In a North American automation market dominated by a few large vendors, how does a smaller player such as Omron Electronics LLC take on its competitors?
“I prefer to take on competitors very carefully, because if we step in the wrong spot, they’ll crush us,” Omron Electronics President and Chief Operating Officer Craig Bauer said recently. “We have a very small share compared to some of the major companies that do business here. What we are trying to do going forward is to pick areas, sectors and niches where we feel we can compete very effectively with differentiated product.”
Bauer made his comments during a question and answer session as part of a conference for trade press editors June 30-July 1, at Omron Electronics’ U.S. headquarters, in Schaumburg, Ill. As a subsidiary of Japan-based Omron Corp., the unit handles sales of industrial automation products and solutions in the Americas. And while the parent boasts global revenues of more than $5 billion, Omron Electronics’ annual sales total approximately $200 million.
That’s small change compared to major competitors that measure North American automation sales in the billions of dollars. But Bauer, who joined Omron Electronics about 18 months ago, has helped craft a growth strategy for the unit designed to capitalize on its strengths, as well as on emerging customer needs. “I consider us one of the best-kept secrets in the automation world,” Bauer told editors at the conference.
Omron Electronics has about 45,000 SKUs, or stock keeping unit numbers, in its industrial automation product line, Bauer said. They are grouped into three major families—programmable logic controllers (PLCs); sensors, including machine vision; and industrial control products such as timers, counters, power supplies and the like, he noted.
Sales are split fairly evenly across the three categories, Bauer said. But unlike some of its competitors who may play up their PLC product lines, Omron Electronics has lately taken a slightly different tack, by focusing on sales of PLCs as part of packaged solutions. The strategy avoids head-to-head competition with much larger vendors on what Bauer calls PLC platform decisions.
“In my early time in the field meeting customers and distributors, it seemed to me that it’s easier for Omron to lead with sensors or the industrial control line than it is to lead with the PLCs,” Bauer explained. Once the company has its foot in the door—with machine vision or power supplies, for example—the strategy then is to couple those products with Omron’s PLC products to offer a more complete solution. Given the company’s broad product line, “we can serve the customer in many, many ways beyond the way that we initially penetrate them,” Bauer pointed out.
About 85 percent of Omron Electronics sales are made through distributors. And Bauer noted that Omron Electronics remains “highly committed” to continued support of its distributors and their major customers. As part of its strategic realignment, however, the unit is also putting a new emphasis on what Bauer calls “user sales,” based on direct contact by Omron’s sales and marketing staff with manufacturing end users.
These efforts are focused in specific market niches. One such niche is the packaging automation business, primarily food and beverage, said Bauer. Another is the automotive sector, where Omron Electronics already has a strong market position at Japanese transplant companies that have set up factories here, Bauer noted, as well as with their suppliers.
In general, Omron has identified several major spending trends in the U.S. industrial automation market, Bauer said. These are driven by manufacturers’ needs for improved product quality, better traceability and employee safety, as well as environmental concerns. Omron Electronics is responding with new products aimed at all of those needs, Bauer said.
In fact, the unit introduced several new products at the editors’ conference that fit the strategy. The list included a radio frequency identification (RFID) system, a laser measurement system, a date code machine vision system, a safety controller and Smart Platform software designed to better integrate Omron’s array of automation products.