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Little
chips could make big impact By Chris Knape Grand Rapids -- Tucked away in the Union Station industrial park south of downtown, a startup company many be on the cusp of a multi-billion dollar revolution. Its a big is built on little chips the size of a speck of pepper attached to sophisticated antennas printed on paper or label stock. RF Identics LLC envisions the day when its deceptively simple-looking radio frequency identification (RFID) tags could be added to virtually any product. The market for tags, services and RFID equipment is expect to top $2.6 billion next year, reaching more than $7 billion by 2007, by some estimates. Companies such as Wal-Mart and Home Depot and goverment agencies such as the Department of Defense already are pushing suppliers to place RFID tags on virtually every product or case pallet of goods they ship. That's leading to
a rush of manufacturers and the nascent RFID tag suppliers such as The chips can be read by passing within range of a scanner. They help track inventory, shipments and sales more effieciently and with more flexiblity than the bar-code labels found on most items. For now, company President Gary Burns, Chairman Pete Metros and Executive Vice President Peter Phaneuf are just trying to ensure their sophisticated $1 million tag-making machine is up to snuff before being shipped from Germany. They're also getting the little things -- such as office furniture and desks in place at their new offices. "We studied this for 13 months," said Metros, who retired as president and chief executive of Grand Rapids-based Siemens Dematic in 2003, "We know our competitors. We know our costs and we know our customers." Burns also is a Siemens Dematic veteran, having overseen the company's mail handling equipment operations. Phaneuf is the owner of the Agile Technolgies, a local computer software integration firm also involved in medical labeling. Already, RF IDentics sees potential customers in West Michigan firms such as Perrigo and Pfizer, which turn out millions of packages of medicine each year, among many others. The company's first customer was a Korean appliance maker involved in a pilot deployment of RFID techology. The company plans to hire about 18 employees over the next year as it develops customers and ramps up local production. Those kind of numbers led a group of about 20 people from West Michigan -- including members of the Grand Angels, a local group of early stage investors -- to put enough money in RF IDentics to get the ball rolling. The total investment wasn't disclosed. The company worked with Grand Rapids-based DaVinci Capital to develop a business plann and match it up with potential outside investors. Burns said his firm has a lef on competitors because it is among the first to create sophisticated tags for less than 20 cents each. In an industry where pennies are expected to make a big difference, few if any players can match that price, Burns said. The company is testing a nearly $ 1 million machine being built in Germany that is expected to be delivered to Grand Rapids by early June. The machine is capable of precisely placing up to 10,000 tiny RFID chips per hour on printed antennas that can be as small as a postage stamp. Demand is expected to be so high the company is planning to take delivery of a second tag-making machine early next year capable of tripling its total output. "We think it's going to be a tool that is going to be needed if you want to sell," Burns said. "Whether it's to Wal-Mart or the (Department of Defense), there's value within your four walls you can get out of this.
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