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Omron Aims to Double Automation Revenues

In the United States, the company sees increased “customer intimacy” and focus on specific market segments as key to growth.

Craig Bauer, President and Chief Operating Officer, Omron Electronics LLC
Craig Bauer, President and Chief Operating Officer, Omron Electronics LLC

If Craig Bauer’s Japanese boss asks him, “What have you done for me lately?” Bauer has a good answer.

Omron Electronics LLC, where Bauer is president and chief operating officer, racked up record automation sales during the fiscal year ended March 31, 2005. The Schaumburg, Ill.-based operation handles sales of automation products in the Americas for Omron Corp., its Japanese parent. And while worldwide revenues for Omron Corp.’s industrial automation division grew by 9 percent last year, says Bauer, “growth in the Americas, or the U.S. unit, was just short of 20 percent,” he points out. “So we definitely contributed a little extra to the company.”

If the question then becomes, “What will you do for me next?” Bauer also has an answer. He believes that continued investment in Omron Electronics’ current strategy, put in place with an organizational restructuring 12 to 15 months ago, will keep automation sales growing rapidly this year and beyond. Indeed, Bauer is counting on the strategy to enable Omron Electronics to double its revenues between yearend 2003 and yearend 2007—in line with a company-wide Omron Corp. goal.

Bauer made his remarks during a briefing for trade press editors recently, and during a private interview with Automation World editors.

Still small

Despite its recent rapid growth, Omron Electronics remains a relatively small player in the North American automation market. While its Japanese parent posted sales of $5.65 billion during fiscal year 2005, Omron Electronics revenues totaled slightly more than $200 million.

As a result—despite a broad product line that includes everything from sensors and machine vision, to timers, counters, power supplies and other control products, including programmable logic controllers (PLCs)—the company avoids competing head-to-head in North America against much larger automation vendors on so-called “PLC platform sales,” says Bauer. “If we have to go up against Rockwell, it’s going to be a long day,” he notes. (Milwaukee-based Rockwell Automation Inc., a major player in PLCs, had revenues of $4.4 billion last year.)

Instead, Omron Electronics is focusing on specific industry segments where it has a strong base or where its products provide some differentiation that match market needs, Bauer says. These include packaging, semiconductors and automotive—particularly the Japanese automakers and their suppliers. The company is expanding efforts in each of these market segments this year, and is also pursuing an initiative keyed to its radio frequency identification, or RFID, technology.

Getting intimate

As part of its recent restructuring, Omron Electronics has also positioned more people in what Bauer calls “customer facing” positions—primarily in sales and field application engineering. “We have shifted as many resources as we can there in the short term, and we’re planning to continue to invest over the next two years primarily in those categories,” he says.

By moving more of its employees into direct customer contact, Omron Electronics is aiming to better understand its customers’ needs, with an eye toward developing and selling more Omron products that can meet those needs. Bauer sees this higher level of “customer intimacy” as one key for Omron Electronics in meeting its parent company’s aggressive growth goals over the next two years.

In line with that strategy, Omron Electronics is asking its distributors, who have traditionally sold 80 percent to 85 percent of Omron products, to also move closer to their customers. “Many of our customers use only a few of our high quality products,” says Bauer. “What we’re trying to get our distribution network to do is go back into their top customers-—say, their top 20 percent—and understand their requirements, and then identify new Omron content and new Omron products that match up with the products that they’ve already sold.”

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