Nortech Systems to Close Manufacturing Plant in Merrifield
Nortech's Twitter account

Nortech Systems to Close Manufacturing Plant in Merrifield

The move means layoffs for about 70 employees.
Nortech's Twitter account

Maple Grove-based Nortech Systems Inc. announced Tuesday that it will close its production facility in Merrifield, a township close to Brainerd. A filing with the Minnesota Department of Employment and Economic Development indicated that the shutdown would affect approximately 70 Nortech employees.

The company disclosed the news in its second quarter earnings report on Tuesday: “To further improve operational efficiencies and lower overhead costs, the company announced that it is closing its Merrifield, Minnesota, production facility, shifting wire and cable assembly, system-level assembly and printed circuit board (PCB) manufacturing to Nortech’s other Minnesota locations.”

The company has other manufacturing facilities in Bemidji, Blue Earth, Milaca, and Mankato. Nortech also has operations in Mexico and China.

According to filing with the state, the plant will close on December 31. Layoffs will begin on October 14. Employees will be offered jobs at other Nortech facilities in Minnesota.

Nortech is an electronic manufacturing services company that makes products such as complete medical devices, printed circuit board assemblies, and wire and cable assemblies to the design specifications of its customers. The company has clients in the medical, aerospace and defense, and industrial sectors.

Nortech is publicly traded. For 2019 the company reported sales of $116.3 million and a net loss of $1.2 million. At the end of 2019 the company indicated in its annual financial filing that it had 687 fulltime employees and 97 part-time or temporary employees.

In its just-released numbers for the second quarter, Nortech reported sales of $26.5 million, down 3 percent from the second quarter of 2019. The company almost broke even for the quarter, reporting a net loss of $123,000.

At the same time Nortech announced entering into a sale-leaseback agreement with North Dakota-based Essjay Investment Co. for its manufacturing facilities in Bemidji and Mankato in a move to bolster its financial position.

Essjay will pay $6.3 million for the properties; Nortech expects its net proceeds to be about $5 million and will sign 15-year leases for the facilities.

“Our balance sheet continues to strengthen, and the sale leaseback and plant consolidation will provide significant liquidity to make further investments in the business. Our goal through these essential moves is to enhance Nortech’s ability to operate through the current COVID-19 pandemic and succeed long term,” said Jay D. Miller, Nortech’s CEO and president, in a statement.