Full screen view: Peter Lau
President & CEO Peter Lau is driven by a vision: to grow FARO Technologies into the full-range supplier of choice for 3D measurement, imaging and realization solutions.
When FARO Technologies’ Board of Directors were hunting for a new President and CEO for the 3D imaging company in 2023, it's likely one line in Peter Lau’s CV made him stand out: his tenure as President of two of Honeywell’ s global businesses, Fire and Security.
The experience demonstrated a proven record of integrating software solutions into complex hardware-oriented businesses. It also highlighted the expertise needed to execute FARO’s strategic roadmap following a challenging restructuring plan, preceded by years of underwhelming financial performance.
"Our gross margin had been impacted negatively by supply chain challenges coming out of COVID-19," Lau tells The CEO Magazine.
"We know that our customers want to consolidate their spend and we want to be that consolidator for them."
The company has also recently completed a mammoth overhaul of its manufacturing strategy, consolidating its global facilities into one central manufacturing facility in Thailand, operated by Sanmina. The transition, while optimizing costs, has resulted in a surplus of FARO's square footage.
For Lau, the challenge of his first twelve months in the role has been to drive operational excellence while reducing operating costs for the company, a leader in 3D measurement, imaging and realization technology.
"Through efficiencies, we plan to build a company that is double-digit EBITDA and return to our rightful place, one where we are consistently delivering profitability and cash flow," he explains.
Growth plans
Once there, the plan is to use this profit and cash flow to invest in big growth blueprints that Lau describes as "simplistic in nature". "We want to deliver more organic solutions to more of our existing and new customers so that we can become a full range supplier for them," he says.
Lau knows that in a manufacturing or construction environment, many different tools are used to measure and analyze products or work. He also knows that today, FARO serves a portion of that tool set.
"If your employees feel valued every day at work, that’s going to help you attract and retain new talent — and customers."
The vision, he expands, is to deliver products and solutions that solve more of its customer’s problems. "When we talk to our customers, they tell us that they want to do everything with FARO," he says.
Such conversations have enabled the business to set an ambitious, but attainable growth target. "Currently, we address about 1.2 billion of the global market," Lau says. "Through our plans, and what we’ve heard from our customers, we aim to increase that to two billion, or 40 percent, over the coming years."
Describing the solid growth plan, he says, "We know that these are solutions that our customers are asking for. We know that these are solutions that we can engineer, and ultimately we know that our customers want to consolidate their spend and we want to be that consolidator for them."
Hardware and software
One of those customer-driven solutions was FARO Sphere, the cloud-computing reality capture platform whose launch in 2022 heralded the expansion of its cloud-based software offerings. Workflow enhancements included data uploads from any location, access to the existing suite of 3D software applications, cloud-based data analysis and global user access.
"One of the big priorities for our customers is how they are able take models that they are building or capturing and collaborate with a disparate set of global partners within their companies," Lau explains.
In response to this feedback, in October 2023, Sphere XG was launched as the next-generation evolution. "Sphere XG enables people to share models and information in a broader way and have a number of different users interact and be able to use the data and send notes back and forth on the cloud to enable that collaboration," he says.
Lau’s customers have also told him that they love the accuracy of FARO’s hardware, but some customers were also looking for increased portability.
A Perfect Pairing
FARO Technologies and Sanmina’s relationship began when FARO approached Sanmina to outsource their complex systems manufacturing from two of their facilities in the United States and one in Europe. "They wanted to streamline their supply chain management, reduce overhead, lower material costs and gain the benefits of scale and efficiency that Sanmina could offer," says Charlie Mason, EVP Global Sales at Sanmina Corporation
FARO’s products contain leading edge technology that required Sanmina to customize its facility for FARO's calibration and test and achieve ISO 17025 certification before manufacturing could even begin. "Despite all these challenges, Sanmina started production on time and most rewarding of all is that we have achieved FARO's revenue and business goals," explains Mason.
Today, Sanmina manages the majority of FARO’s supply chain operations and manufacturing, and performs calibration testing on their products in its facility for worldwide distribution. "Instead of having to manage all the detailed elements of their supply chain in three different locations, FARO instructs Sanmina what they need and Sanmina makes it happen," Mason continues.
The partnership, however, has grown beyond just systems manufacturing and now includes cables and printed circuit board assemblies (PCBAs). FARO and Sanmina collaborate on process and design engineering. One example of this is Sanmina's redesign of FARO's calibration and test system for one of the products.
"The evolution has freed up FARO to invest their resources and capital in research and development and focus on taking their business to the next level," Mason explains.
Both organizations are fully integrated and are tactically and strategically aligned.
"FARO and Sanmina meet each quarter for a business review to evaluate performance and set new goals," Mason says. "Our people are aligned at every level of both organizations. Both organizations are committed to shareholder value and continuous improvement."
And Mason only sees further evolution for the Sanmina-FARO partnership.
"We see the partnership deepening, with earlier involvement from Sanmina in next generation products and platforms that will allow FARO to leverage additional Sanmina services and accelerate FARO’s time to market. As FARO grows their business, Sanmina is committed to enabling their success."
"In the fourth quarter of last year, we launched a new product called FARO Orbis, which combines the accuracy of a tripod-based terrestrial scanner with the mobility of a mobile scanner," he explains.
These innovations are just two in an enduring legacy of delivering patented new technologies — something that Lau knows would not be possible without FARO’s employees and their commitment to the company.
To show its appreciation, FARO recently allocated stock in the company to every single employee. "We want our employees to feel like their the owners of our company and that we’re all in the same boat in terms of the mutual success of our company," he says.
"We are an extremely employee-focused organization," he continues. "Ultimately, if your employees feel valued every day at work, that’s going to help you attract and retain new talent — and customers."