CALEDONIA, Minn. – A small town loses a major employer. It's a story as old as capitalism.
But a planned factory closing in this southeastern Minnesota city has set off alarms all the way to Washington, D.C. That's because Miken Sports makes baseball helmets and bats — and is owned in part by Major League Baseball (MLB). The factory closing will eliminate about 80 jobs over the next 18 to 24 months, sending some to Missouri and others to China.
The idea of America's pastime sending jobs to Communist China has members of the state's congressional delegation crying foul. In a letter to MLB and the California-based private equity firm that own Miken, U.S. Sen. Tina Smith, D-Minn., took a slugger's swing at the plan, expressing "outrage" that organized baseball would send jobs overseas.
"This type of transaction, in which wealthy private equity investors buy longstanding U.S. companies only to shut down American plants and move jobs overseas, has left countless Midwest communities devastated while wealthy private equity investors … reap a larger and larger share of our country's income and wealth," Smith wrote.
Area residents echo Smith's opinion.
"It's really devastating and frustrating. People are angry," said DeWayne Schroeder, mayor of this city of 2,800 residents about 160 miles southeast of the Twin Cities. Schroeder said the company didn't tell the city of its plans, which leaked a month ago.
"It was quite a surprise," he said. "We just heard it on the street. There was nothing official sent to the city. Word of mouth got out, and then we contacted them and found out what was going on."
Sitting over afternoon coffee at Elsie's on the city's main drag, Charlie Kruse said the whole thing leaves a bad taste.
"They started here; then it gets sold, and they move it. That ain't right," said Kruse, of nearby Eitzen.
"We'll miss the jobs," said his buddy Nick Stadtler, a Caledonia resident. Baseball, he warned, "will lose their fans in this area. That's for sure."
An MLB spokesman said the decision was made independently by Rawlings Sporting Goods, another owner of the factory, without input from organized baseball. MLB owns "a small minority interest" in Rawlings — less than 20%, the spokesman said, adding that the batting helmets will continue to be U.S.-made.
The vast majority of jobs — 59 — in Caledonia will go to China, according to Smith's office.
Rawlings and Seidler Equity Partners, the other owners of the factory, did not respond to requests for comment.
Baseball's big tax breaks
Miken has been in Caledonia since 1999. Before the COVID-19 pandemic, it employed about 150 people, but the factory went from two shifts to one and cut its workforce almost by half during the past year. Most of the workers make $13 to $17 an hour, although Miken has offered a $2-an-hour raise to workers who will commit to staying until the shutdown is complete.
The company has been a good citizen, local residents say, generously supporting youth sports teams and community events.
Some officials are holding out hope that they can persuade the factory owners to reconsider the closing.
"This is a gut punch," said state Rep. Greg Davids, R-Preston. "I can't get my arms around the fact that America's pastime is moving jobs to Communist China." Calling himself "the eternal optimist," Davids urged other officials on a recent teleconference call to keep up the pressure.
"What's the show, 'Jerry Maguire'? Follow the money? That's what this is about," he said.
Miken has said it expects to save $4 million to $10 million by closing the factory, a sum that Smith and others said is tiny compared with the resources of its owners.
Smith noted that MLB and its owners have received billions of dollars in public subsidies for stadiums, as well as federal tax breaks on stadium bonds. In addition, MLB has long benefited from an exemption from federal antitrust laws granted in a U.S. Supreme Court ruling almost a century ago.
But Smith stopped short of threatening legislation that would strip MLB of those benefits. "They should be staying there because it's the right thing to do," she said.
Other employers are hiring
The company also has gotten local assistance, including tax abatements, said Allison Wagner, director of the Houston County Economic Development Authority.
"We feel like we have helped them time and again," she said.
Although the loss of any employer is painful for a small town, Caledonia and Houston County have many other companies that can pick up the slack, Wagner added.
"For a small community, Caledonia and Houston County have major employers that are operating on a national scale," she said. "We're very proud of that."
Sno Pac Foods, Caledonia Haulers and medical socks maker SmoothToe are just a few of the area's large employers, and all are hiring, Wagner said.
"We do have enough places to place all 80 workers if needed," she said.
The key will be helping people find jobs so they stay in the community, she added. If workers decide to move to bigger cities nearby, such as Winona, Minn., or La Crosse, Wis., the ripple effect will do damage to Houston County's economy and community institutions, such as schools and churches.
Southeast Minnesota's economy is healthy now, said Mark Schultz, a labor market analyst for the Minnesota Department of Employment and Economic Development (DEED). The region's unemployment rate of 3.6% is slightly below the statewide rate of 4%. And among the 13 regions that DEED uses to track the economy, southeast Minnesota's median hourly wage of $21.13 — meaning half the people make more and half make less — ranks as the third-highest.
Given the current labor shortage, the Miken closing could be a silver lining for other employers, he said.
"The company going away is not a positive thing," Schultz said. "But that will supply labor for other businesses that are looking to hire."
Dee Slinde, who helps train and place workers for the nonprofit group Workforce Development Inc., said it's difficult to lose an employment option for her trainees, many of whom come from difficult backgrounds, including some who have served prison terms.
"In a rural area, coming by good jobs is an important thing. And Miken had good jobs," she said. "It's ludicrous that they would pick up their toy bag and ship it to China."