Digi-Key‘s Location Strategy The Pride of the North

So soll das neue Firmengebäude von Digi-Key bei der Inbetriebnahme im Juli 2021 aussehen.
This is how Digi-Key's new distribution center will look when it goes into operation in July 2021.

Currently, one of the largest construction projects in the USA is located in the remote northwest corner of Minnesota. In order to understand why Digi-Key is investing so heavily in its Thief River Falls headquarters, a visit to the site will help.

Success stories and carefully selected business figures - that's where company presentations usually begin. Dave Doherty, president and COO of Digi-Key Electronics, chooses a completely different path. To greet a small number of journalists who have travelled to Thief River Falls, Minnesota, he tells the story of a Washington Post reporter. In 2015, he had declared Red Lake County, just 30 km south of Thief River Falls, to be the "Worst place to live in America" after evaluating objective climatic and geographical data.

The anecdote is also anything but flattering for Digi-Key's neighboring headquarters, and Doherty openly admits that management has seriously considered moving operations to a less remote region than 160 km south of the Canadian border. But that would have been "like a heart transplant," where Digi-Key's specific strength could have been lost: "The people here make the difference," Doherty emphasizes, and then says the key sentence that sums up the mentality and pride of the American North: "We have turned the disadvantage of being in this region into an advantage.“

It was out of this spirit that the decision was made to invest 400 million dollars in a huge new building with a footprint roughly the size of 22 football fields. With a total area of more than 200,000 square meters, one of the most modern and largest product distribution centers in the field of electronic component distribution is to go into operation in July 2021. The high degree of automation of the facility is intended to increase productivity and compensate for location disadvantages. The ultimate goal is to make every order ready for dispatch within 20 minutes and to deliver worldwide within 48 to 72 hours, even with a further increase in delivery volume. The reason for the press conference is the completion of the concrete work. During the tour through the new halls, the enormous dimensions of the warehouse and distribution system, which are currently under construction, are impressive. The conveyor belts alone will reach a total length of around 40 km. For the fire extinguishing system with more than 50,000 sprinkler heads, the warehouse’s own water tanks had to be installed - otherwise the water supply of Thief River Falls would dry out during its operation.

A special team spirit

Although not as spectacular, some details in the current building are very revealing, because they tell something about the entrepreneurial spirit at Digi-Key. For example, the note in the elevator inviting people to a benefit event for an ailing employee. Despite an exceptionally good health insurance policy by American standards, including the company's own health clinic on the premises, money can be tight in individual cases. But their colleagues are always there to help. Just as they do in extreme weather conditions: Those who live closer to the company willingly step in for others whose way to work is particularly long or hazardous.

The UPS employees also see themselves as partners who not only congratulate the entire workforce in Thief River Falls (around 3,500 employees, more than 4,000 worldwide) on 50 million shipments on a large poster, but also spend a day serving pizza once a year. The close cooperation is important for both sides: Digi-Key can thus guarantee fixed delivery times despite the geographically difficult situation and, conversely, provides the logistics service provider with an enormous sales volume – there are approximately 800 packages that are shipped per hour.

It is said that "necessity is the mother of invention". For Doherty, the talent for improvisation that is so widespread in the sparsely populated North plays an important role in filling vacancies. This is because the permanent optimization process for hardware, software and work processes is largely based on suggestions from employees. The surrounding schools and universities have enough young people to cover the demand for skilled workers without any special recruiting effort. Digi-Key also offers a comprehensive internal training and continuing education program.