MANKATO — In 2008, a new company called Kato Cable pledged to boost its workforce in return for a $400,000 loan from the city of Mankato to help finance a new manufacturing plant on the city’s east side.
Back then, Kato Cable had just four full-time employees and a couple of part-timers, and it promised to add eight more full-time positions if the City Council approved the low-interest loan. The council, acting in its role as the Economic Development Authority, did.
The company has since repaid the loan and is now back with another application, this one for $500,000 with another relatively modest pledge of adding 10 more employees to its workforce.
To say Kato Cable missed the mark on its first job-creation pledge 18 years ago would be more than an understatement. Instead of going from four full-time workers to 12, the company’s payroll has skyrocketed to 135 full-time equivalents.
“They expect that will increase to over 200 within three to five years,” economic development specialist Courtney Kramlinger told the EDA Monday night.
Kato Cable might be planning to underpromise and overdeliver again, even if they hit the 50% jump that Kramlinger mentioned.
“This new expansion will triple our current manufacturing space at 99 Power Drive,” Kato Cable CEO Eric Else told The Free Press in January. “And with our projected growth over the next five years, we hope to bring in at least 100 new job opportunities to the Mankato area.”
The council unanimously set an April 8 hearing to formally consider the loan request, which would provide the $500,000, repaid over 15 years, at an interest rate of 5.95%, 30% below the current federal prime lending rate of 8.5%.
The money from the EDA’s revolving loan fund, which can be used for such purposes as the construction of affordable housing or the creation of new jobs, would technically be a pair of loans totaling $500,000.
Both would prepare recently purchased property next to the current Kato Cable site for a 40,000-square-foot expansion, Kramlinger said. Utilities would be extended and topsoil and “undocumented fill” would be removed and replaced with soils more suitable for construction.
The loan application, dated Feb. 21 and signed by Else, states that the newly created jobs would pay an average of $18-20 per hour plus benefits. A full-time job paying an $18 hourly wage would result in an annual income of $37,440. The city’s guidelines for a job-creation loan from the EDA fund require pay for new workers to be at least 110% of the federal poverty level for a family of four — which equates to $37,440 in 2024.
Another loan requirement is that equity invested by the applicant represents at least 10% of the total project cost. The Kato Cable application states that the company will be putting $1 million of cash into the project, which has a $5 million estimated cost of construction.
A $4 million bank loan is providing the remaining construction financing, according to the application. The total cost of the project rises to $7.47 million when land acquisition, site development, architectural and engineering fees and a contingency account are included.
The company’s need for more space is driven by several factors. When Kato Cable was founded, its focus was almost exclusively on supplying cables for industrial power generation. Since then, it has expanded to a wide variety of technologies, and Else describes the company’s products as “the central nervous system” of everything from power sports machines to medical devices to construction and firefighting vehicles.
Global economic trends have also played a role in the company’s growth, according to Else. Among Kato Cable’s new customers are manufacturers who might have previously focused only on cost when contracting with overseas suppliers — firms that began to recognize earlier this decade the value of a reliable domestic supplier that provides consistent quality and short lead times.
Forced to grow its manufacturing capacity quickly in 2021, the company found an existing facility in North Mankato to open a second location. Now, the goal is to nearly triple the square footage at the Power Drive site — mostly added manufacturing/warehouse space but also a large new cafeteria, new restrooms and an outdoor patio for employees.
If the council approves the loan on April 8, work could begin as soon as the following week and be completed by Nov. 1, according to the application.
Because the requested assistance doesn’t include tax-increment financing, the estimated market value of the completed Kato Cable complex wasn’t included in the materials provided to the council. The current facility is valued at nearly $1.9 million and paid just over $52,000 in property taxes in 2023, according to Blue Earth County tax records.