On boom-or-bust Iron Range, this downturn feels different

KEEWATIN, MINN. – Across the Iron Range, the unemployment checks stopped just as the holidays started.

Ken Lorenz's last check came just before Thanksgiving. The father of four lost his job at the Keewatin Taconite plant in March. Since then, mining operations have groaned to a halt up and down the Range, throwing almost 2,000 miners out of work. It's the latest blow to communities where mining is the bedrock of the economy and local identity.

"Jobs that allow you to support your family are tough to find right now, just because there's so many people who are out of work," said Lorenz, who had just started work at Keetac when the layoff notices went out. Lorenz didn't have enough time in at the company to qualify for state job retraining assistance, and it hasn't been easy to find another job on the Range that pays enough to support his family. He keeps searching, and hoping for the callback to work.

"We'll weather the storm, one way or the other," he said. "We haven't quite figured out how, but we're crossing our fingers something happens here soon."

The Iron Range, one of Minnesota's most volatile regions, is in a downturn again. The slump is in stark contrast to the rest of the state, where many local economies are strong and unemployment is low. Increasingly, Iron Rangers worry that a boom might not follow this bust, that no amount of hard work or sacrifice will bring back the market for the ore they mine. A glut of overseas steel has pushed ore prices to a 10-year low and shuttered more than half the 11 major mining operations on the Range.

Keetac, and its hundreds of workers, has been idled indefinitely by U.S. Steel. The Mesabi Nugget iron plant near Hoyt Lakes and the Mining Resources iron concentrate plant near Chisholm will close for at least two years. Grand Rapids-based Magnetation, facing bankruptcy, idled plants in Bovey and Chisholm. United Taconite closed its mining operation in Eveleth and its pellet plant in Forbes. Northshore Mining in Silver Bay will shut down by December, throwing 540 people out of work.

It would take an act of the Legislature to extend unemployment benefits, but by the time lawmakers return to work in March, almost 600 steelworkers will have run through their benefits. The governor has called for a special session to extend those benefits sooner. But for now, Iron Rangers are waiting and watching the effects of those lost jobs ripple across the region.

Doubts about a boom

"People aren't out spending money. Even the ones that haven't been laid off yet. They're getting ready," said Cliff Tobey, president of Steelworkers Local 2660 in Keewatin. "A lot of places that depend on the mines are laying people off as well."

Iron Rangers remember all the past busts, and some still recall a time when the mines shut down for the winter and all the miners would go ice fishing for a few months. Every time, the economy would turn around, demand would pick up, or the weather would warm up, and everyone got back to work.

This time, people say, it feels different. The economy in the rest of the state is thriving while the Iron Range struggles alone. The unemployment rate in Hibbing topped 8.7 percent in October. Seventy-five miles away in Duluth, it was 2.9 percent.

"What's different about this downturn is that it's occurring in a pretty positive overall economic condition" in the rest of the state, said Erik White, who analyzes economic trends in northeastern Minnesota for the Minnesota Department of Employment and Economic Development. "It's not completely doom and gloom, but it's hard to be optimistic."

'People are scared'

Fewer and fewer people in northeastern Minnesota work for the mines now — just over 4,200 at the start of the year, with another 11,000 employed in support industries, according to Iron Mining Association estimates. But in the economic ecosystem of the Range, when the mining jobs start to go, so does everything else, from the contractors and vendors who supply the mines to the restaurants and shops waiting for their customers to return.

"You can see the fear now. People are scared," said Andy Karahalios, owner of the Sportsmen's Restaurant and Taverna in Hibbing. The Iron Range has fewer children and more senior citizens than the rest of the state. The locals joke that the biggest employer up here is Social Security.

Still, many are confident that the Range will rebound, like always.

"It's gonna turn around again," Karahalios said.

Across the table, Jack DeLuca, former commissioner of the Iron Range Resources and Rehabilitation Board, shook his head and let out a sad chuckle.

"It's not going to turn around this time," DeLuca said. There's too much steel and ore coming in from overseas, he said, and too little demand for Range taconite — the lower-grade iron ore pellets that are shipped to steel mills and melted down. What the region needs, he said, is new blood and new industry. Maybe a four-year college so the young people don't have to go away to school, and stay away to work.

"The government is not going to help us," DeLuca said. "We've been bouncing that ball for 50 years. … They don't want the steel industry, they want high-tech."

There is one thing Iron Rangers are hoping the government can do for them, at least in the short term — extend unemployment benefits for workers like Lorenz. But it is far from certain that there is enough political pressure to force legislators back to St. Paul.

Local charities are bracing for the months ahead, when the workers who used to donate start needing help themselves.

In Chisholm, the United Way of Northeastern Minnesota shifted resources into a crisis fund for the workers and their families, even as it faced the loss of hundreds of thousands of dollars in donations that used to come from miners and mining companies.

"We'll be pretty much wiped out" once the crisis funds run out, said United Way Executive Director Shelley Valentini, standing in a warehouse in downtown Chisholm, where volunteers pack a weekend's worth of food for hundreds of schoolchildren who don't have enough at home. The number of children enrolled in the program has begun to rise.

"My family does not have a lot of money," one child wrote in a thank-you note to the Buddy Backpack program. "So we can get other things when we don't have to pay for this food."

Snowball effect

The loss of hundreds of high-paying mining jobs could devastate communities like Keewatin, population 1,068.

"If you have 25 people laid off in this city, that would be like 25,000 people laid off in north Minneapolis," said Dan Charter, standing in the Keewatin union hall with a crowd of other out-of-work miners. "To go out and find a job elsewhere is not [easy] because everything's geared toward mining. It's the whole Iron Range — the snowball effect," he said. "It keeps building and building and building."

Making the rounds with his résumé, Charter, 57, watched the snowball effect in action. When business owners asked him where he'd last worked, "I'd tell them Keetac, and they'd say, 'Well, that's why we have people laid off too.' "

Charter's unemployment benefits have run out, and while he'd like to sign up for some of the job retraining programs the state is offering, the classes are full — the earliest he can get in is next summer. He plans to study to become a diesel mechanic, retraining for a new career at an age when others are planning for retirement.

"Getting hired on at a diesel shop at almost 60, when you're on your way out, instead of just starting, is …" he trailed off, shaking his head.

There are jobs to be found, but few that paid anything close to the $90,000 a year the state calculates as the average salary for skilled mining industry jobs.

"Where else can we go to get jobs? There is nowhere," said Dan Hill, who lost his job at United Taconite in August and will lose his unemployment benefits in February.

Hill comes from three generations of miners. His wife is fifth-generation mining stock.

He has watched the effect of the layoffs ripple across his hometown of Hibbing. People aren't going to the movies, they aren't buying anything at the concession stands at high school football games, they aren't fixing up their houses or buying new cars.

"Mining is everything up here, [and] all the things that support us as a community are slowing down," he said. "We look at the forecast and it's stormy and gloomy for a while. … [But] that's what makes us hardy up here. That's life up here."

Jennifer Brooks • 612-673-4008