Remote shipper serves global electronics industry

Thief River Falls, Minn., is more than a little off the proverbial beaten path, sequestered in the northwest corner of the state about 70 miles south of the Canadian border. It is home to about 8,500 people and the headquarters of a well-known snowmobile builder, Arctic Cat.

What may come as a surprise to most people is that Thief River Falls is also home to Minnesota’s third busiest airport in terms of freight traffic behind Minneapolis and Duluth. Powering this heavy freight traffic is Digi-Key Corporation, a fast-growing shipper of electronic components.

Digi-Key works with about 650 manufacturing partners and offers more than one million SKUs.

“We bring products in and ship to customers ranging from a hobbyist who wants one or two parts to companies that do high-volume productions and everything in between,” Dave Doherty, executive vice president of operations, says.

Digi-Key’s main campus is a sprawling 700,000-square-foot (65,032-square-meter) building with another 300,000 square feet (27,870 square meters) located nearby. It is here where pickers and packers locate products and send them off to customers. This goes on around the clock, every day. About 2,700 people work at the two facilities.

Due to Digi-Key’s huge volume of business, UPS and FedEx schedule special flights with small airfreight carriers such as IFL, Martinaire Aviation and Bemidji Aviation to Thief River Falls to pick up products. This arrangement has grown through the years.

“We have been working with Digi-Key since their beginning in 1972,” Mike Hunter, Minneapolis-based UPS district air manager, says. “Through their growth, our network serving them has grown to accommodate them. We have been able to make changes to accommodate their needs.”

Thief River Falls Regional Airport is a relatively tiny general aviation facility. Call its telephone number and chances are Joe Hedrick, airport manager, will answer the phone. The airport has improved its infrastructure over the years to handle increased freight traffic. This includes construction a few years ago of a 19,000-square-foot (1,765-square-meter) multipurpose hangar for loading and housing freight aircraft.

While the lion’s share of packages shipped in and out of Thief River Falls Regional Airport are related to Digi-Key, Hedrick says the entire region benefits from the company’s presence.

“There are fringe benefits when you have such a large shipper in town,” Hedrick says.

The airport is without passenger service. Hedrick says Great Lakes Airlines suspended its Thief River Falls operations in February due to a pilot shortage. He expects flights to resume later this year.

Ronald Stordahl founded Digi-Key in his hometown of Thief River Falls after obtaining his PhD in electrical engineering from the University of Minnesota. It has since grown to be the fifth largest electronic component distributor in North America and the 7th largest worldwide.

Doherty describes the electronics business as being cyclical through the years, but Digi-Key has outpaced much of the industry. The company has succeeded by embracing e-commerce and by maintaining a deep product offering. He describes the company as being a “toy store” for engineers, who comprise much of Digi-Key’s customer base.

“For us, it’s been better than OK,” Doherty says. “We have grown about 10 percent per year and are looking at 12 percent this year.”

Much of Digi-Key’s inventory comes from semiconductor manufacturers located in the Far East. Orders are taken from about 170 countries. An international operation, Digi-Key typically has 3,500 to 4,000 orders in the queue each morning. Workers will make 16,000 shipments in an average day with 18,000 on busy days.

Digi-Key has a strong partnership with the integrators. Doherty says the sophistication of, and partnership with, the integrators is a major key. He says FedEx is onsite stacking and packing. This kind of teamwork has allowed Digi-Key to quickly serve international customers. Orders are taken up to 8 p.m. for same-day shipment.

“We ship into Germany and we look like a German company because our customers there get their products two days after their order. They are thrilled with the service.”