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'It's been quite a ride' Perham community and business leaders celebrate growth, address current worker shortage

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Perham’s had plenty to celebrate over the past decade.

The community has grown remarkably, with more than $140 million in new developments since 2004, and it’s showing no signs of slowing down. In fact, last year was a record year for the city, with nearly $45 million in building permits issued – more than in the previous four years combined.

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The growth started at the business and industrial level, and, with every new company or expansion in town, new jobs have been created. This has brought new people and a need for additional housing and services.

As Perham moves into the future with high hopes of continued growth, city and industry leaders are keeping their eye one crucial component: people. The key to the community’s continued success, they say, will be its ability to recruit and retain new workers.

Representatives of the Perham Chamber, KLN Family Brands, KitMasters, Swan Machine, Arvig, Industrial Finishing Services, and local government all noted the need for more workers at the Perham Economic Development Authority’s annual retreat, held at Wild Oaks last Wednesday.

The four-hour event was an opportunity to look back at Perham’s economic accomplishments over the past 10 years, and then look ahead at what’s yet to come.

Economic development

Perham’s Economic Development Authority Director, Chuck Johnson, started things off at the retreat with a recap of how the city has supported and helped finance commercial and industrial growth in recent years.

In the last decade, he said, the Perham EDA has originated 25 loans through a federal relending program distributed through the United States Department of Agriculture. Those loans have totaled more than $2.5 million.

In that same amount of time, a revolving loan fund through the Department of Employment and Economic Development (DEED) has resulted in 18 loans for Perham businesses, totaling more than $1.7 million. Other loan programs, such as the West Central Initiative Fund, Perham Area Loan Pool and Arvig Revolving Loan Fund, have provided more than $1.6 million.

In addition, Tax Increment Financing has been used to help 30 businesses expand, and 10 businesses have benefitted from the JOBZ program.

Rehab funds awarded to the city in 2010 by DEED’s Small Cities Development Program have been used to rehabilitate 10 homes, 10 rental units and 11 businesses.

Perham has also received more than $4.1 million in federal grants toward wastewater treatment facility upgrades, street redevelopment, the new interchange by Perham Health and other major infrastructure projects.

Johnson also shared building permit numbers. Since 2004, a total of 1,261 new permits have been issued. He said last year’s record-high $45 million in permits was due to “a confluence of several big projects that came about,” including a major expansion at Tuffy’s Pet Foods, a record number of new multi-family housing developments and others.

“It’s been a huge year,” he said.

Past and present success

Speakers at the retreat shared success stories about their businesses and the Perham community in general.

Arvig’s Dave Schornack, for example, said that, since 2001, Arvig’s number of customers has more than doubled. There have also been numerous acquisitions, and the company’s construction arm is diversifying and expanding.

All this has helped the company branch out into new service areas, including the Twin Cities metro, Bemidji, Rochester and many others. Today, Arvig is the largest independent telecommunications provider in Minnesota. The company has grown from having 255 employees in the year 2000 to more than 700 today.

KLN Family Brands, too, has experienced remarkable growth in recent years, as most local residents are already well aware. The company is Perham’s largest employer, with 1,500 people on staff.

Owner Kenny Nelson, who is 72 years old now, said the family’s goal is to be a $1 billion company by the time he’s 80. At the rate the company’s been going, that’s likely to happen.

KLN has gone through a series of changes and growth spurts in its history. Its latest expansion, a 600,000-square-foot, $40 million project at Tuffy’s, has “kind of snuck up to $60 million,” according to Kenny.

That’s the largest project price tag Perham has ever seen. When the expansion is done, the pet food-making facility will be completely germ-free and state-of-the-art.

“This plant’s going to be the nicest plant in the United States,” Kenny said.

Chuck Hofius, CEO of Perham Health, also shared a story of significant growth. The health care facility is 10 times bigger than it was 10 years ago, he said.

Last year alone, the hospital hired three new health care providers, signed three more for the future, welcomed four new board members, expanded an impressive number of services for its patients, added a 24/7 ‘telepharmacy,’ honed its patient-centered model of care, and much more – all while increasing its revenue.

Income levels are higher than projected, Hofius said, and, not taking the new hospital building debt into account, the hospital is in the top 25 in the nation, in terms of revenue.

Steve Campbell, of Industrial Finishing Services, said his company can relate. IFS has been experiencing rapid growth in recent years, with business always on the rise and significant building expansions currently underway.

“It’s been quite a ride,” he said.

IFS is expected to be a $50 million company by the end of 2015, Campbell said, up from about $6 million just five years ago.

Also celebrating rapid growth is KitMasters. The company added 56 new employees last year, and is still looking for more, according to owner Darrin Swanson.

The company, which started in 1996 out of a downstairs bedroom in the Swanson family home, has only increased its sales and size over the years. Today, KitMasters operates out of a large state-of-the-art manufacturing facility in Perham’s Industrial Park, shipping to more than 1,200 locations around the world.

As these and many other businesses in town have grown and evolved, one of their support systems, the Perham Chamber, has grown and evolved, as well.

Since 2007, according to Nick Theroux, the Chamber has become a much stronger “promoter of Perham” than it had been previously.

He said the organization has improved financially, structurally and operationally in recent years, leading to a 64 percent growth in membership and revenues that have increased by 40 percent.

Nearly $100,000 of these revenues will have gone into promotion and advertising for the community and community events by the end of this year. Those efforts help to attract more tourists to Perham, bringing positive attention to the community and more customers through the doors of local businesses.

Future plans

None of the speakers at the retreat said their companies would be slowing down anytime soon. Most said further growth was inevitable, and only impeded by the current worker shortage.

IFS, for example, has had to turn some work down recently, simply because there weren’t enough workers to do it. Campbell said the company will be utilizing more robotics in the future, partly due to the struggle to find employees.

“We have got to get people to live here,” he said.

Swanson, of KitMasters, also noted the need for more workers. His company is making plans to diversify beyond their original fan clutch product, to get into belt tensioners.

“It’s a pretty big market,” he said of the tensioners.

“Our business could double again in the next couple years.”

Continued growth is also anticipated at KitMasters’ sister company, Swan Machine, where an expansion is likely to happen soon and “we look forward to a great future.”

The key to that, though, will be people.

The same is true for KLN, where more growth lies ahead but finding workers has been a big issue.

Kenny’s son, Charlie Nelson, said Barrel ‘O Fun, Tuffy’s, Kenny’s Candy and Nutheads will all continue to produce more and more new products in coming years, and they’ll need more hands to do it. Like IFS, the company is looking into the possibility of robotics to help cover the worker shortage. KLN is also doing quite a bit of promoting and recruiting “to get people to Perham,” Charlie said.

At Arvig, “We’re excited about the future,” said Schornack.

The company plans to open a new office in Madison, Wis., soon, and will continue to diversify and expand its fiber transport business, especially in metro areas. Arvig will also continue to look for more acquisitions and will explore the addition of data storage.

The company is looking to hire, but, like the others, is having problems finding people. Schornack said that, in order for Perham to grow in the future, the community needs to draw more people to town; a diverse group of new people, every year. He said Arvig is moving some of its offices out of Perham, “because there just aren’t enough people.”

Hofius didn’t specifically mention a problem with finding workers at Perham Health, though that’s an issue all rural hospitals face, at least to some degree.

He did say more growth is expected. Perham Health’s clinic will soon need to be expanded, for example, and a dementia-focused assisted living option may be offered in the foreseeable future.

The health care facility’s current contract with Sanford Health will expire in about a year and a half, Hofius said, and hospital leaders are already discussing whether that relationship will continue as-is into a new contract, or change in some way. He hoped there would be an answer to that within the next year.

As for the Perham Chamber, Theroux said Chamber leaders are counting on continued success community-wide. According to Theroux, the chamber is planning to expand its membership, utilize technology for future marketing efforts, and research demographics to better target and reach customers.

He also pushed the business owners at the retreat to consider keeping their doors open on Sundays.

“We need to be open for business,” he said. “If we’re going to spend $100,000 to bring people here, we need to be open when they get here.”

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Marie Johnson
Marie Johnson (formerly Nitke) came to the Perham Focus after several years as the Education and Arts & Entertainment Editor at the Herald-Review of Grand Rapids, Minn. She lives in rural Ottertail with her husband, Dan, and their spunky yellow lab, Louisa.
(218) 346-5900 x228
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