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Digi-Key plans April construction start for 'massive' expansion

THIEF RIVER FALLS, Minn.—Officials at Digi-Key Electronics plan to begin construction next month on a new building that's triple the size of its current facility in Thief River Falls.

The $300-plus million, four-story Product Distribution Center will provide an additional 2.2 million square feet of usable space, said Rick Trontvet, vice president of administration.

The project will also add another $500 million in economic output, or the value of goods and services produced by the company in the state of Minnesota, he said.

Expansion of Digi-Key's physical plant is needed to keep pace with the company's worldwide revenue growth, which "is more than double of others in our industry," said Dave Doherty, president and CEO of Digi-Key, in a news release.

In 2017, the global electronic component distributor reported 26 percent growth, with sales topping $2.3 billion, exceeding the $2 billion mark for the first time in its history.

The new addition "will be like three buildings under one roof," said Trontvet. "It's quite a massive project."

"We'd like to get started in the latter part of April," he said.

The structure will be linked to the company's current 700,000-square-foot facility by a second-floor walkway spanning Barzen Avenue on the city's south side.

The general contractor is McShane Construction Company, headquartered in Rosemont, Ill.

The project, which will involve about 20 subcontractors, is expected to bring 250 to 300 construction employees to Thief River Falls in the next three to four years, Trontvet said.

"We'd love to see as many local subcontractors be involved as possible," he said. "We are very focused and interested in seeing how many subcontractors we can engage in our project."

Subcontractors will include "the building trades and finish trades and material handling equipment," he said.

The state-of-the-art equipment to be housed in the new facility "will help us increase our efficiency."

Digi-Key has undergone nine expansion projects, but this one is by far the largest, Trontvet said.

As a result of this newest project, "the state stands to gain $184 million in new annual state revenue, and close to $2 billion over a 10-year period," he said.

Digi-Key is exceeding projected employment figures—100 jobs per year over the next 10 years, Trontvet said.

In 2017, the company increased its number of jobs, beyond a base of 3,200, by 170 worldwide, including 140 in Thief River Falls, he said.

A total of 3,380 employees work in the Thief River Falls location, a branch facility in Fargo employs 150, and about a 60 contractors and information technology employees work in Bloomington, Minn. Beyond those locations, a few employees across the U.S. work in their homes, helping with field sales.

Worldwide, most employees work in contracted sale centers or in the company's wholly owned subsidiaries in Hong Kong, Shanghai and Munich.

Digi-Key, which is headquartered in Thief River Falls, offers more than 6.8 million products from more than 750 manufacturers.

Trontvet cited the quality of the company's employees as crucial to its continuing success.

"The workforce is really what makes our growth possible," he said. "We have dedicated and service-oriented people, our team members."

Those qualities, "combined with a proven business model," have led to the company's worldwide revenue growth, Trontvet said.

"People make the difference, that's for sure."