On one site, two companies thrive

  • May 27, 2013 - 8:39 PM

– Digi-Key is a quiet warren of offices and warehouses, a sophisticated packaging and shipping operation that sells on behalf of other companies.

Arctic Cat is a raucous, jovial factory where workers shout and reach for tools as snowmobiles or ATVs in various stages of assembly sail down the line.

The two companies sit right next to each other on the southwest edge of town.

Digi-Key’s headquarters are in what used to be called the “head shed” at Arctic Enterprises — before the company’s rise, fall and resurrection into Arctic Cat. A four-story, A-frame lobby and museum used to be attached to the front of the building. Snowmobiles were on display, and Arctic threw parties for dealers there in the glory days.

The A-frame burned to the ground in 1973 and the business went bankrupt in 1981, sunk by a saturated snowmobile market and an economic downturn. Digi-Key bought the head shed and moved in next to the silent factory. It’s been there ever since.

Arctic, meanwhile, was revived in 1983 by former employees, shareholders and dealers. The company struggled when the recession hit, but it has since recovered nicely.

“Our bank had just left us, our flooring company had just left us, our gross margins were down in the midteens, our sales were in the tank, we had 11 million dollars of cash left and as we’re fond of saying, other than that, things were great,” said CEO Claude Jordan, who has been with the company since 2008.

Now the ATV business is growing, the company is building snowmobiles for Yamaha and it has opened an engine factory in St. Cloud. Revenue for the 12 months ending March 31 was $671 million, a 15 percent increase over the same period a year earlier.

At the factory, workers set molds for foam seats, paint skid spars and wrestle treads over wheels. At the beginning of the line, workers put the finishing touches on the two-stroke engines for an XF800 Sno Pro. The factory makes three different models a day. Paul Fisher, the vice president of operations, said 60 percent of the plant’s supply chain is in Minnesota, Wisconsin, North Dakota and Iowa.

Fisher has worked in 15 different factories in his career, he said, and he praised the northwestern Minnesota workforce.

“Willing to try anything, no resistance to change,” he said. “Very flexible. If we need to come in at 6 and leave at 2:30 because of a supply component — I’ve been places, where, unh-unh — but here, no problem.”

Adam Belz

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