Digi-Key unveils big expansion in a small town

The 1-million-square-foot expansion at Digi-Key is underway.
The new Digi-Key warehouse facility under construction.
Peter Cox | MPR News

A northwestern Minnesota company has opened a $400 million warehouse expansion to meet growing customer demand.

Digi-Key sells millions of electronic parts, shipping more than six million orders a year to 180 countries.

Digi-Key President Dave Doherty said the new warehouse provides 2.2 million square feet of additional space.

"We wanted a facility that in this first phase of what we designed can carry us out the next 10 years,” said Doherty. “In 2021, we grew 64 percent from roughly about $2.7 billion to $4.6 billion (in revenue)."

Doherty expects continued strong growth, but at a slower pace.

"This year, we'll ship 6.5 million boxes out the door to 180 countries,” he said.

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The process might be easier for employees with the new, highly automated warehouse addition.

Packages of filled orders roll off a conveyer belt at Digi-Key.
Packages of filled orders roll off a conveyer belt in the in the older warehouse at Digi-Key. The company will ship about 6.5 million packages this year.
Brian Bakst | MPR News

There are 27 miles of automated conveyors inside the new building, and robots will play a big role in picking the parts that make up a customer’s order.

“We think there's anywhere from a 25 to 30 percent productivity improvement,” said Doherty. “But our folks here, nobody's worried about that causing a reduction in staff because of the kind of growth rates that I just quoted.”

The footprint of the new warehouse would cover 22 football fields, and it’s four stories.

Digi-Key started in 1972 as a small catalog mail order business. It now ships to nearly 900,000 customers in 180 countries.

The company currently employs 3,600 people in Thief River Falls and another 1,600 at other locations.

The company received a $40 million grant from the state of Minnesota which requires the company to add 1,000 jobs over ten years. Doherty said more than 600 workers have been added since construction on the new warehouse started in 2018.

Worker amenities were integrated into the planning, said Doherty, including food service, quiet rooms for breastfeeding mothers and a community garden where workers can adopt a plot.

“Your people are your differentiator, there's no product that we sell that's exclusively offered only by Digi-Key,” said Doherty, who pins much of the companies success on customer service.

“I'm from the East Coast and I've got some relatives out in the Midwest, but it wasn't until I came here that I can appreciate that difference in pride, work ethic, commitment. They all sound like buzzwords, but it lives here.”

Digi-Key currently employs 3,600 people in Thief River Falls and another 1,600 at other locations, including a warehouse in Fargo, an office in Bloomington, Minn., and global support offices in a dozen countries.