Schwan Food Company is closing its distribution centers in Faulkton and Oakes, N.D., and will be building a 7,000-square-foot facility in Aberdeen.
Construction on the new sales and distribution center, at the corner of Enterprise Street and Capital Avenue Northeast in the Aberdeen Industrial Park, is expected to begin in July with completion later this fall, said Chuck Blomberg, communication manager for Schwan's.
The reorganization will allow Schwan's to increase efficiency and better serve its customers, he said.
The building will support about 25 sales and warehouse employees who will serve customers in north central South Dakota and south central North Dakota, Blomberg said.
"The new structure — which represents a more than $1 million investment into the community — serves as a hub for service to rural customers, as well as those who live in towns like Aberdeen, Britton, Faulkton and Oakes. The building will feature a new freezer and equipment that will make the facility energy efficient."
The Faulkton distribution depot, which opened in 1970, has 15 employees, and the Oakes facility has 12.
"Those employees are being offered positions at the Aberdeen facility or other locations within the company," Blomberg said.
It was not an easy decision to close the Faulkton and Oakes facilities, he said.
"We certainly loved operating from both towns; however, we had to make the right decision for our business as we looked to upgrade our facilities, operate more efficiently and better serve our customers in the area," he said. "We are committed to growing our business in the area, and this new building will better position us to serve our customers and grow. As we grow, the new facility can easily be expanded to meet our needs."
Dwight Hossle, a member of the Faulkton Economic Development Corp., said the closure of the Faulkton depot will be a loss for the town.
"Anytime a business leaves a small town, it is tough to replace those jobs," he said. "Those paychecks are important. Those people are buying groceries, paying utility bills and shopping at stores. They say a dollar spent in town turns over seven times, which may be an exaggeration, but it turns over at least four times. That is a big ripple effect, a big economic impact."
He said there might be a few Schwan's employees, such as route drivers, who will continue to work out of Faulkton, so the net job loss is not known yet.
"Even a job loss of 10 is a big deal in Faulkton," he said. "It is a much bigger deal than in Aberdeen, where there are 10 to 15 jobs lost or created almost every day."
The population of Faulkton is 736, and the population of Oakes is 1,856, according to the 2010 census.
Monte Zimmer, Oakes mayor, said the loss of jobs in his town is unfortunate.
"A lot of families in Oakes will be impacted," he said. "It hurts the community as a whole. It affects the school district, housing market and other parts of town. I know that business has been here as long as I have been here — more than 20 years — so it is a loss."
Schwan's is the the largest direct-to-home provider of frozen foods in the United States, according to the company website. The company markets and distributes more than 350 products, including its signature ice cream, pizza, choice meats, seafood and desserts.
The business has more than 400 sales-and-distribution centers throughout the nation.
Julie Johnson, executive director of Absolutely! Aberdeen and leader of Prairie Vision, which works to increase economic development in northeast South Dakota, said Schwan's is a very important contributor to the area.
"We encouraged them to take another look at Faulkton," she said. "We are very sensitive to Faulkton and the smaller towns in our region. We want to see them prosper. I can assure you that attracting businesses from smaller towns in the region to Aberdeen is not in our business plan. We have worked with Faulkton leaders, and they are doing some wonderful things there. They are doing very well as a community."
Johnson said she hopes the employees at the Faulkton and Oakes facilities will stay in the region and if possible work at the new Aberdeen facility.
"We would like to keep those talents in the region," she said.
The expectation would be that Capital Builders will hire local contractors for the construction work when possible, Blomberg said.