Facing Labor Shortages, Pella Reinvents the Company Town in Rural Iowa

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Facing Labor Shortages, Pella Reinvents the Company Town in Rural Iowa​


Charity L. Scott | Photographs by KC McGinnis for The Wall Street Journal

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By | Photographs by KC McGinnis for The Wall Street Journal
Aug. 1, 2022 10:31 am ET
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PELLA, Iowa—Pella Corp. has offices and manufacturing plants in more than 30 cities across the U.S. and Canada.
But one of the toughest jobs, say executives at this closely held maker of windows and doors, is convincing workers to locate here in its hometown, a rural city of about 10,000 residents 45 miles southeast of Des Moines.
The company and its controlling shareholders—members of the founding Kuyper family and its descendants—set out to change that. They have spent tens of millions of dollars in the past three years on housing, child-care centers, restaurants and an indoor entertainment center, among other things, to retain and attract new workers. More spending is on the way.
“We just didn’t have the amenities that people we were trying to recruit would expect,” says Chief Executive Tim Yaggi, noting that the manufacturer competes with major cities for talent.
A hallmark of the labor market in the past two years has been a mismatch of job openings and job seekers. In a tight labor market, companies have had trouble finding the workers they need in the places they want them. A pandemic-related rise in remote work also allows some workers to choose where to live based on quality of life and cost of living, rather than nearness to offices. Some employers have boosted salaries or added signing bonuses to attract the workers they need.
While the job market remains tight, it is showing signs of cooling amid high inflation and rising interest rates. Wages and benefits continued to grow in the second quarter, but the broader economy is slowing. Some big companies have pulled back spending or curtailed hiring as they anticipate a slowdown.
Pella says it has an eye on the long term in its bid to attract more workers. The company says it needs hundreds of workers to fulfill its growth ambitions, which include doubling annual revenue by 2025 from 2020 levels.
“We’ve got very high ambitions in terms of where we think the company can grow,” says Chairman Adam Farver, the great-grandson of the company’s founders. “In order to stay in the community, Pella is going to need to grow.”
Charting the city’s future is no small feat. The company and the controlling shareholder family set aside roughly $30 million for community redevelopment between 2019 and the end of this year and it isn’t clear how much spending is needed to reach their goals.
Iowa is among the states where population growth lags behind the national average and low unemployment has exacerbated the labor market strain. Iowa’s unemployment rate was 2.6% in June, declining for six straight months.
The destinies of the two Pellas are intertwined—for now. The city of Pella’s population, however, has been little changed for decades, and some residents fear changes brought by Pella, the company, could wreck what makes the small city special.
But not meeting Pella Corp.’s needs makes it a flight risk, potentially eroding the local tax base, according to city leaders. The city’s annual budget is $47 million, a fraction of the company’s annual revenue of more than $1 billion. Pella Corp. is able and willing to fund community projects that otherwise might never come to fruition, company executives say.
The steps Pella, the company, is taking evoke memories of old company towns, where employers shaped nearly every facet of community life. It pays for the city’s annual fireworks production and its foundation donates to a range of local causes.

Dutch roots​

The city traces its roots to immigrants from the Netherlands settling in the area in 1847, nearly 80 years before Pete and Lucille Kuyper founded the forerunner to Pella—the Rolscreen Co. The company moved to its now hometown from Des Moines in 1926 and gained success selling window screens that roll up and down. Despite the close ties between the company and town, Rolscreen didn’t take the name Pella until 1992.
 
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dgordo

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City proponents are careful to maintain visible ties to Pella’s Dutch heritage. One local McDonald’s has fake shutters on its windows and gables decorating its roof, features that meet local design guidelines. The visitor’s center is housed inside a windmill, one of several in town. This spring, Pella planted 130,000 tulip bulbs for its annual Tulip Time festival.

The city’s main square—dominated by a “Tulip Tower” where each year a highschooler is crowned Tulip Queen—is surrounded by Dutch store fronts, housing businesses from restaurants and bike shops to a full-service quilt shop.

Pella Corp.’s tastes, in some instances, are more modern. Some new construction funded by the family shareholders’ group, including townhomes and a grocery store, feature few traditional Dutch design features, raising the ire of some residents.

“If we’re going to put up a building that’s built from scratch, there’s no harm in building it in a traditional Dutch aesthetic, right?” asks Shawn Thomas, a member of a group that works to preserve the city’s historic buildings. Still, he appreciates the support the company has given over the years. “Pella puts a lot of money into this town, and it’s put a lot of money in the right places.”

The company says its designs reflect its brand while staying true to the city’s heritage. Its headquarters campus, which anchors the south end of Main Street, features a three-story, red-brick office building, a product showroom and factory that churns out made-to-order doors and windows.

Labor pool​

Pella says it will take time to increase its local workforce. Currently, about 2,550 people work for the company in the town, but only about 640 live there. The others live and commute in from neighboring Iowa communities.

“We can make an investment now knowing that the payback may not be next quarter and maybe in a few years,” says Mr. Yaggi, whose company employs roughly 10,000 workers across 14 states.

Pella executives say the company tried more traditional solutions to boost its ranks. It raised pay, automated some tasks in factory work to widen the appeal, and doubled down on recruiting from the local high school and college—but with limited success. Tapping a larger labor pool isn’t easy. Some candidates relocating may fret about adjusting to life in an overwhelmingly white town with more than two dozen churches and two bars, they say.

“We can bring in all the amazing talent from across the country, but if they get here, and they don’t see themselves reflected in the community, they don’t feel at home,” says Nicolle Picray, a company spokeswoman.

Absent interventions from Pella, Andrew Kreifels says he wouldn’t have joined the company. Mr. Kreifels moved here with his wife and two children from suburban Detroit earlier this year to run Pella’s strategy and business development team.

After rounds of interviews, problems kept surfacing. He couldn’t secure spots in local child-care centers, ending up on wait lists instead. Options for local housing were limited, he says, and the idea of at least a 45-minute commute to the office from Des Moines wasn’t appealing.

“If you’ve got a dual-career household, of your top 10 priorities, the first five are child care,” says Mr. Kreifels. “I vividly remember saying to my now-manager, ‘It’s just too much, I don’t think we can do it.’”

Pella had a plan. The company offered him corporate housing, a spacious colonial in the city, for a year. It also reserved two slots for the Kreifels’ children in a local daycare center that the shareholder family paid to renovate and expand.

Mr. Kreifels plans to stay in the housing until next spring when construction is scheduled to be completed on a home he and his wife purchased in the city.

Housing shortage​

Executives and city leaders agree that a shortage of housing is a big barrier to growth. On a typical weekday, 5,000 to 6,000 people pour into the city for work at large employers such as Pella and farming-equipment maker Vermeer Corp., Mayor Don DeWaard says.

Employers nationwide, including meat-processor JBS USA Holdings Inc. and Walt Disney Co., are focusing on housing in an attempt to address labor-market issues.

The shareholder family’s investment arm bought 160 acres of farmland here for Prairie Ridge, a development aimed at creating more affordable homes. The median home price in Pella is $339,750 as of July, according to real-estate brokerage Redfin Corp.

“If a house comes on the market, it’s usually gone almost instantly,” says Mr. DeWaard, who worked as a local real-estate developer before being elected in 2019. He says he recently sold his own house through word-of-mouth before it was officially on the market. People relocating might spend tens of thousands of dollars over the asking price to snag a home here, he says.

“The odds of someone staying in the job are much higher if they live in the community where they work,” says Mr. DeWaard.

Pella, the company, is also remaking the city to be more attractive for out-of-state recruits by covering construction and startup costs for some businesses.

Poke bowls​

One of those is Liberty Street Kitchen, a contemporary restaurant opened in 2019 that serves dishes such as poutine, tuna poke bowls and steak ramen stir-fry. Pella recruited a Des Moines-based hospitality organization to take care of hiring and running the new establishment, which sits inside a hotel along a short, artificial canal.

Liberty Street Kitchen has been a hit with Pella residents, packed for lunch and dinner most days. Like many businesses in town, the restaurant is hiring. The hourly rate for dishwashers starts at $14, nearly twice the federal minimum wage and $4 more than the starting pay at Jaarsma Bakery, just around the corner.

Jaarsma bakes Dutch letter pastries, almond butter cake and white walnut bars six days a week, but owner Lisa Larson says the pressure in the local labor market is intense. Several businesses along the town square feature “Help Wanted” signs. Ms. Larson, whose family has owned the bakery for five generations, says she has lost four new hires to Pella in the past year.

“We get a lot of people who move to town and they work for us for a month or not at all, before they’re like, ‘Oh, I got the interview for the job that I really wanted’ and ends up being at Pella Corp.,” she says.

Jason Bandstra, owner of #DutchFix, a restaurant, says he employs dozens of teens, offering flexible hours and short shifts to secure staffing. “When we started this business, my wife and I understood that Vermeer and Pella Corp. have exhausted the labor force in this community, and we were going to have to run this place with high-school kids,” he says.

Pella executives say there is little overlap between its workforce and the labor pool local businesses are hiring from. The company is offering $3,000 sign-on bonuses for some roles on its warehouse and manufacturing operations team, according to its website. It is also seeking machinists, commercial truck drivers as well as a senior internal auditor.

Residents in Pella recognize the benefits of having the company deeply tied to the city, says Ross Davidson, pastor of Heartland Reformed Church. “Companies coming from somewhere else, you put a factory in because you got incentives, and when those incentives dry up, you find the next best place,” says Mr. Davidson, who moved here from Michigan 20 years ago.

Heartland is one of Pella’s smaller churches, but its congregation of about 125 spans generations and socioeconomic backgrounds, Mr. Davidson says. There is division among his members over whether or how much Pella should grow, and how growth may change the town.

“When we moved here 20 years ago, you would never see anyone cut their grass on Sunday,” he says, as one example of how Pella is changing. “Now if I sit in the yard, on a Sunday afternoon, I can just see mowers running all over.”

Pella, the company, is steadfast with its development plans. It recently committed $6 million to help the city build a 90,000-square-foot recreation center, with three gyms, multiple pools and a rock-climbing wall. These efforts, executives say, will help woo talent.

Mr. Kreifels is originally from Iowa and never planned to move back when he left 16 years ago. Before Detroit, he lived in Philadelphia and Portland. “I would never have imagined us moving to a town of this size,” he says.

Pella has its advantages, Mr. Kreifels says. He used to spend as many as three hours in his car every weekday between commuting to work and ferrying his toddler to daycare. It has been easier to make friends than in the big cities he’s previously lived in.

The scale of Pella Corp.’s investments were confusing as an outsider, Mr. Kreifels says, but now that he’s a resident, he understands why the company has been so proactive about filling in gaps in the town’s amenities.

“The conversation with friends and family is like, ‘these people that you work for, why would they do all that?’ ” he says. “And then once you get here, you realize, well, if they didn’t do that, I probably wouldn’t be living here.”

Write to Charity L. Scott at Charity.Scott@wsj.com
 

Hawki97

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I can appreciate what they’re trying to do here, but holy shit, I might need that entire $6M investment they’re planning to put into the rec center in my pocket to move to Pella.
 

theiacowtipper

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I love visiting pella. The parks are cool. Biking paths are cool. There are some decent restaurants. The people are very friendly. As far as living there, it’s a nice place to visit.
 

SSG T

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Lol. How many threads criticize capitalistic large businesses? Now when one invests in their hometown they criticize the city.

Capitalistic large businesses are criticized when they put profits before everything else. People don't criticize capitalistic large businesses when they put their workers needs ahead of profit.

Notice the difference? Now, granted, they're doing it to help themselves, long run, but if you can't get workers, you do what's needed to get the workers or you move somewhere else that will let you continue to maximize profits. Pellacorp is choosing to invest in workers needs, others, not so much.
 

OILCHECKER

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If you are under 65, not sure why you would want to live there. And there's really not much for surrounding towns that you would want to live in either.
 

jamesvanderwulf

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I can appreciate what they’re trying to do here, but holy shit, I might need that entire $6M investment they’re planning to put into the rec center in my pocket to move to Pella.
Don't forget part of the deal is you are required to wear wooden shoes. I suppose you could get custom bicycle clips embedded in them at the local bike and/or carpenter shop. Just remember what wearing wooden shoes for 70 plus years did to @joelbc1...
 

VodkaSam

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I interviewed with Pella at the university of Iowa career center my senior year. Was offered a position in the company during a second interview at the pant. Ended up turning it down for another offer, but thought they were a great company.
 
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BioHawk

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Lol. How many threads criticize capitalistic large businesses? Now when one invests in their hometown they criticize the city.
Well, they were criticizing the church to bar ratio, which is valid. Although it is nice to see a business invest in its city instead of just dumping the town and leaving for larger population centers. They just might be missing one of the bigger factors keeping people away, particularly the young people they are trying to attract.
 

MepoDawg#

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Well, they were criticizing the church to bar ratio, which is valid. Although it is nice to see a business invest in its city instead of just dumping the town and leaving for larger population centers. They just might be missing one of the bigger factors keeping people away, particularly the young people they are trying to attract.
If the number of bars is keeping young people away then it’s not necessarily a bad thing. And when we’ve gone to bars recently they haven’t been full of young people.
 

HROT

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If you are under 65, not sure why you would want to live there. And there's really not much for surrounding towns that you would want to live in either.

I’m under 65 and in Pella. What exactly am I missing out on being in this demo?
 
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joelbc1

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you can’t always get what you want!
Don't forget part of the deal is you are required to wear wooden shoes. I suppose you could get custom bicycle clips embedded in them at the local bike and/or carpenter shop. Just remember what wearing wooden shoes for 70 plus years did to @joelbc1...
The hardest part of “moving” to Pella is the complaint that folks don’t feel welcome. There is a period of that I am sure but it certainly is not something unique to Pella. Half the town is “foreigners” now as compared to 40 years ago. Take a look at the school roles of the public schools. These roles were DOMINATED by Dutch names a few decades ago..not so much any more.
What my complaint would be is Pella is “small town Iowa” where way too many folks think their business is what others are doing. My dad moved there following WW2 from west central Illinois, and honestly thought Pella was the finest small town in the United States. The role that Pella Corp and Vermeer’s play in the community is crucial and can never be discounted. These are two pretty smart corporations who protect their self-interests But are very aware of the community and its needs.
For Iowa living, Pella is upper tier, I’d think.
 
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HROT

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Pella was the finest small town in the United States. The role that Pella Corp and Vermeer’s play in the community is crucial and can never be discounted.

We should probably build them a nice, new airport for their efforts. Maybe include Musco and put it between here and Osky.

#AirportSignJoke
#NotInMyField
 
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EasyHawk

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Pella is always on the top 10 cities to live in, definitely one of the best in Iowa. And it is pretty close to Des Moines. Many people commute from Altoona, Pleasant Hill, etc. It is a fantastic place to raise a family and has terrific schools. Nice having a Central College in town along with Vermeer and Pella Corp. Not sure where the two bars statement came from, there is the Peanut Pub, Smash Park, Liberty Street, Nederlander's, The Butcher's Brewhuis, de Kelder Speakeasy. Really can't beat it for a smaller town, lot of community pride and plenty of employment opportunities.
 

joelbc1

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you can’t always get what you want!
We should probably build them a nice, new airport for their efforts. Maybe include Musco and put it between here and Osky.

#AirportSignJoke
#NotInMyField
That’s the politics of the town(s) to decide...but don’t stick your head in the ground and think a “regional airport” would not be a huge asset to the Pella/Osky area.
Back in the day, Folks criticized the city for running water and sewer services from the edge of town to their new location 2 miles east of town (at city expense)...sometimes business makes demands on their cities...some sometimes these very businesses lead communities into making needed improvements via their charities.
 

EagleHawk

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The role that Pella Corp and Vermeer’s play in the community is crucial and can never be discounted. These are two pretty smart corporations who protect their self-interests But are very aware of the community and its needs.
Yep, for years any new construction project in town began with talking to Pella Corp and Vermeer Foundations and seeing what they would give, and then working from there. Then the companies got smarter and said we will match this much, how much are you doing yourself.
I grew up there and have always said, Pella is a good place to be from.
 

Nole Lou

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This is really interesting.

In Atlanta, all of the suburban towns surrounding the city have either revitalized their downtowns, built one from scratch, or are int he process of doing so. It's a tremendous success, the housing (lots of townhouses) sell as fast as they can build them. Lots of people love the idea of living in a walkable town with restaurants, bars, live music, parks, shopping, etc without being in a big city. The thing is, they're in such demand it's pretty much a $700k+ entry point to buy anything in these places.

But I would absolutely live in a place like this 60 miles from Atlanta rather than 15 miles from Atlanta, if I could get in for $300k. It's an awesome lifestyle. I go several days without getting in the car now sometimes. We walk out to have a few drinks, listen to a band, and can stumble home if we have a little extra fun.

With remote work, if the money comes from somewhere to develop these type of towns in rural areas, people will come, I'm sure of it.
 

CarolinaHawkeye

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This is what I think of when I think of company towns. You wouldn't want to get drunk and try to find your house in that town because 90% of them look exactly the same. In the past, the company owned the house you lived in and the stores you spent your money in.
 

EagleHawk

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One thing I will add, all of this sounds good to bring all of these people to Pella, and build all of this stuff, but what happens when housing slows down and Pella doesn't need all of these people to work there anymore?
 

Hawki97

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Pella is always on the top 10 cities to live in, definitely one of the best in Iowa. And it is pretty close to Des Moines. Many people commute from Altoona, Pleasant Hill, etc. It is a fantastic place to raise a family and has terrific schools. Nice having a Central College in town along with Vermeer and Pella Corp. Not sure where the two bars statement came from, there is the Peanut Pub, Smash Park, Liberty Street, Nederlander's, The Butcher's Brewhuis, de Kelder Speakeasy. Really can't beat it for a smaller town, lot of community pride and plenty of employment opportunities.

Great place for a lot of people.

Too religious, too insular, and too in people's business / judgy for me. Not unlike most small towns. Small towns aren't for everybody. Just like big cities aren't for everybody. Nothing necessarily wrong with either.