Digi-Key opens $400M distribution center in Thief River Falls

THIEF RIVER FALLS, Minn. — Digi-Key Electronics was busting at the seams when it began planning a 2.2 million-square-foot, $400 million expansion in 2017.

Now, as the Thief River Falls company on Wednesday showed off the new space, one of the 10 largest warehouses in the country, it is growing at a pace that will outgrow the current addition in the next decade.

"Today is clearly a celebration," said Dave Doherty, Digi-Key's president, at a celebration lunch. "But this book is far from over."

In 2016, Digi-Key had annual sales of $1.86 billion and 3,200 employees. Annual revenue last year was $4.7 billion, and the company now has about 5,200 workers, 3,600 of whom work in Thief River Falls in the northwest corner of the state.

Digi-Key is a distributor of electronic components and automation products offering more than 13.4 million products to more than 857,000 customers each year in 180 countries.

"What's unique for us is we deliver lots of small shipments everywhere," Doherty said in an interview before the celebration for dignitaries and the community. "This model is about having inventory and having high service levels to get out the door."

Doherty refers to Digi-Key as a "broken pack" distributor. That means it takes any size order, including small custom jobs that many suppliers cannot handle.

The company began 50 years ago as a mail order catalog business. Thief River Falls remains Digi-Key's largest location, with additional support and distribution facilities in Fargo and a dozen other cities across the world.

The new building — which is the size of 22 football fields — will allow Digi-Key to not only ship more products but also offer more services to their customers and suppliers. The new building has automation built in as well, eliminating the long walks workers had before to fulfill orders.

Steve Grove, commissioner of the Minnesota Department of Employment and Economic Development, attended the grand opening as part of his "Summer of Jobs" tour and later held a panel discussion on the area's economy at Digi-Key's next-door neighbor, Textron's Arctic Cat facility.

"It's a unique regional economy that I don't think a lot of Minnesotans know about, " Grove said in an interview before events on Wednesday.

One big impediment to the Thief River Falls companies — and others in northwest Minnesota including Marvin in Warroad, Polaris in Roseau, and Altoz and Central Boiler in Greenbush — is promotion. People might not know about the job opportunities.

The effort to sell Minnesota more broadly, similar to efforts in South Dakota, Nebraska and Wisconsin, is critical, Grove told the audience Wednesday.

"We advocated last legislative session to get DEED's first-ever marketing budget for talent, attraction and promoting our state to business," Grove said. "We're just not in that game."

22 football fields: Size of new Digi-Key warehouse

4: Number of stories

27: Miles of automated conveyor inside the building

$400 million: Cost to build complex

$40 million: State of Minnesota grant for job creation

640: New jobs added since construction started

1,700: New parking spots added