Herald Journal, Nov. 14, 2005
Direct mail company reaches for the stars
By Dave Cox
Five Star Direct recently moved its direct mail production business to Winsted from Delano, bringing 60 jobs and the potential for many more.
City Administrator Brent Mareck described the move as the result of a cooperative effort between owners Joe Remer and Dick Borrell, and the City of Winsted.
“This is a great opportunity for the city,” Mareck said. “It will help other businesses. It will help housing and retail. It affects the rest of the community.”
Remer pointed out that bringing the company to Winsted may also introduce new people to the city.
“Professional people from all over the metro area have been coming to the city to do business with the company, and they may not have even known where Winsted was before,” Remer said.
He added that this could potentially help events such as Winstock, because more people will realize that the city is not that far from the metro area.
Remer and Borrell hired Economic Development Consultant Joe Egge of Litchfield to help them put together the deal to purchase the former Sterner Lighting building in Winsted.
A variety of programs made the deal possible.
The Minnesota Job Opportunity Building Zones (JOBZ) program is an initiative to stimulate economic development activity in greater Minnesota by providing local and state tax exemptions to new and expanding businesses through 2015.
Under the program, the company pays no state sales tax, no business income tax, and no property tax.
It is also eligible for job-creation credits.
The company had 60 employees at the time of the move, and the terms of the JOBZ program require them to create an additional 30 jobs in the next two years.
Five Star has already started to fill this requirement. They have added 36 jobs since the program began July 25. Not all of these were new positions, however. Some of the new hires replaced other employees who chose not to follow the company from Delano.
Further expansion is planned, and the company will be adding additional employees.
Another program that helped to facilitate the purchase was the Minnesota Investment Fund (MIF), a grant and loan program through the state of Minnesota.
The MIF program uses federal dollars and is administered by the state.
The City of Winsted secured $300,000 from the program and loaned it to Five Star.
Loan payments go back to the city, which will use the money to help other local businesses.
Citizens State Bank of Waverly provided additional funds for building expansion and new equipment.
Remer said that some employees are Winsted residents, and others have already moved or are planning to move to the city.
“A lot of people have a misconception about this type of business. They think that these are low-paying jobs. A lot of these are high-paying jobs,” Mareck stated.
Remer and Borrell agree.
Many employees start out as mail sorters and move on to become machine operators. With each new job an employee learns, the pay increases.
There are also technical and highly skilled positions within the company, which provide high wages.
The success of the company has been the result of innovative thinking and creative new solutions for their customers.
“This is a competitive business. We are always looking for new ideas. Flexibility and innovation are responsible for our growth,” Remer said.
One of the unique processes that the company offers is embossed plastic marketing cards.
These cards look similar to credit cards, but can be used for a variety of marketing applications.
The production area is filled with specialized equipment.
The company also has high-speed inkjet printers, high-speed folders, and an in-house bindery.
The fact that the company also offers printing services adds value for its customers.
Another example of how the company has responded to customer needs is its ability to produce notched reply cards.
Customer research showed that the notched reply cards significantly increased the response level. Five Star initially had to send this specialized work out to another company.
In order to increase efficiency and improve turnaround time for their customers, Remer and Borrell invested $15,000 in die-cutting equipment so they could do the work in-house.
As trucking and fuel costs continue to increase, Remer and Borrell are striving to give their customers “more bang for the buck” by producing multiple components in a single facility.
Five Star has a secure data management department that takes customers’ mailing lists and formats them to meet postal requirements.
Because of the volume of mail handled by the company, there is a US Postal Service office within the facility.
Postal employees verify outgoing mail by weight, and move it to a locked area within the plant until Postal Service trucks come and pick it up.
The volume of mail is significant.
The company goes through as much as 250,000 lbs. of paper each month, which is equivalent to four or five semi loads.
This could lead to future business for local trucking companies, as well.
The company outgrew the 26,000-square-foot facility it occupied in Delano, and the 112,000- square-foot space in Winsted provides ample room for expansion.
Remer said they have an additional 15-20,000 square feet available to lease to other businesses.
The company has both a local and national account base.
“Our biggest customer is North American Membership Group in Minnetonka, but we have many national accounts including the American Heart Association, the American Lung Association, Wells Fargo, and the National Humane Society,” Remer explained.
Remer and Borrell met in the early ‘80s while working for another direct mail company.
Borrell left that company to start DB Direct in Delano 20 years ago.
Remer joined Borrell as vice-president of sales in 2000.
In 2001, they started a printing company, Inc On Paper.
Borrell bought out his other partner in 2002, and in 2003, Remer became president of both companies.
Remer is a Winsted resident and grew up a block away from the new facility. His wife, Wendy, manages the accounting and human resources departments for the company.
Borrell is a Waverly resident, and a former state representative.
Remer and Borrell are in the process of changing the name of the company to Five Star Direct Inc. The name comes from the fact that both Remer and Borrell have five children.