MnStar Group, a custom manufacturer of industrial wire harnesses on the Iron Range, is on track to double in size as it takes advantage of new business caused by the pandemic disruption of traditional supply chains.
Wire harnesses made in Bovey go all over the country to install in everything from fire trucks and snowplows to farm equipment, utility trucks and boats. With the harnesses in place, power and data is transferred between components.
"Until I went to visit this company, I would have thought a wire harness was something you put on a horse," CEO George Klus said. "Wire harnesses are in every engine, every motor that we use today, and I got very excited about that."
Klus bought the company in September 2020 through his firm Highland Holdings LLC after watching employees intricately stringing cut-to-order wires into bundles, attaching bundles to connectors and braiding protective material over wire bundles.
Since then, the company has hired a sales team, stepped up marketing and fought to gain new customers seeking U.S.-made products in response to supply chain issues.
It has grown rapidly since, doubling revenue from 2020 to 2021 and on pace to double it again this year, said Klus, who declined to specify the company's sales. The workforce has grown to 43 employees, from 28 when Klus bought the company.
Employment could reach 60 to 70 workers in 12 to 15 months.
The company plans to build a 30,000-square-foot facility next to the company's existing 24,000-square-foot plant in Bovey. It should be done by summer 2023, Klus said.
The company — which began 30 years ago in a Grand Rapids, Minn., basement — also has signed a purchase agreement to buy another wire harness company. While Klus did not divulge details, he said it was outside Minnesota.
While MnStar has invested in new wire-cutting and equipment to improve productivity, employees still string wires by hand on large pegboards to build each harness.
That quality control appealed to Donna Stolt, a buyer at TBEI/Crysteel Manufacturing, a Lake Crystal, Minn., company that makes dump bodies for landscape, military, construction and other trucks and vehicles. Stolt began ordering from MnStar a few months ago when other domestic suppliers couldn't deliver because of labor and materials shortages.
She now buys more than 70% of the wire harnesses Crysteel needs from MnStar.
"MnStar pulled through for us and got us harnesses to keep going," Stolt said. "And they didn't do any shortcuts. Their quality is very good. They were able to do it in a timely manner. We're back up and running for harnesses."
This month, Fox Business Channel will feature MnStar in a segment on its "Manufacturing Marvels" series.
The manufacturer was able to put in COVID-19 safeguards and continued production without interruption until last summer, when connector supplies tightened and prices soared, according to Tammy Wersal, vice president of operations.
The company had to scramble just like some of its customers did.
"When everybody went back to work in mid-May to June, the supply chain dried up," Wersal said. "Then they were just panic buying and buying it all up. Prior to that, we could get anything we wanted and as fast as we wanted it."
A standard connector went from $1.60 to $22, Wersal said. A bigger one skyrocketed from $15 each to $90 to $120.
The connector market has since leveled out some, she said.
Supply chain issues, on the other hand, have brought in new business.
MnStar doesn't always have what they need, so the company's prototype business also has grown dramatically, Klus said. That has MnStar Group looking to add to engineers.
"I could hire three to four of them today if we could find them," Klus said.
"These are all custom-made specific for our customers for their needs," Wersal said. "There is no way to mass produce them. Our employees are very proud of every single harness they produce."
While the wire harness business is new to Klus, he traveled to several small towns when he was an executive in the health care business.
"I'm a big believer in small communities," Klus said. "When I look to buy a company today, I'm going to keep it in that community. I want to build upon what they have. I like to see things grow and get bigger and bigger. That's when I have fun."
Todd Nelson is a freelance writer in Lake Elmo. His e-mail is firstname.lastname@example.org.