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- A Production Facility Aimed at High Output
- Meeting Growth Demands for UHF RFID Products
- New Demonstration Labs for Innovating Solutions
Avery Dennison Smartrac is expanding its manufacturing capacity with a new factory for UHF RFID technology production in Querétaro, Mexico's fastest-growing city, which has an economy centered around IT, manufacturing and data centers. Avery Dennison is a material science and digital identification solutions company. Its Smartrac division offers RFID products for inventory management and other Internet of Things (IoT) applications. The company says it intends to spend more than $100 million on the new site, then employ 600 workers to produce RFID inlays, tags and labels.
The factory will serve the Americas, as well as other parts of the world, and Avery Dennison reports that it will be the largest RFID plant it operates globally. The 25,000-square-meter (269,000-square-foot) facility, located in Querétaro's FINS III industrial park, is expected to be open for business next year. The company's stated goal is to meet the growing demand for passive UHF RFID tags, and to increase the speed at which it can fulfill orders, while adding resilience and flexibility to its global supply chain.
A Production Facility Aimed at High Output
The company says it intends to maximize its RFID production at the site by building a highly productive system of operation. Innovation is at the core of its business, according to Francisco Melo, Avery Dennison Smartrac's senior VP and general manager. "We will introduce new platforms in this new facility," he explains, "to optimize our efficiency and, as a result, our output."
Francisco Melo
The plant's production capacity will be ramped up gradually throughout 2024, based on demand in the Americas and worldwide, the company reports. "We will focus on driving adoption in the apparel segment for the region," Melo says, "as well as meeting the increasing demand in newer segments, including food and logistics."
RFID technology use has been skyrocketing in the past several years to meet the demands of omnichannel sales, reduce supply chain delays and ensure in-store, on-shelf availability. That demand has been accelerated by the COVID-19 pandemic. According to a RAIN Alliance market research report, approximately 35 billion UHF RFID tag chips were sold last year, representing a nearly 20 percent increase over the previous year's 30 billion (see RAIN RFID Research Report Finds Growth at 36 Percent).
Of the 30 billion tag ICs sold in 2021, the RAIN Alliance report found, about 70 percent were used in apparel, footwear and other retail products. Among the other 30 percent of sales, the study found that growth is taking place in food-based products, such as those used by quick-serve restaurants, which are using the technology at rates higher than 25 percent over those of the previous year. Automotive and pharmaceutical industry demands are also increasing, the company notes.
Meeting Growth Demands for UHF RFID Products
Avery Dennison Smartrac is among the largest providers of the technology. "We see significant opportunities for growth ahead of us," Melo says. "As we drive adoption in new segments, such as food and logistics, and continue to lead in the apparel industry, we expect that there will be a continued rise in demand for RFID and digital ID technologies in the Americas."
The company has an existing plant in Juarez, Mexico, and Melo says that facility is also significantly expanding its capacity there. Altogether, Avery Dennison Smartrac will now operate nine manufacturing sites globally. Beyond Juarez, the firm is launching smaller expansions at additional manufacturing sites of lesser size.
"Avery Dennison Smartrac has embarked on a clear growth trajectory to drive the adoption of RFID and digital ID technologies across multiple sectors globally," Melo states. This latest investment, he adds, serves as a foundation that will enable the company to meet the needs of the market in the years to come.
New Demonstration Lab for Innovating Solutions
Additionally, Avery Dennison plans to launch an I.Lab innovation center at the facility, at which it will demonstrate its latest developments and showcase existing use cases across multiple industries. The existing I.Labs in Brazil, China, India, the Netherlands, South Korea and the United States, Melo says, "demonstrate the possibilities that digital identification solutions unlock for a more connected world" (see Avery Dennison Experience Center Aims to Encourage Innovation, Avery Dennison Opens Intelligent Label Solutions Lab in India and Avery Dennison Opens Innovation Center in South Korea).
At other locations, the lab offers visitors hands-on experience, to help potential or existing customers find ways to use the technology to manage inventory in retail apparel, or to track products in the cosmetics, pharmaceutical, automotive and aviation industries. The company chose to build its largest RFID facility in Mexico, Melo says, due to its strategic location, its proximity to customers, the availability of highly qualified labor, its cross-collaboration with the company's sister businesses and its existing infrastructure.
In the long term, Avery Dennison intends to build an ecosystem for RFID solution providers in that area. "Our ambition," Melo says, "is to establish a new IoT cluster in the region, where customers, suppliers and local government enable productivity, rapid innovation and expansion to current or new markets." The company partnered with the State of Querétaro and its capital city, Santiago de Querétaro, to develop new jobs at the facility and provide training, infrastructure, recruitment, and supply or development.
Key Takeaways:
- Rapid growth in RFID technology demand has led Avery Dennison Smartrac to purchase its largest manufacturing site to date, located in Mexico.
- With the new facility, the company plans to better serve the North American audience, as well as its global customers, with faster, high-volume output and a lab for innovation.
