In Thief River Falls, Minnesota, Teri Ivaniszyn, who now deals with trade compliance, wakes up nightly to consider tariffs affecting her company. Surprisingly, Ivaniszyn had never envisioned becoming a tariff expert but now finds herself doing late-night calculations to keep the business afloat. Working for DigiKey, a major yet lesser-known player in global tech, she juggles the challenges of tariffs in her efforts to maintain operations.
DigiKey, which resembles Amazon but on a smaller scale, specializes in electronic components and operates from a single warehouse in rural Minnesota. Established in this modest setting, the company employs roughly 3,800 individuals, which constitutes half of the region’s workforce. DigiKey initially created jobs by hiring farmers’ spouses, providing stable wages and health benefits, and has since grown considerably.
Dave Doherty, President of DigiKey, asserts the importance of their global shipments, emphasizing the local job creation resulting from these endeavors. However, the company faces the challenge of tariffs due to its extensive interactions with international markets such as China. In 2018, during President Trump’s tenure, significant tariffs were imposed, leading DigiKey to spend half a billion dollars. Ivaniszyn continues to struggle with changes in trade policies, which affect her work and lead to unpredictable impacts on tariffs.
DigiKey’s roots trace back to its founder, Ron Stordahl, a radio enthusiast from the 1960s. Stordahl’s interest in selling electronic components out of his own necessity eventually led to a business catering to engineers and hobbyists. This legacy continues today with the DigiKey warehouse, which boasts a size large enough to fit numerous sports arenas, maintaining significant operations from a modest town that grew alongside the company.
While DigiKey has adapted to shifting tariffs by setting up a foreign trade zone (FTZ), allowing for duty-free imports as long as they are not shipped to U.S. customers, the challenges persist. Doherty acknowledges the system saves tens of millions annually, not only in tariffs but also in related fees. However, maintaining the FTZ entails lots of paperwork and meeting specific supplier requirements, complicating the business.
The firm continues to navigate labor-intensive tariff matters, with some processes coming under considerable strain. Employees are redirected from their usual tasks to handle tariff issues, leading to operational inefficiencies and additional fiscal burdens when system errors arise, occasionally leaving DigiKey responsible for unclaimed tariff costs.
As DigiKey evaluates its strategic future amidst these economic challenges, the consideration of opening warehouses abroad remains a topic of discussion. Yet, Doherty maintains that DigiKey plays an essential role in the local community of northwest Minnesota.
DigiKey remains an important figure in Thief River Falls’ economic landscape. The company sustains jobs, contributes to population growth, and supports related ventures like the snowmobile factory by Arctic Cat. The town’s largest employer, DigiKey’s fate, is intertwined with its community’s vitality, navigating the intricacies of tariffs while contributing substantially to local prosperity.
In summary, although the landscape of global trade and economic barriers presents challenges, DigiKey remains a resilient force within its community, committed to addressing the complexities of tariffs while retaining its roots in Thief River Falls.
