Digi-Key considering $200 million expansion in Thief River Falls

Digi-Key Electronics is considering adding a $200 million factory and distribution center to its Thief River Falls headquarters that could add 1,000 jobs over 10 years, officials announced this week.

If selected, the project could add 1 million square feet of manufacturing and warehouse space in Thief River Falls and $500 million in economic output to Minnesota's coffers, officials said. It also could increase Digi-Key's current 3,200-employee Minnesota workforce by one-third.

The Digi-Key project might ultimately grow in scope to $300 million.

The international wholesaler, which ships all of its parts for smartphones, electric cars, LED lights and medical devices from its hub in Thief River Falls, now generates about $1.5 billion a year in sales.

Although Digi-Key is considering other locations for expansion, Thief River Falls remains its "preferred location," said Rick Trontvet, Digi-Key's vice president of administration and human resources. Digi-Key will give the city and state a chance to put together an incentives package before expanding the search to other sites.

Trontvet declined to say where else the company is looking.

"We obviously are thrilled with Thief River Falls as the place where we have grown. And we wanted to give Minnesota and the city the first opportunity or the first bite of the apple so to speak" in trying to make a deal work, Trontvet said.

But he cautioned that Digi-Key's large size means the decision on where to expand is "more complex and requires that we review a variety of possibilities. This review process involves a lot of fact finding."

Infrastructure and hiring needs are just two of many issues that will have to be addressed if the project is to go forward. It's often difficult to find hundreds of new workers to hire in northern, rural Minnesota, officials conceded. In the past, housing has been a concern.

Cities and businesses have teamed up in recent years, though, to improve access to jobs, apartments and houses.

Thief River Falls Mayor Brian Holmer said that, if chosen, his city will welcome Digi-Key's project "with open arms. … We want them to stay here."

The expansion proposal was set to be discussed by City Council members during meetings Tuesday and Wednesday and by state legislators this week, Holmer said.

If possible, city leaders will consider offering Digi-Key some type of tax increment financing. At the same time, state legislators are considering proposals to steer state loans or grants toward the company.

The state's Department of Employment and Economic Development has the ability to offer expanding businesses certain incentives, such as job creation rebates and Minnesota Investment Fund loans, to assist with expansion. Most measures require the grant or loan recipient to first invest significant capital and to create a set number of new jobs before receiving state money.

"We started working on it in January and have worked with the consultants that Digi-Key hired," Holmer said. "Now we are at a crossroads and have to see how it all works out."

The city, state and the regional airport are all willing to help ensure that an expanded Digi-Key plant and its enhanced cargo demands could be met. "In the future, if [Digi-Key] needed bigger planes at the airport, the airport is willing to consider that. If we need to grow, we will grow," Holmer said.

Digi-Key Electronics is a global distributor of electronic components, prototypes and designs from more than 650 name-brand manufacturers. It stocks 1.3 million electronic components and typically ships parts to customers across the globe within 48 hours.

Digi-Key has enjoyed robust growth in the last 15 years as customers moved from paper catalogs to internet-based ordering. In addition to Thief River Falls, Digi-Key has a small facility in Fargo and a customer service center in the Netherlands, plus sales offices in Munich and Tel Aviv.