Arctic Cat considers expanding its Thief River Falls plant

Arctic Cat Inc. is planning to expand its ATV and snowmobile factory in Thief River Falls, Minn., provided it receives local tax subsidies it has requested.

The Thief River Falls City Council expects to hold a public hearing on the matter May 12. The company has requested 15 years of property tax abatements. The county, which also must approve the measure, could piggyback on that hearing, officials said.

If approved, the manufacturer that has struggled in recent years will expand and upgrade equipment at its current factory in the northwest Minnesota city by about 70,000 square feet at a cost of roughly $25 million.

Christine Anderson, economic development director for Thief River Falls and Pennington County, said that Arctic Cat's request is supported by the mayor, the City Council and generally by residents in the area.

"The community knows the importance of Arctic Cat to our community and, as such, I am very optimistic that they will support it," she said.

Arctic Cat and the city have been having "confidential conversations" for the past few months about the company's need to expand and upgrade its factory. Arctic Cat informed the city in a letter Monday that Thief River Falls would indeed be one of the sites it is considering for expansion.

If Thief River Falls prevails, the city would gain 39 new hires and retain 150 production jobs that might otherwise move out of town, ­Anderson said.

Arctic Cat, which has its headquarters in Plymouth, reported in late January that nine-month profits fell 35 percent to $26.4 million. Nine-month revenue rose 2.5 percent to nearly $600 million in late January.

Arctic Cat's new CEO, Christopher Metz, told ­analysts at the time that the company has been hurt by the soaring U.S. dollar. That has specifically hurt export sales in Canada, where Arctic Cat generates about one-third of its sales.

Last year, the manufacturer also endured a shipment timing glitch and severance costs associated with the June departure of then CEO Claude Jordan.

Undeterred, Metz said that the company will grow via faster product introductions, several "bolt-on" acquisitions and new partnerships with parts makers.

If the company proceeds with its proposed factory upgrade and expansion in Thief River Falls, it should help make production more efficient and save money, ­analysts said.