UPM-Kymmene has folded its RFID inlay and label division, UPM Rafsec, into its label-stock subsidiary, Raflatac. This union will form a combined company, UPM Raflatac. Rafsec will remain only on product names. Both Rafsec and Raflatac are fully owned units of UPM-Kymmene, a Finnish company focused on producing paper for such items as magazines, newspapers, envelopes, bags and packaging.
“Nothing changes with the way we run the business,” says Christer Härkönen, senior vice president of Raflatac’s new RFID division. “This is purely a rebranding exercise.”
Ownership of Rafsec, which UPM-Kymmene founded in 1997 as a way to extend its business into smart-paper products, has alternated between UPM-Kymmene and its label-stock division. Rafsec was initially a subsidiary of Raflatac, then turned into a standalone subsidiary in 2000. The company moved into a new UPM Labelstock Business division alongside Raflatac at the start of last year. Plans for the RFID unit’s move into its far larger label-stock sister company, however, were under consideration as early as March of 2005. While UPM does not break out revenues for UPM Rafsec, UPM Raflatac’s annual revenue of around one billion euros far outstrips that of Rafsec.
“Rafsec has come full circle, but it was important—and a good business-building process—to be a standalone startup company for the first part of the decade, because the market required a new venture mentality,” says Härkönen.
Rafsec produces high-frequency (HF) and ultrahigh-frequency (UHF) inlays and finished labels. HF tags are used in a range of applications, including library-book management, access control and mass-transportation ticketing; UHF tags are employed in such applications as supply chain management, baggage tracking and garment tagging. Before customers can use the Rafsec inlays, however, the inlays must first be converted into labels, either non-printable or printable.
Rafsec manufactures its products at two production plants, one in Jyvaskyla (about 150 miles north of the company’s Tampere headquarters), and another in Fletcher, N.C. The Fletcher plant, built in 2005 and put into operation toward the end of last year, is located near a label stock production facility run by Raflatac. “We have been operating in the U.S. as one company for the past few months, and so [moving Rafsec into Raflatac] is a way to simplify that relationship and the way we brand ourselves as UPM Labelstock Business,” Härkönen explains. Rafsec has traditionally sourced its label stock solely from Raflatac.
Rafsec’s move into Raflatac, says Härkönen, should also help UPM emphasize its commitment to maintaining ownership of its RFID operation. “The message is that we are a part of UPM, and maybe now I will get [fewer] calls from bankers making offers for the company,” he says.