The maker of doors and windows is spending $30 million hoping to get people to move to its headquarters; ‘We just didn’t have the amenities’
Facing Labor Shortages, Pella Reinvents the Company Town in Rural Iowa
Charity L. Scott | Photographs by KC McGinnis for The Wall Street Journal
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.