InfoTech-Minot Technology Center officially closed its doors last week.
The software company, which opened about five years ago in February 2007, had been releasing employees and was rumored to be closing. It has opened a smaller office at the University of North Dakota Center for Innovation in Grand Forks.
New York-based InfoTech had received a $200,000 grant and $200,000 forgiveable loan from the Minot MAGIC Fund at the time it opened the Minot Technology Center.
Matti Kon, company president, announced the closure in a letter this week.
"Like many small information technology companies, our commercial business suffered due to the economic downturn, and last year the Navy contract that was the core of our Minot operations fell victim to defense cost-cutting. Skyrocketing wages from the oil boom inflated employee salaries in Minot, increasing in some cases from $25,000 per year to almost $70,000 for an employee. At the same time, I found it harder and harder to find qualified replacements in Minot for senior developers from my team who left the area. These factors have made it impossible to sustain operations in Minot. Fortunately, InfoTech is not leaving any unemployed workers in Minot and all of our developers have found good jobs with good companies."
Kon said he worked tirelessly around the clock for 15 months with support from the North Dakota congressional delegation, the Minot Area Development Corp. and friends from within the Department of Defense and the Navy to try and overturn the Navy's decision to discontinue InfoTech's work on the Secure Discovery project.
He said the efforts were "to no avail, even though over and over again, we have received confirmations to how imperative InfoTech's work on Secure Discovery is for national security."
After operating the Minot office at a loss since June 2011, Kon said there was no choice but to close the office. InfoTech opened its new office at UND to accommodate several senior InfoTech programmers who decided that they would like to move out of Minot for various socio-economical reasons, Kon said. Also, several other employees requested to work in Grand Forks upon the closing of the Minot office, and they have been relocated.
"Anytime a company that we have provided taxpayer money closes, it's disappointing," Minot Mayor Curt Zimbelman said. "They did fulfill all their obligations as far as numbers of people and years in the community, but things changed."
He said the MAGIC Fund's purpose is to help new businesses get started. In InfoTech's case, it appears circumstances and the economy changed in ways that made operation of the business no longer feasible, although it is good that InfoTech will maintain a presence in the state, he said.
Over the years, InfoTech employed more than 40 professionals in Minot, offering high tech jobs on projects with the Navy and Wall Street. The payroll in Minot totaled more than $7.2 million, which included employee benefits and state and federal payroll taxes.
InfoTech contributed to the community in a variety of ways, from its award-winning internship program and other cooperative work with Minot State University to donations of tens of thousands of dollars to community organizations and local initiatives.
In February 2011, North Dakota Young Professionals named InfoTech as one of the state's top best places to work.
"While the decision to close in Minot is based on economic realities, it is with no little personal pain that I carried out this act," Kon wrote. "Back in 2006 when I initially embarked on this project, Minot for me was far more than a business venture or a one-time engagement. Minot for me was a vision of building up a technology center in a state with visionary leaders and in a city that seemed to have all the perfect ingredients. Minot represented the quintessential non-metropolitan environment with great resources that were not fully realized due to the lack of high-tech employment opportunities. That said, and with the personal pain of leaving Minot, I am satisfied with what InfoTech achieved during its time in Minot.
"While things did not work out business-wise for InfoTech long term in Minot, and while I personally believe the oil boom is a mixed blessing, there is no doubt that Minot has a bright future. The talent, work ethic and productivity of North Dakotans are second to none and that fact is recognized around the country. Nowhere will one find more supportive and accessible political leaders at every level who work tirelessly for the good of their state, communities and businesses."