Sudden, painful Iron Range slump evokes talk of the ’80s

Minntac sign
MinnPost photo by Catherine Conlan
The Minntac plant in Mountain Iron will see layoffs of 590 people, half its workforce.

VIRGINIA, Minn. — Mining layoffs and slowdowns. An imploding economy. A drop in steel demand. The current business climate reminds some on the Iron Range of the tough times in the 1980s, when similar conditions crushed the region’s mining industry.

But only a few months ago, taconite production was barreling along, company officials touted expansions and new projects, and cities were wondering where to put extra workers. 

What happened?

Plain old supply-and-demand has undermined the taconite industry, but it was the quick response from steel companies that caught Iron Rangers off guard.

“It happened in mid-October when we were still going full guns,” said Gary Skalko, mayor of Mountain Iron, which is home to Minntac. Minntac’s parent company, U.S. Steel, announced Feb. 20 it would lay off half the plant’s workers — about 500 union workers and 90 in management — for an indefinite period.

“Wood was hurting, but mining wasn’t. By mid-November, it did come quickly but at the same time, when you look at the whole picture — the car industry, the economy, everything — it’s not surprising.”

Last year, the Range was basking in new projects and expanded production. Now, people are hoping for a quick turnaround that isn’t necessarily coming.

The layoffs at Minntac may begin this week, said Mike Woods, president United Steelworkers Local 1938, which represents Minntac steelworkers. However, Woods stressed that U.S. Steel has not given him any specifics.

“It’ll probably go in phases,” he said, adding that some people could be laid off this week and then another batch would be laid off at the beginning of April.

Slowdown came ‘almost overnight’
“This was almost overnight,” Woods said about the slowdown. “In August, we were running wide open. There was some softening by October or November. At this point, a lot of people don’t know what to expect. A lot of the younger ones are expecting to get hit, they just don’t know when.”

Other recent announcements included Cliffs Natural Resources’ decision to idle another line at Hibbing Taconite Co. at the end of March, which could result in more than 80 layoffs. It will also shut down for 15 weeks starting in May. North Shore Mining Co., also a Cliffs plant, will shut down for a month starting in April. U.S. Steel’s Keewatin Taconite plan was shut down in December for an indefinite period.

The steel companies “responded immediately and at breathtaking speed” to the economic drop, said Sandy Layman, commissioner of Iron Range Resources in Eveleth. “The Iron Range was unprepared for the sudden and direct impact of the economic recession.”

And while the slowdown evokes talk about the 1980s, Layman said there are some key differences.

A more diverse industry now
“The Iron Range has more diverse mining-related activity today” than it did 25 years ago, she said. “The amount of people directly employed by mining is significantly less. And the 1980s were a period where steel companies and taconite plants were in transition — after that, the whole industry was reorganized into something that is now better positioned to recover” when the economy turns around.

The short term is what is looking particularly painful.

“They can get by on extended unemployment,” Skalko said, “but what’s scariest for all of us up here is when it will turn around. U.S. Steel says the halt is temporary, but they don’t know what that is — three months, six months, eight months, a year? That’s the scariest part.”

U.S. Steel spokeswoman Courtney Boone said the company will not speculate on the timing of any potential layoffs, or when production might ramp up again.

‘There aren’t a lot of options’
Woods, with the Steelworkers, said there are few options for his members. “There’s not a lot of jobs out there,” he said. “I can’t imagine what people out of work will do. With the big construction slowdown, there aren’t a lot of options. Even down in the [Twin] Cities, there isn’t much going on.”

Joe Erickson
Catherine Conlan
Joe Erickson

That kind of outlook is what reminds Joe Erickson, who worked at National Steel (now Keetac) as a millwright for many years, of the down times in the 1980s. Erickson opened a barber shop in Virginia in 1995 after the year-long lockout at National Steel and has worked as a barber ever since, selling the shop to someone else in October.

“If you were laid off in the mines [in those days], there weren’t construction projects to work on,” Erickson said. “Skills were so specific — if you were in real heavy industry, unless you were an electrician, you couldn’t offer anything else. Everyone was cutting back in those days.”

“It’s hard to say what kind of effect it will have,” Erickson said, because the magnitude of any slowdown isn’t quite clear yet. “But it looks like things are going to get worse.”

Skalko said the hits from the 1980s were tough on towns, too. “We lost a whole generation of people then,” he said. “It affected cities and schools. Enrollments took a hit. A lot of people left here and went to other jobs. Now it’s different. We’re not losing people because there aren’t that many places to move to — things are hard all over.”

Longer-term projects are moving ahead
At the same time, Layman pointed out, long-term prospects have not dimmed.

Projects that were fueling talk of an Iron Range resurgence are still on schedule. The $1.6 billion Essar Steel Minnesota plant is moving ahead on land acquisition and pit dewatering, Layman said. Mesabi Nugget, a $260 million project, is continuing its construction near Hoyt Lakes, is meeting its timetables and is hiring.

“It’s encouraging to see ads for engineers,” Layman said.

The $601.9 million PolyMet Mining project, which plans to use part of the old LTV Steel Mining Co. plant near Hoyt Lakes, is at the draft EIS stage and moving ahead, Layman said.

“Even U.S. Steel’s $300 million expansion at Keetac, while the plant itself is shut down, is still moving ahead,” Layman said. “They’ve made it clear that long-term they don’t want to slow down.”

Municipalities and planning commissions had been focused on that growth, Layman said, “and suddenly the locals are losing their jobs, instead of us welcoming new workers. It is a period of chaos.”

“It’s part of the business,” Erickson said. “Boom or bust.”

“It’s very alarming and scary,” Skalko said, “but we’ll pull together and survive.”

Catherine Conlan writes about the economy, politics and other subjects in northeastern Minnesota.

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Comments (1)

  1. Submitted by david granneman on 03/05/2009 - 10:21 am.

    hello americans
    department of labor statistics show that when you buy an american car
    you are creating jobs for 54 of your fellew americans. when you buy a honda you are creating jobs for about 25 americans. most of the remaining foreign car companies create about 5 jobs for each car sold. remember this when you decide to buy a new car.

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