measures in place and many companies have seen a reason to diversify their supply chains outside of China to countries such as Indonesia and Vietnam. Could you tell us what prospects the Chinese market holds for you?

I think automakers in China are going to advance forward. As I mentioned earlier, they are having the same social issues that are affecting Japan, and to add to that they are seeing a rapid rise in salaries. These factors are promoting the use of factory automation, so from that perspective, China is the largest market in the world in terms of automation sensors.

Of course, during the COVID-19 pandemic, our office in China was impacted by the lockdowns occurring. We also have a factory in China that was affected as well, but when compared to the impact on our competitors, I think the impact on our own business was limited. Some deliveries were delayed, but we were able to recover quite fast.

We have focused on local production and local consumption in China, so I think that is why we were able to avoid serious issues from the continual lockdowns. We try to produce products that are consumed in China, and for other countries, we produce in Japan so that we might avoid the risk. We would like to continue to strengthen sales and manufacturing in China going forward.


Besides China, you have bases in the US and Thailand. Moving forward, which countries or regions do you see growth potential in besides China, and how will you go about tackling that market?

Our main markets besides Japan are China and the US. These two countries currently have a large demand for automation, and although Japan does have potential, we see the potential in other countries as being much larger. We would like to focus on South Korea as well as the entire ASEAN region. Essentially we are looking to grow both our share and our presence in the region. I would say that we are looking to utilize M&As in order to expand in the region.


Imagine that we come back in 5 years' time and have this interview all over again. What are your goals and dreams for the next 5 years of Optex FA?

Of course, we have goals for certain revenue and profit, and I would like to achieve these goals. Other than that I would like to be recognized as one of the top 500 companies called “White 500” domestically, especially in terms of companies that promote healthy and productivity management.