Minnesota manufacturers cash in on data center construction boom
Minnesota's largest companies are betting growth on artificial intelligence infrastructure. 3M, Ecolab, nVent, and newly public Forgent Power Solutions are all pushing products and services into the surging data center market, which is helping offset tariff pressures and economic uncertainty.
Data center construction contributed to U.S. GDP rising 2% in the first quarter. McKinsey estimates the sector could produce $7 trillion in capital spending nationally by 2030.
Fastest growth in state
nVent, run out of St. Louis Park, moved from 22nd to 19th on the Star Tribune 50 list of Minnesota's largest companies, making it the fastest-growing large public company in the state. The electrical components maker opened a new plant in Blaine last month and expanded its Anoka facility within the past year, adding at least 325 employees focused on data center products.
The U.S. has more than 3,000 data centers operating and another 1,500 in development. Minnesota has at least 12 in the works. Global data center capacity will roughly double by 2030, according to commercial real estate firm JLL.
High-margin business
A single data center can cost about $40 billion to build and generate $12 billion in revenue immediately, according to Blackrock analysts. Much of that spending goes to equipment inside the centers-chips and systems for processing data-rather than raw construction costs.
3M's data center business generated at least $600 million in annual revenue last year. The company sells optical components, noise and vibration management products, and power distribution materials like tapes, wires, and heat-shrink tubing. It plans to more than double production capacity to meet demand.
The business carries higher profit margins than 3M's overall operations. While 3M's net income fell nearly 19% last year and Ecolab's fell nearly 2%, nVent-which invested early in data centers-saw profits increase 78%.
Water and energy concerns
Local opposition to new data centers is building across Minnesota and the nation. Critics point to the high volume of energy and water required to keep facilities running and cooled.
Ecolab has acquired two companies to address those concerns. In December, it bought Ovivo, which specializes in water purification and reuse. It is also acquiring CoolIT, focused on data center cooling, in a deal expected to close later this year. The combined acquisitions are worth nearly $6.5 billion.
Ecolab CEO Christophe Beck said the company's products can reduce a large data center's water demands to that of a car wash. At one Microsoft data center in Milwaukee, workers use more water for personal consumption than the facility itself uses, he said.
nVent applied its existing liquid cooling technology-developed for medical and industrial use-to data centers after a major tech company approached the company about the application.
New public company enters market
Forgent Power Solutions became Minnesota's newest public company on February 4, raising $1.7 billion in an initial public offering. The Dayton-based company manufactures electrical distribution equipment for data centers and large manufacturing facilities.
Oppenheimer stock analyst Noah Kaye estimated Forgent's revenue could grow at a 50% compound annual growth rate over the next three years, outpacing the data center market overall. The company employs 2,000 people, though not all in Minnesota.
Minneapolis-based Xcel Energy sells power to these centers. Bloomington-based SkyWater Technology manufactures chips crucial for processing data. Other Minnesota firms sell ancillary products used in the buildouts.
Your membership also unlocks:
