Few Minnesota companies have navigated monumental disruptions to their business model as well as Northern Tool + Equipment, the 45-year-old maker and retailer of hydraulic tools based in Burnsville.

And, as the Trump administration continues trying to impose tariffs that affect U.S. businesses, Northern Tool provides a glimpse into the work needed to answer that disruption and move overseas manufacturing back to the U.S.

Northern Tool is both a manufacturer and a retailer, with about $1.2 billion in annual revenue.

In retailing, it went through the e-commerce disruption. Northern Tool transitioned away from catalogs — after printing 50 million a year at its peak — to online platforms while still operating 130 stores across the country.

Its customers are mainly businesses and independent contractors in the building trades, along with consumers it calls “trades-minded.”

“It’s a high-end consumer group, people who do things with a lot of pride and passion,” said John Bakke, Northern Tool’s chief operating officer.

But it is in manufacturing where Northern Tool has experienced the most recent — and biggest — change.

Founder Don Kotula started the company in 1981 to sell a hydraulic log splitter he had designed. But having worked in sales previously, he quickly focused on creating a retail operation that would offer tools and other light industrial equipment, initially in the Twin Cities and northern Minnesota.

It took a decade for Kotula to start a manufacturing operation with a factory in Faribault and to launch the company’s first private-label product line, called NorthStar. He had a factory built in Faribault in 1994 to make them.

In the late 2000s, Northern Tool joined the parade of U.S. manufacturers to open a factory in China and move some of its lower-margin production there. And by the late 2010s, it also had a factory in Mexico. Kotula died in 2024, and his sons Ryan and Wade now own and lead the closely held firm.

The imposition of tariffs on goods made in China, and later in Mexico, by the federal government changed the financial equation for operating in the two countries. Northern Tool closed its factory in China a couple of years ago, and it ceased work in Mexico late last year.

“As the global relationships change, everything gets reconsidered through the lens of what’s needed today,” Bakke said.

The company makes more than 200 products under its NorthStar brand, and all had to be shifted to domestic production. Northern Tool sells thousands of other products from manufacturers that operate around the world.

“The world continued to evolve, and we looked and realized, from an overhead perspective, it just made more sense to get more out of our domestic manufacturing site,” he said.

For Scott Underdahl, who runs the Faribault factory, that meant months of splitting time between there and the main office in Burnsville to redesign the plant and the processes inside it.

“We didn’t add space,” he said. “We configured it differently to bring in this new production.”

The 260,000-square-foot building was about evenly split between production space and warehouse space. Underdahl needed room for more production and workers. The overall goal was for the factory to increase its output of goods by 40%.

The Faribault factory had originally been home to the largest products in its lineup: power generators used at construction sites, trailer-sized pressure washers with 525-gallon tanks and log-splitters with 37 tons of splitting force.

With the closing of the Mexico plant, the Faribault factory took on finished-goods assembly for smaller products like precision pumps, and the production of parts used in all kinds of products.

To find room in the factory, Northern Tool carved into space that had been used for parts inventory. But such a move could only happen after rethinking the broader assembly process.

As Underdahl and Bakke described the transformation, the image that sprang to mind was one of those handheld puzzles of plastic tiles that slide in a frame.

“It took manufacturing engineers, product engineers, the production team and their insights, the supply-chain managers,” Bakke said. “I mean, every functional area participated.”

The biggest physical change to the factory was in a corner of the finished-goods warehouse that was turned into production space. It was modified to accommodate two injection-molding machines — each about the size and height of a railcar — that were moved from Northern Tool’s Mexico site to Faribault.

Both look like small factories themselves, with pipes, hoses and funnels, plus ladders and catwalks to get around them. They are used to produce the plastic tanks that go onto sprayers and other products.

Just seven months since production completely left Mexico, new workers are still being hired in Faribault. Bakke said the company is seeing efficiency gains in at least two dimensions.

“One is our ability to build closer to the real time of when demand is. And the other is we’re seeing more efficient throughput,” he said. “I’m very pleased with the quality, too.”

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