Fastenal CEO Dan Florness announced the company’s plans to construct a new office building on Winona’s riverfront that would host 400-600 employees. A vibrant downtown benefits the community and Fastenal, Florness said.
by CHRIS ROGERS and SARAH SQUIRES
Fastenal announced plans on Friday to build a new office building housing 400-600 employees on the riverfront in downtown Winona. “I can’t think of a better place for a community to see development than down along the river,” CEO Dan Florness said. “Anytime you can put 400-600 people in the downtown area with good jobs, I think what’s going to follow that is more retail, more jobs, and more restaurants,” Mayor Mark Peterson said.
Friday’s announcement came after months of speculation in Winona over why a nondescript Indiana company, Rock, LLC, quietly paid over $3 million in cash for a handful of riverfront properties near Washington Street — at times paying quadruple the appraised value. “I think if you’re spending that kind of money on land, you must have a heck of a project behind it,” Winona County Assessor Steve Hacken said of the purchases earlier this spring. On Friday, Fastenal leaders revealed that Fastenal was behind the deals and its new office building was that “heck of a project.” Florness and Fastenal executive Dana Johnson described the general plan, but said many details have yet to be determined, including exactly where 400-600 people would park. Construction is slated for late 2019 or 2020.
A crowd of local business leaders and city officials applauded the announcement. “To me, it’s just so great that a Winona company is willing to continue investing in the community,” businessman Jerry Papenfuss said. “[Fastenal] could easily say, ‘Well, we can’t find labor; we need to diversify.’”
“I think for over 30 years I’ve been having people say, ‘There’s nothing going on in downtown Winona, and I don’t hear that anymore,’” Peterson said.
For his part, Florness said that his company needs somewhere to put all of the new jobs it is creating, it was just a matter of deciding where that should be. Florness said that Johnson, who also oversees the city’s downtown development efforts as a member of the Port Authority Commission, pitched him on investing in downtown Winona. Having a vibrant downtown helps everyone, Florness stated. “It makes for a better community; it makes it easier for us to recruit,” he explained.
The new office will not replace Fastenal’s headquarters on Theurer Boulevard — Florness’ desk is staying put, for instance — but it will help accommodate the company’s growing staff. As the company continues to add jobs, “Each of our buildings are getting tighter everyday,” Florness said. Fastenal officials stated they have not decided exactly which departments will be relocated to the new office yet.
Asked where 400-600 employees will park, city and Fastenal leaders said that is still to be determined. City code does not require downtown commercial building to provide any off-street parking, but Fastenal officials said they will provide at least some of the parking their employees need. “We don’t have the full plans right now, but I think it’s a good problem for us to have and for our community to resolve,” Sarvi stated. “It’s early days. We’ll still have to look at the site plan and figure out what they’re planning for on that site for parking and what extra [will be needed],” he added. “I’m very mindful of the fact that I want it convenient for the folks of Winona,” Florness stated. “Frankly, I want it convenient for the employees of Fastenal. So personally, I don’t think there should be a project in the downtown area or anywhere where parking isn’t part of the overall plan, and that will be a factor in our plan, as well.” Johnson mentioned the possibility of a public-private partnership with the city in the future to provide additional parking. Asked about that prospect, Peterson said, “The city is happy to work with Fastenal to solve some of those issues.” Merchants Bank Vice President Jim Vrchota added of the parking issue, “If Fastenal says they’re goign to pay attention, they’re going to pay attention.”
Robert Weaver, the agent for Rock, LLC, is a contractor who has worked on numerous Fastenal projects across the country for years. Weaver will have a shot at working on this construction project, but that the project will be open to local contractors, too, and Winona has great local contractors, Johnson explained.
“This announcement is a new chapter int he great relationship between Fastenal and Winona,” Winona Main Street Program Coordinator Emily Kurash said. ”This development and the hundreds of employees it will bring to our downtown will help support new and existing stores, restaurants, housing options, and other businesses. The energy from this and other Opportunity Winona projects will help downtown attract more companies, entrepreneurs, investors, and others to look at Winona in a new way.”
City officials said they have not yet received a site plan or other planning and zoning applications for the project. There is a city-owned alley on the site, and Peterson said the city will likely vacate it for this project. Fastenal officials said they are still working on the design.
Fastenal: a Winona success story
Fastenal has considered Winona its home base since it opened its first location in Winona in 1967. Bob Kierlin and five friends pooled $31,000 with the idea of starting a company that would provide nuts and bolts and other fasteners through a vending machine system. Henry “Van” McConnon, whom Kierlin had met in New York, contributed, along with Steve Slaggie and Mike Gostomski. Jack Remick contributed $4,000 — he said he borrowed $3,000 from his mother to help the start-up.
As Kierlin began designing a vending machine that used the old-style push and pull actuators to dispense the supplies, he soon found people were coming into the Lafayette Street storefront to buy more boxes of those nuts and bolts than the machine would be able to hold, or for parts that were too big for the system. So the vending machine idea was set aside, and Fastenal’s more traditional branch-based service model was born.
The company acquired a second location in Rochester in 1971, and eventually gained enough bulk fastener inventory — much of it stored in garages around Winona — to open a handful of regional stores in underserved markets. By 1981, the company launched a small manufacturing plant with $30,000 in used equipment operated by a single machinist. But the company’s ability to make custom speciality parts in-house added a new, attractive dimension to the growing business. Six years later, Fastenal’s initial public offering spurred sales to quadruple from $41 million to $161 million from 1989 to 1994; by the end of the 1990s, Fastenal had over 800 stores. In 1993, it first reached $100 million in annual sales — today it takes just over seven business days to reach that sales milestone.
“Back in 1967, we were the smallest of an estimated 10,000 fastener sellers in the U.S.,” explained Kierlin. “By the mid-1990s we had outgrown them all. We had to be doing something different. It wasn’t the product, and it wasn’t how we distributed the product. It was our belief in people.”
In 1994, Fastenal opened two branches in Canada, then spread to Mexico and Singapore in the early 2000s. The company then had branches in all 50 U.S. states, and the Hawaii branch marked Fastenal’s 1,000th location. It launched its own trading company, Fastenal Asia Sourcing and Trading Company in 2003, and marked its 10,000th employee in 2006. By 2007 it cracked the Fortune 1000.
In 2008, Kierlin’s original vending machine idea came full circle with the launch of Fastenal’s FAST Solutions, quickly becoming the world’s most used industrial vending system. “It has really taken off like a rocket,” Al Rothering, technical sales and training support specialist, said at the time. “We are literally gobbling up market share because of that.” That year, Fastenal also joined the S&P 500 index, and in 2012, Bloomberg Businessweek named Fastenal the top performing publicly traded stock since the 1987 market crash, surpassing such giants as Apple and Microsoft.
From Lafayette Street to Fortune 1000
1967 — First store is born
1970s — “Growth through customer service” — Fastenal opened a second location in Rochester and acquired enough inventory to open a handful of stores in underserved markets.
1981 — Fastenal manufacturing was born with $30,000 in used equipment and one machinist, but the ability to make custom speciality parts in-house added a new dimension to the growing company.
1987 — Initial public offering — Sales quadrupled from $41 million to $161 million from 1989 to 1994, and by then end of the ‘90s, Fastenal had over 800 stores.
1993 — First year of $100 million in annual sales. Today, it takes just over seven business days to surpass that milestone.
1994 — First stores outside the U.S. were born with two branches opening in Canada.
1999 — Fastenal School of Business begins. Today, the corporate university delivers more than 200,000 virtual courses to employees annually.
2001 — Fastenal opens a branch in Monterey, Mexico, and in Singapore. Stores in Alaska and Hawaii secured branches in all 50 U.S. states, with the Hawaii branch marking Fastenal’s 1,000th location.
2003 — Fastenal opens its own trading company, Fastenal Asia Sourcing and Trading Company (FASTCO). At the time, it was just a 12-person team working in Shanghi, but the trading company working closely with Asian manufacturers gave FASTCO the edge in its global supply chain.
2006 — Fastenal hits the 10,000-employee mark; the following year, it cracked the Fortune 1000.
2008 — Fastenal returns to its roots — Kierlin’s original vision of inventory sold through unmanned vending machines comes full circle with the introduction of Fastenal’s FAST Solutions. It soon became the world’s most used industrial vending system. That year, Fastenal also joined the S&P 500 index.
2012 — Bloomberg Businessweek named Fastenal the top performing publicly traded stock since the 1987 market crash, surpassing such giants as Apple and Microsoft.
Keep reading the Winona Post for more on this story.