Fanuc to Invest $1B in Plants & Research

Fanuc Corp.is cutting loose a chunk of its $8.4 billion stockpile of cash into order to build a new manufacturing plant and a research and development facility. Apparently, Daniel Loeb, an activist shareholder from hedge fund Third Point, complained in a letter that the company's stash pile of cash was doing nothing for shareholder value.

New manufacturing plant

While a company spokesperson told Reuters that Fanuc was not pressured by the letter, the company did announce Tuesday that it will invest nearly $844 million in land and construction for future manufacturing facilities, up from a planned investment of half that amount. The goal is to begin construction by October of 2016. Fanuc noted that the new facilities will be located in Tochigi Prefecture, north of Tokyo.

The new facility will "target the fortification of the production capacities of its main products consisting of CNCs, servo motors, and servo amplifiers, the company said in a statement Monday. Fanuc makes robots for Apple, Samsung, and Tesla. Fanuc has no debt and is sitting on $8.4 billion in cash and assets.

New research and development facility

Fanuc will invest another $250 million in a research and development facility near its headquarters in Yamanashi with a completion date of May 2016. The company plans to hire engineers to strengthen its research on numerical control equipment, machine tools, and robots.

While the total investment on facilities may have been increased due to shareholder pressure, a good half billion was already committed to expansion, suggesting that Fanuc sees an expanding market for industrial equipment, particularly robotics.

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That fact that Fanuc is investing in Japan rather than shifting to a low-cost center probably indicates a couple things. For one, the company has prospered through cautious growth, and staying at home ensures control. For another, Fanuc may want to demonstrate to its blue-ribbon customers that it intends to continue consistent levels of quality and reliability.

The expansion of Fanuc's research capabilities, including the plan to hire more engineers, suggests the company intends to either push to a new generation of robotics or extend its robotics through integration with other manufacturing equipment. Probably both. Either way, we're seeing a cautious company investing deeply in the future of robotics.

Rob Spiegel has covered automation and control for 15 years, 12 of them for Design News. Other topics he has covered include supply chain technology, alternative energy, and cyber security. For 10 years he was owner and publisher of the food magazine, Chile Pepper.