How Fanuc quietly took over the world

TOKYO - Fanuc may not be a household name, but the Japanese industrial robot maker likes it that way. It is no exaggeration, however, to say that without its products, global assembly lines, including those of iconic brands such as Apple, would come to a shuddering halt.

Fanuc controls the lion's share of the world market for production machinery and boasts an almost unheard of 40 per cent operating profit margin. Recently, the company caused a stir in the stock market by announcing it will funnel up to 80 per cent of its profits to shareholders through higher dividends and share buybacks.

The industrial robot maker was spun off from Fujitsu in 1972 when the Japanese information technology company was shedding noncore operations. Since then, Fanuc has gone on to achieve astonishing success by crafting a business model that defies conventional wisdom.

At Volkswagen's headquarters complex in Wolfsburg, Germany, a red brick factory over half a century old evokes a bygone era of manufacturing. But a look inside the facility presents a markedly different tableau: numerous robotic arms moving quickly and with great precision, assembling the Golf compact car. Orange is the predominant colour on the factory floor, as it is the colour of the robots made by German manufacturer Kuka. But over the past several years, a new colour has been entering the mix in the factory - the bright yellow of Fanuc's robots.

Kuka robots have traditionally been the go-to choice for VW and its domestic peers Daimler and BMW. But Fanuc is chipping away at its rival's dominance in the German auto industry. In overhauling its development and manufacturing operations, VW conducted a thorough review of the products of industrial robot makers. The carmaker said Fanuc products proved the smarter choice.

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