Omni-ID to Open Production Plant in China

By Claire Swedberg

Growing demand for the company's passive EPC Gen 2 RFID tags has led Omni-ID to establish a manufacturing subsidiary in Qingdao, in order to keep up with orders.

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After completing its most profitable quarter since its formation two years ago, Omni-ID, a manufacturer of passive ultrahigh-frequency (UHF) RFID tags encased in hard plastic, has opened a subsidiary manufacturing facility in China to help the company meet its rising volume of orders. Betting that the sagging economy will no longer pose a significant negative impact on the demand for passive RFID tags, and that the expected economic growth will result in greater RFID tag usage, the tag manufacturer—which spun off from British defense and security technology company QinetiQ in 2007—is establishing the subsidiary to take on work currently handled by third-party providers.

The Qingdao facility, known as Omni-ID High Science & Technology Co., Ltd., will open in September 2009 within the Qingdao Export Processing Zone (QDEPZ). The 20,000-square-foot facility will employ a staff of 50 workers and have the capacity to manufacture 6 million passive UHF Gen 2 tags each year.


Tom Pavela, Omni-ID’s president and CEO

Omni-ID specializes in producing EPC Gen 2 passive RFID tags that can withstand harsh environments and perform reliably in the presence of metals and liquids, which can hinder tag reads. The company required the new facility due to the growth in its existing customers’ demand for passive UHF tags, as well as the acquisition of new clients, says Tom Pavela, Omni-ID’s president and CEO. The company’s customers include IBM (see IBM Offering IT Asset-Tracking Solution), Hewlett-Packard, Wal-Mart and Sam’s Club.

In the past 12 months, Pavela says, average orders for Omni-ID tags have grown from tens of thousands to hundreds of thousands at a time. The tags are typically utilized for asset management, logistics (tracking cartons and pallets, for instance) and tracking work in progress at manufacturing sites and other facilities. “Each order was getting larger,” he explains. “We were faced with the decision of either ramping up outsourcing efforts or establishing our own manufacturing facility.”

The new center will allow the company to shorten its time to market and improve the overall quality of its RFID tags by providing Omni-ID with tighter control over the products it makes, rather than outsourcing the work. It also will enable the firm to rapidly produce product prototypes when necessary, Pavela notes, because the manufacturing site will be able to quickly develop tags designed in-house by Omni-ID.

Pavela believes Omni-ID is becoming “a significant player in the RFID industry,” though he adds that his company’s decision to open up a plant in China is a sign that business is on the upswing not only for Omni-ID, but also for the RFID industry as a whole. “Like many in the industry, we had a very difficult first quarter,” he says. “Then, during the March-April time frame, we saw an increase in activity.” A degree of comfort with the economy’s improvement, he indicates, has led to increased tag orders. “In our second quarter, we saw the highest revenue of our history, and thus far in Q3, we are very pleased with the activity. We’re cautiously optimist.”

The RFID industry, Pavela observes, has shown a shift from proof-of-concept testing and pilots to direct deployments by end users. “We are starting to see signs that we’re moving in the right direction in terms of RFID adoption,” he states. “We’re very encouraged by this.”

Still Pavela adds, Omni-ID’s growth is an indication not only of an improving economy, but of a good product line as well. “What I’m sensing,” he says, “is that we are offering real value to our customers, and we’re seeing that in the high-volume orders.”

According to Pavela, Omni-ID decided to locate its new subsidiary in China not only because the cost of manufacturing in Asia is inexpensive, but also because the company expects to expand sales of its tags to customers in that region. In June 2009, for instance, the firm signed an agreement with Mitsubishi Electric and IBM Japan to sell RFID solutions for asset management in Japan, using Omni-ID’s Prox metal-mount RFID tag (see Omni-ID, Mitsubishi Electric, IBM Japan Partner On RFID Asset Management).

If business continues to grow, Pavela says, the company will expand the size of its production facility further, to increase RFID tag production volume.