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Minnesota Diversified Industries (MDI) has a company name that's a bit of a contradiction to the reality it faces. While the name implies it is diverse, the nonprofit's over-reliance on the United States Postal Service as its No. 1 customer has greatly contributed to its tumultuous history.

Founded in 1964, MDI has a core mission of providing employment to disabled workers. That mission has been made harder in a recessionary economy further complicated by erratic orders from the USPS.

MDI has operations at three Minnesota locations - St. Paul, Grand Rapids and Hibbing. At its Iron Range facilities, MDI manufactures and assembles corrugated plastic products including postal totes.

The nonprofit's executives have long maintained that diversification of its customer base was an important goal but making that happen hasn't been easy. Until recently, its customer base has been highly skewed, with more than 90 percent of orders coming from the Postal Service.

That's now changing, said CEO Peter McDermott. While the USPS still accounts for the majority of orders, the percentage has been lowered to 80 percent. Two major private sector contracts led to the change.

While McDermott declined to name the new customers, he said sales of reusable totes and boxes would add $3.5 million to the company's 2012 revenues. Commercial business has more than doubled in the last four years - from $1.9 million in 2008 to about $5 million this year.

MDI also recently forged a partnership with Northern Foundry in Hibbing. MDI will sort flange nuts for the company. McDermott hopes additional partnerships can be established with local companies to increase private sector work.

Orders and work from commercial customers have been buoyed further by a resurgence in 2012 orders from the Postal Service, which will nearly double revenues - from $12.9 million in 2011 to an estimated $25 million in 2012. The USPS is renewing orders for EMM (extended managed mail) and MM (managed mail) trays - two items of which it had previously suspended. Orders this year will bolster MDI revenues by $2.5 million.

It's welcome news in Itasca County, home to MDI's Grand Rapids facility. Unemployment usually ranks far above the regional average. In Feb. 2012, unemployment in Minnesota's Arrowhead averaged 8 percent. In Grand Rapids, the rate was 11.7 percent, according to the Minnesota Department of Employment and Economic Development.

"All of the sudden, things are going wild" for MDI, said Jeff Borling, interim CEO at Itasca Economic Development Corp.

"MDI plays a very significant role in the Grand Rapids community," added Grand Rapids Area Chamber of Commerce President Bud Stone. "They hire people that other companies can't hire. If it wasnï¿½t for MDI, there are a lot of people in this community that wouldn't have that sense of accomplishment that comes with a job."

The uptick in orders also has meant a return of workers. While MDI employed more than 300 in the mid-part of the last decade, FTEs plummeted to about 120 (all three sites) in 2010. Employment numbers ticked upward in 2011, to about 140. In the last four months, MDI has more than doubled its workforce, again reaching employment exceeding 300.

The company also has reduced its debt load in recent years, shedding $3.7 million from 2008 to 2011. McDermott said the Blandin Foundation played a significant role, forgiving a $775,000 loan in 2010.

Taken collectively, those numbers allow McDermott to be cautiously optimistic about the near-term and long-term futures.

"I feel a lot better now than I did four months ago," he said.

Looking forward

Nonetheless, the current positive numbers didn't come without pain. In 2007, MDI lost $10 million - the result of not downsizing quickly enough. The company also went through major management restructuring from 2007 to 2008 after the resignation of former CEO Mark de Naray, who left following revelations that company executives were enjoying lavish perks, including expensive retreats, while disabled workers were being laid off.

McDermott was hired as CEO in 2008. Since then, MDI has been in the black, and management has adopted a more frugal approach.

"Our retreats (now) are at the Forest History Center (an historical site in Grand Rapids). We're a nonprofit, and there are no extra perks," he said.

Frugality is likely a wise course of action, given the company's history of ups and downs - a cycle that McDermott knows isn't over yet. Still, he's optimistic that with renewed orders from the Postal Service, it will provide some additional time to slowly win commercial clients and stabilize the future.

"I don't think 2013 will be quite as good as 2012," said McDermott, 'but, we are continuing to grow the commercial side of the business."

MDI by the numbers:

Total revenues for 2011 =

$12.9 million

ï¿½ USPS totes - $6.6 million

ï¿½ Commercial plastics - $3.25 million

ï¿½ USPS stamps - $1.7 million

ï¿½ Commercial assembly - $417,783

ï¿½ USPS lids - $377,755

ï¿½ Grants and donations - $275,476

ï¿½ USPS cardboard trays - $264,938

ï¿½ Other - $2,639