MANKATO — Rolls-Royce hosted a grand opening Wednesday of its new 250,000-square-foot Logistics Operations Center, marking the completion of a $24 million expansion the company says will more than double production of backup power systems while creating upward of 100 new jobs locally.
The addition expands the company’s Power Systems campus to roughly 357,000 square feet at 100 Power Drive and increases its workforce to more than 500 employees, reportedly making Rolls-Royce one of Mankato’s largest manufacturers.
Adam Wood, managing director of Rolls-Royce Solutions America, said the investment is part of more than $1.5 billion the company has invested in the United States in the last decade.
The new facility consolidates logistics operations that were previously spread across multiple warehouse locations. A connecting corridor links the logistics center directly to the existing production facility, allowing materials to move efficiently between inventory and assembly without leaving the building.
The center became operational this summer following about a year of construction. Company leaders said the facility positions the Mankato operation for continued growth as demand for backup power systems increases across North America.
Wood said the new facility will significantly increase production of the company’s mtu Series 4000 backup power systems, which are used to support hospitals, airports, municipalities, data centers and critical infrastructure worldwide.
Data centers are built in all shapes and sizes, and serve any number of computing needs, though a surge of interest in hyperscale data centers statewide has led to controversy and discussions surrounding construction moratoriums, including in Mankato and North Mankato.
“We see an uptick of a lot of different applications, so certainly data centers, there has been a big increase in demand,” Wood said. “We certainly still see a huge demand on the data center side and increase in investments in the U.S.”
Spending on this type of construction has skyrocketed nationally, with tech giants Google, Microsoft, Amazon and Meta reportedly surpassing $130 billion in spending on AI infrastructure and data centers, according to an April report from The New York Times.
The expansion reflects Minnesota’s strengths in advanced manufacturing, said Catalina Valencia, executive director of business development for the Department of Employment and Economic Development. She said it reinforces Minnesota’s position as a competitive location for companies investing in next-generation manufacturing and technology — notably data center construction amid the artificial intelligence surge.
“Driven by the rapid growth of data centers and the enormous infrastructure that’s needed for artificial intelligence, Minnesota is proud to be a place where this kind of cutting-edge work and growth like this sends a clear message,” she said.
Wood said the expansion comes as demand for reliable backup power continues to grow alongside investments in technology and energy infrastructure and some systems also can operate using renewable diesel to support lower-emission power solutions.
Mayor Najwa Massad said the expansion represents an investment in both the local workforce and the future of Mankato. She noted Rolls-Royce’s long history in Mankato, describing the company as a committed community partner whose products built in southern Minnesota help support critical infrastructure around the world.
The Mankato facility has changed ownership several times since it opened. Originally built by Katolight Corp. in 2001, the plant became MTU Onsite Energy after its acquisition by a German-based company in 2007. That company was later acquired by Rolls-Royce, a descendent of the luxury car manufacturer, making the Mankato operation part of the company’s Power Systems division.
The Mankato project complements a $75 million expansion at the company’s engine manufacturing plant in Aiken, South Carolina. Engines produced in Aiken are assembled into generator systems in Mankato, strengthening the company’s U.S. manufacturing network.
Rolls-Royce Power Systems CEO Jörg Stratmann said the United States is the largest and fastest-growing market, making continued investment in domestic production essential.
“We are investing in our ability to serve our customers in markets that are becoming more important every day,” Stratmann said. “One of the strongest drivers of growth is our power chain business, and the reason is pretty simple. The world needs more and more reliable power.”