Peter McDermott is a veteran accountant, business manager and industrial-development executive who took over then-struggling Minnesota Diversified Industries (MDI) in 2008. MDI, nearly 50 years old, employs more than 500 people with disabilities and others in contract manufacturing, packaging, recycling and environmental services at plants in Minneapolis and northern Minnesota.
Q: What is your background and how did you become CEO of MDI?
A: I started my career as a CPA in St. Paul and moved to Grand Rapids in 1982 for a position in finance at Blandin Paper Company. Blandin was sold in 1997. In 1999, [when he was CFO] rather than move to the corporate office in Chicago, I took the CFO position at Cirrus Design in Duluth. I left Cirrus in 2002 and started my not-for-profit career with Itasca Economic Development in Grand Rapids. I was president [in 2008]. Itasca Economic Development supported MDI’s growth of its Grand Rapids facility. MDI had interim management; I was attracted to the mission.
Q: What is MDI’s mission and what have you and your employees accomplished?
A: To serve people with disabilities by offering inclusive employment opportunities and services. Our primary businesses are integrated plastic packaging manufacturing and assembly … with additional business in recycling and environmental services. We are a social enterprise, so MDI operates like a for-profit business, but we are always accountable to our mission.
Q: Please quantify your growth.
A: We’ve grown from 123 employees in 2009 to 297 and 231 contract employees in August 2016. We’ve added two new facilities to bring the total to five facilities in the Twin Cities, Grand Rapids, Cohasset and Hibbing areas. Revenue has grown from $11 million in 2009 to $45 million in 2015. Approximately half of our employees are people with disabilities. At MDI, people with and without disabilities work side by side, producing the best possible products for our business-to-business customers.
Q: How you have diversified from your heavy reliance on the U.S. Postal Service?
A: USPS is a great customer. Those volumes vary from year to year — hence our need for contract employees. We know what we’ve got from USPS through December, but we don’t know after that. Commercial sector growth [is] a focus for us. We’ve grown our non-USPS business from $2 million to $8 million in the past seven years. We’ve also diversified our product and service offerings to include polypropylene plastic, protective foam packaging, recycling and more.
Q: Please elaborate on your commitment to employees with developmental disabilities.
A: MDI targets an integrated workforce — 50 percent with disabilities. In 2015, MDI supported 280 employees with disabilities; 66 percent had developmental disabilities, 20 percent physical and 14 percent mental health disability. We have employees with tenures of … up to four decades. We also offer job training and placement services. Our internal employment-services team members meet with employees to discuss professional development and help meet work goals. If this means an employee leaves MDI for another company — better pay or opportunities — we see that as success.
We do 51 hours of orientation and training over a period of time for our new people. We pay $9.50 up to $13 an hour for floor workers, and some benefits. We also paid a cash bonus at the end of last year, about 13 percent on top of hourly wage.
Q: What’s the benefit of employees with and without disabilities working together?
A: Inclusive, integrated work environments such as MDI … break down stigma and discrimination among employees, the community and the wider business community. For employees with disabilities, an integrated work environment can be hugely empowering, socially and financially.
Q: Please discuss your plant growth.
A: The move to the new facility in Cohasset … improves working conditions for our employees. We moved our Deer River-based recycling operations from a facility that was cramped with little natural light to a modern, spacious location. Second, it gave us room to grow our operations and jobs. In 2013, we moved the Twin Cities location to a larger facility and renovated the [northeast Minneapolis] facility to improve working conditions. In 2015, we expanded it to 49,000 square feet to accommodate business growth. We have also begun the process of adding products. This will open new markets to us, help diversify our revenue streams and allows our employees to grow their skills as they advance to more complex work.
Q: A Wilder Research 2016 study found that for each dollar donated or spent on MDI, MDI provides a “social return” of $4.87. How?
A: We believe we have an excellent model. The Wilder report supports that notion. The employment rate of working-age people with disabilities in Minnesota is 44 percent. This doesn’t need to be. A job for a person who might otherwise be unemployed can mean everything. It means social interaction and inclusion. It allows them to support themselves, reducing burdens that might fall on family, public services and taxpayers.
Our revenue allows us to operate and pay employees at least minimum wage, and offer benefits. Donations help support expansion and growth, as well as employee job placement and coaching services. We believe you can run a successful business and fulfill important social needs. MDI has been a pioneer in the social enterprise movement for over 50 years. It requires us to be committed to our mission first — to provide good jobs in supportive workplaces for people with all disabilities. That mission is reliant on us running our business well.