Massive Manufacturing Opportunity

Data centers are having a moment, and Minnesota manufacturers can be part of it. The massive structures house the servers and storage and networking equipment that stores, processes, and distributes large amounts of data to enable everything from streaming and online learning to AI and cloud services.

Seemingly insatiable demand for computing power is driving data center construction at an astounding pace, including in the Midwest. Manufacturers across the state can take advantage of this robust new market, if they take the right steps. In an upcoming Enterprise Minnesota magazine article, writer Mary Schier explores what data centers need and how manufacturers can serve the market.

As Schier points out, companies like Azure, Google Cloud, and Amazon Web Services—industry insiders call them hyperscalers—need components for these facilities, and fast.

According to a McKinsey & Co. analysis, a $6.7 trillion investment in data centers worldwide will be needed by 2030 to keep up with demand for computer power, with 70 percent of that computing power needed for AI applications. The systems also require security such as encryption and intrusion protection systems as well as biometric security. Managing the heat generated continuously by the computers inside them requires massive HVAC systems.

Intek Plastics, a Hastings-based manufacturer of extrusion and injection molded products, began supplying data centers when one of its customers was acquired by a large data center integrator, a firm that builds the IT systems inside data centers.

“Plastics play a small role in the scheme of things,” says Paul Pedersen, Intek’s vice president of strategy and market development. “There is so much more spent on the computers themselves and the metal racking and all sorts of other things. But even playing a small role, it’s massive. It’s just massive.”

Other Minnesota companies have found huge opportunity in the data center boom. Rolls-Royce Solutions, has invested $24 million to double production at its Mankato plant, which manufactures the company’s mtu Series 4000 generator sets, used extensively in data centers.

States Manufacturing received $2.8 million in state financing from the Minnesota Department of Employment and Economic Development (DEED) to expand its facilities in Dayton and Champlin. States manufactures power distribution equipment, including large equipment enclosures similar to those used in data centers.

Schier’s article also includes tips for manufacturers trying to break into the market. To become a supplier, Pedersen suggests manufacturers immerse themselves in the world of data centers, particularly through trade shows. “All the people who supply data centers show off everything at those shows,” he says.

“I would encourage people who haven’t been in it to go to the shows and look for parts that they could make and then start talking about what they are doing to innovate,” says Pedersen, whose firm is actively seeking more data center work.

Because so many of the components that data centers need involve electrical enclosures, Enterprise Minnesota business growth consultant Greg Hunsaker recommends manufacturers obtain UL50 certification, a standard by Underwriters Laboratory for electrical enclosures in non-hazardous locations, for example.

Hunsaker adds that companies should be ready to act fast. “The rate of speed they are going with these things is unbelievable,” he says.

Look for a sneak preview of the February magazine article, available at www.enterpriseminnesota.org on January 16th.

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