It was expected but not good news for St. Paul when Rihm Kenworth, one of America’s larger truck sales and service operations, moved out of the Midway this summer after 85 years, costing the city 80 good jobs.
However, it is not a net loss for job growth in the Twin Cities.
The Rihm family’s decision to move, after much deliberation, is understandable.
The Midway was no longer easily accessible for today’s large trucks. And the business faced the need to provide amenities for staff and visiting drivers.
Moreover, the Midway, like St. Paul’s Lowertown neighborhood, is a former industrial and warehouse district undergoing a transformation toward housing, entertainment and commercial uses.
“There wasn’t sufficient acreage of industrial-zoned land [in St. Paul’s Midway] that we needed that was accessible to truck routes,” said Vice President J.B. Rihm, great grandson of the firm’s founder.
Much of the Midway, bisected by University Avenue and railroad tracks, has evolved from an industrial area to housing and small businesses. And the Green Line light-rail tracks along University Avenue made it even tougher for trucks to get in and out of Rihm facilities.
The company, after years trying to work a deal with BNSF Railroad and adjacent property owners, threw in the towel last year.
Moreover, Kenworth had pushed CEO Kari Rihm, daughter-in-law of the founder, to move almost since she took over for her late husband in 2010.
So Rihm Kenworth in June finally headed to a much-larger headquarters and operations center in South St. Paul, on the south end of the Twin Cities; as well as a sister sales and service facility to the north, in Coon Rapids, closer to freeways and interstate trucking routes.
Rihm Kenworth sold its two Midway locations to commercial buyers for $2.8 million, and invested $28 million in more acreage, larger buildings, technology and otherwise expanding the business and adding people in Coon Rapids and South St. Paul.
“We are still a member of the St. Paul Area Chamber of Commerce,” noted Kari Rihm. “We’ve built our new offices with our people in mind and the facilities help us improve our service and offerings for our customers throughout Minnesota and Wisconsin.
“It creates a better environment for the drivers, but also makes our shop more efficient. We need to capture more profit to continue to invest in the company,” she said.
The buildings will boost recruiting thanks to amenities like nicer break rooms, a wellness room and training rooms that accommodate 75 people for industry events. ”We’ll let customers and community partners use them,” Kari Rihm said.
Rihm Kenworth operates from 21 locations in the Upper Midwest, employs 340 workers, sells 1,500 trucks a year for $100,000 to $150,000 each and leases and services many more.
“Trucks in the 1930s were a third the size,” J.B. Rihm said. “Our old facility was a two-story building, with a body shop in the basement. We had two garage doors, trucks at every angle and only 12 service bays. Now we have drive-through 100-foot service bays, two trucks to a bay. Or a truck and trailer. In South St. Paul we have 20 service bays and 17 in Coon Rapids, plus space for a body shop and painting. In each facility we also have a 50-foot wash bay.”
The Midway, meanwhile, is not losing momentum.
In fact, it’s growing, but with a different mix of businesses, from a new bank to a Major League Soccer stadium that has inspired developers to add hundreds of apartments, built or planned, and related development.
Cecile Bedor, who was St. Paul’s planning and development director for several years and who also worked in economic development for Greater MSP, the regional economic development organization, said commercial and industrial districts evolve.
She noted that we have a “regional economy” that allows for economic movement as times dictate.
For example, when Ford Motor Corp. closed its plant in St. Paul’s Highland Park neighborhood in 2011, fewer than 20 percent of the plant’s employees lived in the area. Hundreds of millions in replacement housing and commercial development now planned for the site should employ a few thousand in temporary and permanent jobs.
In the Minneapolis warehouse district, now known as North Loop, and where I loaded and unloaded trucks on small docks and narrow alleys nearly 50 years ago as a high school kid, the warehouses were redeveloped over the decades into housing, retail, restaurants and technology and marketing firms. The warehouse district moved to Brooklyn Park, which offered huge warehouses, large docks and access to major freeways.
And industrial businesses aren’t all bailing on Midway.
Scott Tankenoff of Hillcrest Development is renovating a 300,000-square-foot industrial building just off University and Fairview Avenue N.; an engineering firm will renovate one of the Rihm buildings; and specialty manufacturers and other blue-collar employers abound, particularly in the Midway-Energy Park area. On the southern end, St. Paul-based Wellington Management and Minneapolis-based Ryan Cos. have multimillion-dollar, residential-commercial projects in the works.
But the Midway will not be returning to “the Ford Century,” the golden era when auto showrooms and repair shops dominated University Avenue until the post-World War II move to the suburbs commenced.
Neal St. Anthony has been a Star Tribune business columnist and reporter since 1984. He can be contacted at firstname.lastname@example.org.