OMRON - Company History

From a tenement workshop to Kyoto — founding, fire-bombing, and the trough of thirty-three

On 10 May 1933, at the age of thirty-three, Tateishi Kazuma (立石一真) founded Tateishi Electric Manufacturing Works at Higashinoda in Miyakojima ward, Osaka[1]. The staff came to two people — one workman and one apprentice. Tateishi lived on the first floor of a row house and used the earth-floored room below as the shop, where a bench with a vice clamped to it made up the whole of the plant. The first product was a timer for X-ray photography, which he had developed himself. The market for X-ray equipment was small, however, and he switched target industries early, styling the firm as a plant devoted to protective relays for electric power and selling into the utilities[2]. Tateishi Electric Manufacturing Works was described as the first and only factory in Japan specialising in relays[3]. The switch paid off: in 1936 the company built and moved into a new plant at Nozato-cho in Nishiyodogawa ward, Osaka, and by 1945 it had grown to a payroll of 250[4].

In May 1945, before the war ended, the Osaka plant burned to the ground in an air raid. Since the previous year the company had been taking over a film studio at Omuro in Kyoto and converting it into an evacuation plant, so Tateishi Electric moved its base there. This is the direct reason OMRON has its head office in Kyoto today, and the trademark OMRON, adopted later, derives from the Omuro place name[5]. With the end of the war demand for relays disappeared. The firm was reorganised in May 1948 as Tateishi Electric Co., Ltd. with capital of ¥2 million[6], but recovery did not follow, and by 1950 the workforce had fallen to just thirty-three people[7]. Only as demand for electrical equipment for the power industry returned did a real rebuilding begin.

There were three reasons for choosing Kyoto as the place of evacuation: Tateishi had worked, before founding his own firm, at Inoue Electric Manufacturing 井上電機製作所 in the southern outskirts of Kyoto; the city was rich in cultural heritage and judged unlikely to be bombed; and the traditional local industries of Nishijin weaving and Kiyomizu pottery promised the dexterity of hand that assembly work needs[8]. The evacuation plant at Omuro was opened in April 1944, and after the Osaka plant burned down the Kyoto plant was raised to head-office plant in August 1945[9]. For several years after the war, demand for the induction-type protective relay, the company’s main line, remained entirely absent. Following the government’s Outline of Measures to Break Through the Power Crisis of June 1947, the company took orders from the electric utilities for current limiters, and sold household goods — electric heaters, hair irons, electric lighters — to get through the emergency. Even the current limiters were then hit by a shipping-suspension order connected with the Dodge Line of March 1949[10].

The bet on automation, and management by devolution

In 1952, with the rebuilding still under way, Tateishi Kazuma heard from Ueno Yoichi (上野陽一), the leading authority on efficiency studies in Japan, that automatic factories operating without workers had appeared in the United States[11]. At the time the word automation was not even known in Japan. Tateishi judged this a market with a promising future, and in 1955 — already fifty-five years old, running a company of 110 employees with annual sales of $666,667 (¥240m)[12] — he set out to open a market that did not yet exist. The route was to develop in-house, one after another, the functional components used in control: microswitches, relays and the rest. Together with the Five Basic Management Principles, which put research and development of new products first, the R&D-led management that would sustain OMRON in later years begins with this decision[13]. Tateishi said in later years that no great leap could be expected while the company went on handling the protective relays it had made since its founding, that he had been searching for the next promising market, and that the true founding of the company came after the war, in 1955[14].

To cope with the rapid expansion of the business, in January 1955 Tateishi devised an organisational theory of his own, the Producer System. Sales and research were separated into distinct companies and manufacturing was spun out into independent specialist plants by product line — a devolved way of running the group, with the production subsidiaries eventually numbering nine[15]. Tateishi framed this not as mere spinning-off but as a management philosophy for creating places where individuals could exercise their own character. Over the five years in which the system bedded in, sales grew roughly tenfold[16]. In 1959 the company adopted the trademark OMRON, taken from Omuro[17], and in April 1962 it listed on the second sections of the Kyoto and Osaka stock exchanges[18], putting development spending and fund-raising on the same footing.

The real shape of that devolution survives in the numbers. In 1955, when the Producer System began, the whole company came to 185 people and there were two producer plants, each of no more than forty or fifty[19]. As the plants multiplied and moved from rented premises into new buildings, central control from head office could no longer reach them, and in September 1962 the company brought in a system of plant directors, posting head-office department heads out to the plants. Orders from the sales companies were rerouted to reach the plants directly rather than through head office, and materials work and part of the administration were moved out to them as well[20]. In an industry where every firm piles into a product the moment it turns profitable, the company chose the roundabout road of developing products by its own technology and opening the markets for them itself; as of 1973 its research themes had been held consistently to labour saving and unmanned operation, and it was reckoned to have made no new investment that missed[21].

A run of world firsts, and the origins of health engineering and social contribution

The control technology built up in functional components for automation produced, through the 1960s, one applied world first after another. In 1960 the company developed the world’s first contactless proximity switch, and in 1964 the world’s first electronically actuated traffic signal[22], carrying control technology into transport infrastructure. In March 1967 the world’s first unmanned station system went into service at Hankyu Railway’s Kita-Senri station; combining automated ticket gates with ticket-vending machines[23], it became the prototype for railway automation in Japan. In July 1965 the company developed an automatic vending system operated by credit card, and exported the technology to Canteen of the United States, the largest vending-machine maker in the world[24]. Traffic control went on from there into an unmanned arrangement in which detectors placed at 120 intersections in central Tokyo measured the volume of passing vehicles and a computer at the Metropolitan Police Department set all the signals at once[25]. The two business pillars that continue to this day — factory automation on the plant floor, and social systems in public infrastructure — took shape in this period.

The origin of the third pillar, health care, goes back to the invitation extended in 1963 to Dr Hans Selye. That a single private company should invite the world authority on the stress theory to conduct joint research in health engineering drew a response from the medical world, and Tateishi Electric signed a joint research agreement with the Institute of Experimental Medicine and Surgery at the University of Montreal in Canada[26]. Research into measuring the meridians and pulse diagnosis of East Asian medicine by electronic means led on to the development of a simple blood-pressure monitor, then to the first OMRON blood-pressure monitor of 1973[27], and on to electronic blood-pressure monitors and the Ken-on-kun (けんおんくん) electronic thermometer. Entering medical devices was framed as giving concrete form to the corporate motto Tateishi had set out: よりよい社会をつくりましょう — let us make a better society[28].

The idea of giving contribution to society the form of a business appeared elsewhere too. In February 1972 the company established OMRON TAIYO Co., Ltd., a production subsidiary founded on the employment of disabled people[29], and in the late 1960s it developed an electrically powered artificial arm for children affected by thalidomide, jointly with Tokushima University[30]. Growth in scale brought a trouble of its own. In January 1983 Tateishi said that centralisation had multiplied both the matters requiring approval and the meetings, that the time from order to collection of payment had lengthened, and that the company could no longer beat nimble venture businesses; he would devolve wide authority on the business divisions and turn the whole company into a collection of small and medium-sized firms[31]. In control components it was beginning to lose small orders to smaller rivals — it took OMRON three months to get a sample to a customer who had ordered one, against two or three weeks for the smaller companies[32]. On another front, in April 1988 the Tokyo branch was raised to the status of a Tokyo head office, giving the company a two-headquarters structure, and regional holding companies were set up in turn in the Netherlands, Singapore and the United States, completing a three-pole global structure in 1989[33]. The Kyoto inventors’ firm that had stacked up world firsts at home shifted its footing, at the end of the 1980s, to that of a control-equipment maker with its eyes on the world market.

From Tateishi Electric to OMRON

In January 1990 the corporate name was formally changed to OMRON Corporation. The OMRON brand, adopted in 1959, had taken hold at home and abroad, and a company name carrying the founding family’s name, Tateishi, had come to sit awkwardly beside it. The change also carried the sense of unifying the brand as a global enterprise. In April 1991 the head office moved to Shimogyo ward, Kyoto, and in August 2000 the registered head office was consolidated into the OMRON Kyoto Center Building, a multi-function site.

In April 1993 OMRON Dalian Co., Ltd., the company’s first wholly owned production venture in China, began operating, and from then on China was positioned as a principal manufacturing base. A Chinese regional holding company was set up in May 1994 and raised to the status of a China head office in April 2002. In June 2006 OMRON Shanghai Co., Ltd. began operating as the global core site for control-equipment systems. Through the 2000s the company’s control-equipment business carried out a concentration of assembly and board mounting in China.

The company system, and the sorting of the portfolio

In April 1999 the divisional structure was abolished and an internal company system introduced. It was the first redefinition of organisational theory in forty-five years, since the Producer System of 1955, and it switched the group to a structure in which each company held independent responsibility for its business. In May 2003 the Keihanna Innovation Center was opened in Soraku county, Kyoto prefecture (now Kizugawa city), and in July of the same year the health-care business was spun out as OMRON Healthcare Co., Ltd., establishing the blood-pressure monitor business as an independently run operation.

In October 2004 OMRON made BITRON INDUSTRIE S.p.A. of Italy a subsidiary, expanding its automotive electronic components business, and in the same month transferred its information-equipment business — ATMs and the like — to Hitachi-Omron Terminal Solutions, Corp. through a joint incorporation-type split. Taking the decision to buy one business and to cut another loose in the same month says something about the company’s stance on running a portfolio. Between 2005 and 2008 it stacked up further acquisitions — Colin Medical Technology, Pioneer Seimitsu, Yasu Semiconductor and others — reinforcing its position in medical devices, backlights and semiconductors.

The Lehman shock and the largest loss in the company’s history

Revenue for the year ended March 2008 reached $7.4B (¥763bn), the highest level in the company’s history, but the Lehman shock changed the picture entirely. Revenue for the year ended March 2009 fell to $6.7B (¥627bn), down 17.8 per cent on the year, and the net loss attributable to OMRON shareholders came to $311.1M (¥29bn) — the largest deficit in the company’s history. It was the direct result of a sudden collapse in demand for factory automation striking the control-equipment business.

During the recovery from the crisis, OMRON pushed the spinning-out of individual businesses further. In April 2010 the switch business was spun out as OMRON Switch & Devices Corporation, in May the automotive electronic components business as OMRON Automotive Electronics Co., Ltd., and in November the social systems business was established as the subsidiary OMRON Social Solutions Co., Ltd. Standing each business up as a separate company became the precondition for the divestments that followed. In 2011 Yamada Yoshihito became president and representative director, and the next management team — the one that would draw up the long-term vision — took office.

Delta Tau and Adept — a full entry into factory-automation robotics

In September 2015 OMRON made Delta Tau Data Systems of the United States a subsidiary — the acquisition of a motion-control equipment maker. In October it made Adept Technology, Inc. of the United States a subsidiary as well, entering the industrial robot business in earnest. Adept held the technology for autonomous mobile robots (AMRs), and OMRON positioned this as a core element of its factory automation business. It is the origin of what is now OMRON ROBOTICS AND SAFETY TECHNOLOGIES.

The acquisitions continued into 2017. In July the company made Sentech Co., Ltd., an industrial camera maker, a subsidiary, reinforcing machine vision, and in October it took in Microscan Systems, Inc. of the United States, adding industrial code readers. This run of deals gave concrete form to a strategy of adding robots, imaging and code readers to the control-equipment business of controllers, sensors and servos, in order to supply the whole upper layer of factory automation. In February 2018 OMRON SINIC X Corporation was established as a research company designing the near future, putting in place a structure for advanced research in artificial intelligence and robotics.

Cutting away the automotive and ATM businesses

At the same time OMRON was cutting away non-core businesses in parallel. In August 2018 it transferred all the shares in OMRON Laserfront Inc., its laser processing equipment business, to TOWA Corporation. In February 2019 it sold 80 per cent of the shares in OMRON Nohgata Co., Ltd., a contract development and manufacturing business for industrial electronic equipment, to Advantech. And in October 2019 it transferred all the shares in OMRON Automotive Electronics Co., Ltd., which handled the automotive electronic components business, to Nidec Corporation. It was a complete withdrawal from the automotive business that the company had spent fifteen years building since acquiring BITRON of Italy in 2004.

In March 2021 OMRON transferred all its shares in Hitachi-Omron Terminal Solutions, Corp. — an equity-method affiliate — to Hitachi, Ltd., withdrawing completely from the ATM business it had founded jointly with Hitachi in 2004. In October of the same year it spun out the MEMS business and transferred it to Mitsumi Electric. These divestments, carried out under President Yamada Yoshihito, expressed a line that put clarity in the choice of businesses ahead of the scale of revenue. The concept of selection and dispersion, set out in 2020, was framed not as mere divestment but as a distinctive way of thinking in which supply chains and risk were dispersed within the businesses that remained.

The handover to President Tsujinaga Junta, and the acquisition of JMDC

In 2022 Tsujinaga Junta became president and CEO. In February of that year OMRON entered a capital and business alliance with JMDC Inc., a medical statistics data service, announcing a full entry into data health. In April the review of Tokyo Stock Exchange market segments moved the company from the First Section to the Prime Market, and in June it amended its articles of incorporation to write in the practice of the corporate philosophy. In October 2023 it made JMDC a consolidated subsidiary, bringing the data health platform inside the group.

Performance at the point of Tsujinaga’s appointment was strong. For the year ended March 2022 — the summing-up of the Yamada years — revenue was $5.8B (¥763bn) and net income $467.4M (¥61bn). For the year ended March 2023 revenue reached $6.2B (¥876bn) and net income $525.2M (¥74bn), the highest levels in the company’s history. Immediately after this peak, however, OMRON entered a different phase.