MDI will break ground on a new plant near Hibbing, Minn., as part of a $9 million expansion of its northern Minnesota operations.

The company recently purchased land for the new 35,000-square-foot plant that will replace MDI's existing 100-year-old building in Hibbing and will cost more than $5 million. The groundbreaking is scheduled for early June.

CEO Peter McDermott said the construction is necessitated by business growth and the need for better working conditions for employees of the nonprofit contract manufacturer.

The 50-year-old light manufacturer and packager employs more than 300 workers, about half of whom have disabilities.

McDermott, who came to MDI after a career in industry and economic development, is a proponent of a workforce that integrates the developmentally disabled with other workers.

McDermott said the expanding "social enterprise" business expects employment over the next three years to grow up to 1,000 people, including contractors, about half of whom will have physical or mental disabilities.

The expansions "will increase our competitiveness in the market and ultimately lead to more jobs," McDermott said.

The company has acquired a high-speed die cutter and in-line printing capabilities for its nearby Grand Rapids, Minn., facility.

The tab was more than $1.5 million.

MDI also recently completed an expansion in Cohasset in northeastern Minnesota through the purchase of a 110,000-square-foot building that cost more than $2.5 million.

The expansions are being financed through MDI's reserves, the Blandin Foundation and the Iron Range Resources and Rehabilitation Board.

MDI, originally Minnesota Diversified Industries, has its corporate headquarters and a plant in northeast Minneapolis. It provides packaging solutions and environmental services for customers, including corrugated plastic containers for the U.S. Postal Service, its single-largest client. It also makes products such as recycling containers and tree wrap.

The company paid out more than $10.5 million in wages in 2016, with an average wage of $11.17 per hour for employees with disabilities who averaged 31 hours a week of work. In addition, year-end bonuses totaled 8 percent of pay.