Maple Grove manufacturer Nortech Systems closing plant near Brainerd, affecting 60 to 70 jobs

Maple Grove-based company will shift production to other Minnesota facilities.

August 13, 2020 at 3:21AM
Maple Grove-based Nortech Systems does complex engineering and manufacturing of electromedical and electromechanical parts for clients in the medical, aerospace and defense and industrial markets. (Nortech press photo)
Maple Grove-based Nortech Systems does complex engineering and manufacturing of electromedical and electromechanical parts for clients in the medical, aerospace and defense and industrial markets. (Nortech)

Nortech Systems will close a production plant in Merrifield, Minn., affecting 60 to 70 jobs.

The Maple Grove-based company also announced it has signed sale and lease-back agreements at two other Minnesota production facilities that are expected to save costs as it navigates through the new COVID economy.

Nortech Systems does complex engineering and manufacturing of electromedical and electromechanical parts for clients in the medical, aerospace and defense and industrial markets.

The plant-closure announcements were included in its second-quarter earnings report.

The company reported quarterly sales for the quarter ended June 30 were $26.5 million, down 3% from the same period a year ago. It lost $123,000 for the quarter, or 5 cents per share, an improvement over the $1.6 million loss, or 58 cents per share, in the same period last year.

The plant in the central Minnesota community of Merrifield, near Brainerd, does wire and cable assembly, system-level assembly and printed circuit board manufacturing.

Employees have been notified and layoffs are expected to begin in mid-October, and the facility is expected to close by the end of the year, according to a required filing with the state Department of Employment and Economic Development.

Merrifield employees will be offered positions at Nortech's other facilities in Minnesota, where production will be shifted.

The company also announced it will be moving PCB manufacturing from Monterrey, Mexico, to its Mankato facility.

"Our goal through these essential moves is to enhance Nortech's ability to operate through the current COVID-19 pandemic and succeed long-term," said Jay Miller, Nortech's president and chief executive, in a news release.

At the end of last year, Nortech had 687 full-time and 97 part-time employees at production facilities in Bemidji, Blue Earth, Milaca, Merrifield and Mankato, as well as Monterrey, Mexico, and Suzhou, China.

The 15-year initial sale and lease-back agreements for the Bemidji and Mankato facilities are with Essjay Investment Co. Nortech is projected to earn $5 million from those deals that are expected to close in the third quarter, the release said.

The company said it will use proceeds from the sale and lease-back agreements to pay down debt and provide liquidity for other general corporate purposes.

Nortech's annual revenue in 2019 was $113.6 million, up less than 1% from 2015 and it's been profitable in two of those five years.

Nortech released its financial results after the market closed Tuesday. On Wednesday, shares closed down 5% at $4.40. Over the past 52 weeks, shares have ranged between $2.52 and $7.46 per share.

about the writer

about the writer

Patrick Kennedy

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Business reporter Patrick Kennedy covers executive compensation and public companies. He has reported on the Minnesota business community for more than 25 years.

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