PRAIRIE BUSINESS: Thief River Falls plans for growth

Digi-Key Corporation is in the midst of an aggressive growth cycle that has seen the international electronics component distributor add new distribution agreements and rapidly ramp up hiring at its Thief River Falls, Minn., headquarters facility.

Digi-Key, Thief River Falls’ largest employer, currently employs about 2,100 workers. Earlier this year the company announced plans to add more than 400 new jobs in the community in 2010, which would bring its total employment to about 2,400.

The employment growth is being driven by increased demand for the electronics components the company purchases from suppliers and resells to customers. Sales are expected to reach $1.3 billion this year, up from $984 million in 2008.

“That is an incredibly huge upswing in sales,” says Rick Trontvet, the company’s vice president of human resources. “This means we need to hire more people to support our sales.”

The growth of Digi-Key and other Thief River Falls companies is forcing community leaders to examine how to deal with a housing shortage and workforce concerns that threaten to limit business expansions and hiring as the community looks to the future.

Digi-Key continues to add more employees to meet the company’s expanding sales needs. But Trontvet worries about finding enough qualified workers to fill positions at the fast-growing company given the community’s limited housing stock.

Thief River Falls has more than 2,400 single family units and more than 1,200 multiple family units, as well as 330 mobile homes. Michael Moore, the city’s community development director, says the city is facilitating housing rehabilitation and working with developers to create more rental housing.

Like many other rural communities in the region, there are also concerns about the impact of rural depopulation trends. Thief River Falls, a small city of about 8,500 residents in northwestern Minnesota, has seen its population slowly increase from about 8,000 in the 2000 Census. But some local communities that feed Thief River Falls’ population are shrinking along with the out migration of young adults.

“We want to see that (declining population) trend reversed,” says Jim Retka, the dean for workforce and economic development at Northland Community & Technical College, which has main campus locations in Thief River Falls and East Grand Forks, MN. “Housing is an issue for our students. Students from all over the country are in our aviation program. Obviously, as we continue to build up our program, we are bringing in an entirely new population of students.”

A 'hidden jewel'

Thief River Falls is located at the confluence of the Red Lake River and the Thief River, but is high enough that flooding has never been a major problem. Residents enjoy the city’s small-town atmosphere, but are only a short approximately 50-mile drive from Grand Forks, ND. Fargo is about 110 miles away and the Twin Cities area is within a 300-mile drive, offering access to more shopping and entertainment options.

“This community is a hidden jewel,” says Jodi Torkelson, Thief River Falls’ city administrator. “Our businesses are some of the biggest, best companies you never hear about. We need to get the message out. We have things to offer people. We have to get out there and brag a little more about our community because whatever you want, it is here.”

Torkelson is typical of the leadership in Thief River Falls. She was born and raised in the community, left for a few years and has since returned.

“I’m particularly happy to be here at this time in the community’s history because there is so much happening,” she says. “There are community projects and changes in the community. I am here to facilitate some of the change happening.”

Ben Anderson, the executive director of the local chamber of commerce, is another former resident who returned to the community.

“We are different than other communities because we are distant enough from larger communities that we rely on ourselves and make our own things happen,” he says.

Digi-Key’s Trontvet also grew up in Thief River Falls before leaving for college and career opportunities. He says he jumped at the chance to return when he was offered a job at Digi-Key. Trontvet says he is constantly selling the city to job candidates and telling them they have an opportunity to work for a world-class company and have access to technical and career opportunities usually only found in larger metro areas.

Retka says he moved to Thief River Falls from the Twin Cities area in 1993 because he felt it was a good place to raise a family.

“I do enjoy the smaller town atmosphere with access to larger communities,” he says. “There are a lot of things happening in the community and the college.”

Signs of growth

An estimated $70 million combination of the city’s hospital and clinic is scheduled to open in 2012.

The city is building a $2.7 million hangar at the airport with city funding and funds secured in a state bonding bill.

A 70-bed, $10.5 million nursing home is also on the horizon, which will result in the addition of 25 new employees.

Northland Community & Technical College recently received a federal grant to design, build and start training maintenance technicians for unmanned aircraft systems. Retka says Northland College is the only college in the country currently funded to pursue the program by the federal government.

He says Thief River Falls and the larger nearby area is geared for future growth in the research and development of unmanned aircraft systems, an emerging technology and industry.

Economic strengths

Thief River Falls is a regional center for commerce, education, health, government and transportation in northwestern Minnesota.

Digi-Key and Arctic Cat Inc., which together employ more than 3,500, are the community’s largest employers. Other large employers in the area include MeritCare Thief River Falls Northwest Medical Center, Seven Clans Casino Hotel and Indoor Waterpark, the local school district, Pennington County and Northern Pride Inc.

Thief River Falls served as the birthplace of both Arctic Cat and Digi-Key. Arctic Cat, which designs, engineers, manufactures and markets snowmobiles, ATVs and related merchandise, was founded in Thief River Falls. Arctic Cat recently moved its headquarters from Thief River Falls to Plymouth, MN. But the company, long one of the city’s largest employers, still maintains a large manufacturing plant in Thief River Falls.

Moore said Arctic Cat and Digi-Key Corporation signify the entrepreneurial attitude of the area.

“Digi-Key Corporation started in the trunk of a car and now look,” he says. “Thief River Falls is a working man’s town. People have ideas in this town.”

When Moore moved to the community, there was a need to expand its infrastructure, provide finance programs and tax abatements for housing. Then in January 2005, two businesses added 600 employees and the community took off.

Cody Hempel, the chairman of the local chamber of commerce and an employee at Arctic Cat, is excited about the community’s education system and its high graduation rate.

“I like the variety of ways people get involved in the community, regardless of what their background is or their current situation” Hempel says.

Retka says Northland College’s mission is to offer quality educational service and accessibility to the residents of northwestern Minnesota.

“The college has concentrated in what role it can play in economic development,” Retka says.

Small-town getaway

Thief River Falls’ small-town charm has also made it an attractive destination for visitors seeking an out-of-the way weekend vacation.

Outdoor activities like snowmobiling, hunting, fishing, boating and bird watching are attractive draws. The area is a nationally-recognized hot spot for bird watching. Birders come from across the country to an enclosed observation shelter located about two miles outside of the city and make a 20-mile drive to the nearby Agassiz National Wildlife Refuge, which features more than 280 species of birds.

“Bird watching is a huge draw for us,” says Laura Anderson, executive director of the Thief River Falls Convention & Visitors Bureau.

The Peder Engelstad Pioneer Village in Thief River Falls offers visitors the opportunity to walk through a replica northern Minnesota pioneer town as it might have appeared a century ago. Seven Clans Casino and Two Fools Vineyard — the state’s northernmost vineyard — are both located just outside of Thief River Falls, offering more options for visitors.

A number of regional athletic tournaments are hosted by the Ralph Engelstad Arena in Thief River Falls and the city’s Multi-Events Center outdoor recreational fields.

Anderson says a large portion of the city’s tourists are Canadians lured by Minnesota’s lack of taxes on clothing and the city’s more relaxed, main street feel.

“In the summer our greatest visiting public is from Winnipeg,” she says. “Our campgrounds and parking lots are full of Manitoba license plates. Canadians say that they like the small-town charm along with having some shopping options. We’re big enough that you can feel like you’re in a city, but with a nice, small-town atmosphere. It is a very well-kept, clean community.”

Challenges remain

Despite the community’s strengths, local leaders still face a number of challenges, including reduced state funding sources and workforce and housing concerns.

Pennington County’s not-seasonally-adjusted unemployment rate was 11.1 percent in April. Despite a challenging statewide economic picture, the county’s unemployment rate was actually down from 13.1 percent in April 2009. While the county still has a relatively high unemployment rate, there is a need for a deeper pool of skilled labor in the area to help local employers.

“What we need are people; well educated, hard working people,” says Moore, the city’s community development director. “There is a desperate need of people.”

A number of retailers have moved away from the city’s downtown core, leaving city officials to ponder how to improve the situation.

“We’re constantly thinking about how to maintain that level of activity in the downtown section,” says Anderson of the chamber of commerce.

Hempel believes area leaders need to work to build a better, more livable community in order to attract younger workers.

The city is also looking at ways to lower business taxes and stay within its budget.

“Taxes are high here,” says Torkelson, the city administrator. “We are trying to do our part to make sure this is a growth-healthy climate. We have to make sure we are business friendly.”

Northland College has seen a $3 million reduction in its budget in the last two fiscal years. At the same time the community and technical college experienced a 7 percent increase in enrollment in 2010.

“It is very much of a challenge for the college to maintain all services and faculty,” Retka says.

Community leaders continue to develop projects and programs to help address housing and workforce shortages as well as other challenges facing the community.

Planning for the future

Thief River Falls’ forward strategic planning process began in 2008. One of the goals of the plan is to create a livable community, including completing a downtown redevelopment plan in 2010. The group also plans to have a vibrant community pool by 2014, expand the city’s existing recreation trail 14 miles by 2012 and develop a single, comprehensive source of information on all community activities by later this year.

Plans also call for expanding the city’s airport runway, improving facilities and building a new hangar by 2014. An airport authority is expected to be in place later this year and plans call for designating the airport area as a tax-free zone within the next two years. In addition, the community group aims to help create a plan for Northland College’s future growth.

By 2011, Thief River Falls hopes to develop a collaborative leadership roundtable initiative to improve communication between government, city and business groups.

Coordination and teamwork have long been keys to the community’s success. By working together to plan for the future, local leaders hope to continue the momentum and keep improving the community.

“We feed off each other,” says Trontvet of Digi-Key. “We help each other.”

Prairie Business is a publication of the Grand Forks Herald and Forum Communications Co. See the magazine's website at www.prairiebizmag.com.