Omron 2005 Annual Report Download - page 20

FUMIO TATEISI, Executive Vice President,
Company President, Industrial Automation Company
18
REVIEW OF FISCAL 2004
•Maintaining strength in Japan and Europe
In domestic operations, the digital consumer appliance mar-
ket performed well in the first half of the fiscal year 2004,
but entered an adjustment phase in the latter half of the
year. Nevertheless, inquiries from makers of semiconductor
manufacturing equipment and automobiles held steady,
and demand for investments to improve quality and safety
rose, stimulating robust performance in areas such as PCB
inspection systems and safety equipment. In overseas oper-
ations, sales of PLCs* and general-purpose sensors
increased in China and other parts of Asia, where we have
strengthened our marketing base. Our sales remained
steady in North America and Europe. As a result, sales in
the IAB increased 9.0% year-on-year to ¥250.3 billion. This
helped to boost our operating income by 21.2% year-on-
year to ¥41.4 billion, and led to an increase in our operating
income margin of 1.6 percentage points to 16.5%.
* Programmable Logic Controllers, intelligent control devices used in production
processes, control equipment efficiently by processing information from various
control components such as sensors, timers, temperature regulators (con-
trollers), and switches.
BUSINESS ENVIRONMENT AND KEY STRATEGY
•An approach that emphasizes the need for improve-
ments in quality, safety, and the environment
In the domestic manufacturing industry, capital expendi-
tures are currently in the final stage of inventory
adjustments in the digital consumer appliance and semi-
conductor industries, and should return to a path of
recovery beginning in the second half of fiscal 2005. Capi-
tal expenditures in the automobile industry are also likely to
grow steadily, particularly among Japanese manufacturers
that have significantly improved their international competi-
tiveness. From a geographical point of view, China, which
has been transformed from the “world’s factory” to the
largest consumer market on earth, is expected to expand
its manufacturing base. The IAB segment has established
as its basic strategy to carefully look at these trends in the
expansion of manufacturing bases, and respond to the
growing needs for improvements in quality, safety, and the
environment in manufacturing processes, as well as
develop a total solution-oriented marketing operation for
the realization of growth, with a focus on the following: (1)
develop further core sensing and control technology, which
is our area of strength, and (2) establish a QLM* solu-
tions business for total control of manufacturing
processes aimed at dramatically improving quality. We are
particularly eager to speed up investment in China, our
most important overseas operating region, with a view to
strengthening marketing and production activities there.
*Quality Lifecycle Management is a technique in which the quality control expert-
ise of highly-experienced technicians serves as a model to guarantee
manufacturing processes in order to achieve quality assurance.
MEASURES FOR ACCELERATING GROWTH
•Improving solutions-based expertise through alliances
In November 2004, Omron formed a partnership with the
U.S. firm Delmia Corp. in the field of automation for the
manufacturing industry. Delmia Corp. is highly skilled in the
development of software that facilitates the streamlining of
manufacturing processes. Until now, the IAB segment has
made strides in strengthening its solutions business
focused on increasing the value of our client companies.
With this partnership, the segment can systematically pro-
vide controllers, networks, and software to our client
companies and significantly contribute to shortening each
manufacturing process from product design to manufactur-
ing and production design. The segment will also develop
new products that integrate our leading-edge automation
equipment such as PLCs with the innovative software of
Delmia Corp.
•Expansion of manufacturing bases in China
In Shanghai, China, the IAB segment until now has oper-
ated development and production companies that
specialize in: (1) programmable logic controllers (PLCs), (2)
sensors, and (3) temperature regulators (controllers) and
other devices. Through the integration of these three bases
dispersed in Shanghai City, we will strengthen their design
and production capabilities and establish infrastructure for
distribution, information management, and other functions
in China. (The integration of these bases was completed in
July of fiscal 2005.) The IAB segment will also enhance its
marketing capabilities in Shanghai through the establish-
ment of a facility provisionally named the IAB China
Business Center. With these moves, we will boost our
price competitiveness, quality expertise, and customer
support capabilities, as well as conduct activities that spark
demand for improvements in the productivity, efficiency,
and quality of China’s manufacturing industry.
Amid the trend toward a borderless global economy, a crucial factor in ensuring survival
in the manufacturing industry is the ability to manufacture products efficiently with high
precision and quality. The Industrial Automation Business (IAB) segment, a leading man-
ufacturer of control equipment for factory automation, will meet these expanding needs
through leading-edge technology and strength in the development of solutions.
INDUSTRIAL AUTOMATION BUSINESS (IAB)
Manufacture and sale of control equipment for factory automation