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Candy maker closes plant in Perham

A homegrown Perham business that created homemade style chocolates and candies will be relocating.

"Route 29 Caramels and Sweets" will be moving its production facilities to the Twin Cities metro area--closing its production and warehouse facilities in Perham.

During peak production periods, prior to the holiday season, the candy maker employed as many as 160 full-time and temporary workers. The company serviced some large, name brand customers with candy products--including Caribou Coffee, Barnes and Noble and Target.

The move had been rumored for some time, but was confirmed last week when staff delivered farewell cards and treats to a number of Perham area businesses.

"Thank you for you continued support for Route 29 over the years," wrote the message on one of the farewell cards. "We are saddened to close our Perham facility and say goodbye to the town."

The company was originally founded by Kenny Nelson as "Nelson's Confections." The candy company also started with production of licorice.

Nelson, who founded "Barrel O' Fun" snacks, kept the licorice production and continues today as "Kenny's Candies," but sold off the chocolate production to Mark Kalan in 2002.

Employees were layed off on Thursday, April 2, but most of them have been offered full-time positions at the company's headquarters and production center in New Hope, Minnesota.

"We had some great employees, that's why this is so hard. We're hoping we can get some of them to relocate," said part-owner Kim Kalan. "We worked very hard to keep it open, but the building was too inefficient. We have strong emotional ties to the town and our employees."

The train crash of 2003, which literally destroyed the warehouse space, was a big factor in the decision, said Kalan. Because of its proximity to the Burlington-Santa Fe tracks, the warehouse couldn't be rebuilt. So, Route 29 has had off-site storage--including the former Dean's Country Market building for a period of time.

The resulting inefficiencies in the 10,000 square foot building, and inability to come up with a good building for that type of a production, prompted the move, said Kalan.

Another factor is the labor pool.

"It is thin up there," said Kalan. "That's good for the town to have low unemployment, but the competition for labor wasn't good for us."

Route 29 has a total of 3,500 customers on the list, including some local retailers.

The equipment will be moved from Perham to New Hope over the next 35 days, said Kalan.

"It was a very hard decision to make. We even hired a consultant to try to find a way to keep the plant open in Perham," said Kalan. "We concluded that if we continued to manufacture up there, we would go out of business. But we did everything we possibly could."

The city's Economic Development Authority will be marketing the building, in hope of finding an occupant, said Chuck Johnson, EDA director.

The building itself, located on Main Street next to Main Street Express, is owned by Kenny Nelson, of KLN Enterprises.