The look of 'new' manufacturing

By B. Candace Beeke
Business Review Western Michigan
May 26 - June 1, 2005

On the same day Sligh Furniture Co. announced the removal of its manufacturing operations in Holland, a high-tech start-up announced it would create the low-cost radio frequency identifaction tags on evolving industry has been crying for.

Such could be the new order of manufacturing in Western Michigan, a Grand Rapids economic developer said.

Sligh has long outsourced components of its highend residential furniture to foreign countries, utilizing low-cost labor overseas. The elimination of all manufacturing in western Michigan and the closing of its grandfather clock lines marks a sad but inevitable move for the family-owned company, its chairman Rob Sligh said in the company's announcement.

"Today most wood home furniture sold in the U.S. is made outside the U.S." Sligh said in the announcement.

Sligh may be one more example of the old model of manufacturing -- labor-based, commodity goods -- that many say is doomed in this country.

"We are losing high-labor content" manufacturing, said Birget Klohs, president of Right Place, Inc., Grand Rapids economic development group. "We are retaining very advanced manufacturing jobs that have embedded in the process alot of new technology."

As Sligh was declaring the end of its Holland manufacturing, newcommer RF IDentics Inc. announced it would begin production of low-cost RFID tags and labels in Grand Rapids. Compared to the 75 jobs Sligh will phase out in the fall, RF IDentics plans to hire 18 in its first year, Chairman Pete Metros said.

The start-up plans to tap many markets for its products, including suppliers to Wal-Mart Stores, Inc., and the U.S. Department of Defense, both of which have mandates requiring suppliers to integrate RFID into their supply chains. The market opens up beyond such forced applications as well. RF IDentics President Gary Burns noted.

"There are companies out there who are basically volunteering to do this, " he said.

"One of the hottest markets in RFID is the pharmaceutical market," Metros added. "They are looking for suppliers of RFID tags and labels. They're not only doing it at a case level and a pallet level. They want to put it on the bottles."

Tagging items -- whether it be cases, pallets or individual configurations -- allows RFID readers to pick up the information as the product moves past. In this way, the supply chain opens up, reducing or eliminating lost or hidden items and counterfeiting.

Many companies have lamented the high costs of tags as a serious impediment to mass us in the supply chain. While the price varies by volume of purchase and size of tag. RF IDentics tags will be less than 20 cents, Burns said.

Through a high-yield, high-quality proprietary manfacturing process that produces little scrap, RF IDentics plans to make 40 million to 70 million tags in its first year, Metros said.

While its equipment has yet to be shipped from the German manfacturer, the company already sent one shipment of tens of thousands of tags from Germany to a South Korean home-electroniocs company, Burns said.

"Our family of tags probably meets the requirements of 80 percent of the market place," Burns noted. "You name it, there's an RFID application."

Because of the breadth of the potential market, the company chose a manufacturing facility open to expansion. The 5,000 square feet it occupies in a Renaissance Zone on Hynes Avenue has the potential to quadruple that space, Burns said.

"The marketplace is rapidly expanding," Burns said. "Alot of companies are playing catch up. The growth really comes when the small to medium players set up."