Iron Range hoping stimulus jumpstarts mining industry

Welcome to Keewatin
Welcome sign outside the town of Keewatin, home of KeeTac Mining. About half KeeTac's workforce is on furlough; the others have temporary jobs at another taconite plant in Mountain Iron.
MPR Photo/Bob Kelleher

It's quiet today outside the gates of the KeeTac taconite plant in Keewatin. There should be furnaces pouring exhaust out of a row of stacks there. There should be trucks rumbling in the background, and maybe from here you could hear the roar of the rock grinding and crushing from the taconite building, but nothing today. This plant is not likely to reopen until this recession lets up.

Wayne Wilson has worked at KeeTac for almost 41 years. Today, he's out of work, chain-smoking cigarettes in the small union hall in downtown Keewatin.

"They've talked about going back in April, or March for repairs and stuff," Wilson said. "But I don't know, with the way the economy's going if that's going to happen or not. The economy's going to dictate everything, I think."

About half KeeTac's workforce is on furlough; the others have temporary jobs at another taconite plant in Mountain Iron.

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Mining shovel
Taconite mining has always been an up and down business on the Iron Range. Workers are hoping the steel needed for infrastructure projects will jumpstart the mining industry.
MPR Photo/Bob Kelleher

When KeeTac was open, Cliff Toby was fixing mining shovels and trucks. Now, he's fielding calls in the union hall, where the number of calls from worried workers is on the rise.

"I think we're kind of right at the point where it's really starting to sink in pretty heavy," Toby said.

The people laid off in Keewatin get six months of unemployment, but a third of that has already been used up. The economic fallout is not as bad here as it was in the 1980s, when two taconite companies closed altogether. But now, Toby said the industry feels more volatile because of globalization.

"This could be a lot worse than the 80s depending on what happens with the economy," he said. "I don't think in the 80s we had nearly the pressure on our economy from the global economy that you have now."

Toby's counting on the stimulus package in Congress, which could directly stimulate the taconite industry for steel in bridges and steel re-bar in new roads.

"I'm not an economist or anything like that. I'm just a miner on the Iron Range," Toby said. "But, I mean, obviously we're all hoping that this is going to help our situations. We all want to work and we all want things turned back around again."

Taconite mining has always been an up and down business on the Iron Range. John Rebrovich, the Steelworkers Sub-District Director in Eveleth, was surprised how quickly things went downhill.

"There was actually no hints as to this was coming," Rebrovich said. "Back in October of last year, the taconite plants were producing everything they could produce. They were doing everything to keep the plants running. In a matter of a couple of months it just seemed like the doors have shut, and everything is just shutting down. So this is quite different."

To Rebrovich, the federal stimulus is the only hope for the industry.

"Right now, nobody else sees any other way out of it, to tell you the truth," he said.

Rebrovich said provisions in the package to rebuild infrastructure like bridges will take steel.

"This will trickle back into the manufacturers, who [are] going to manufacture parts, to the steel industry which is going to have a great effect on iron ore," Rebrovich said. "And it will get the economy going again and get people spending again, get money in their pockets. Hopefully, this will rebound."

Economist Tony Barrett, with the College of St. Scholastica in Duluth, said, from a classical economic view, the stimulus is the right thing to do. "That's exactly what the textbooks say we should be doing now, and that's one of the reasons I think this recession will end this year, because the tax cuts will gradually increase household spending," Barrett said. "Government spending will increase demand. We know they're going to spend every penny they authorize, and that's exactly what should happen."

But with Minnesota's link to the steel industry, it stands to benefit more than most.

"For our region we have the added benefit that a lot of the infrastructure spending is steel intensive," Barrett said. "That helps us more than, say Missouri, or some other state that doesn't have a steel, or a taconite industry."

But Craig Pagel, with the Duluth-based Iron Mining Association, cautions that even an $800 billion stimulus isn't going to turn things around quickly.

"In fact it might even get a little bit worse before it gets better, just because market will take a little while to react to the stimulus package if it's passed, and hopefully it will," Pagel said. "There's always a little bit of lag time, which in the interim there's going to be a little bit of slipping that goes on. But I think from there it should climb rather quickly, if it's done right."

Local steelworkers president, Ray Pierce, was in Washington last week, lobbying for the stimulus plan. He represents workers at a Virginia, Minnesota mine.

"It's to the point right now either we're going to need a stimulus package, or we're going to be back, going from a recession to a depression," Pierce said.

In Keewatin, steelworkers try to avoid the "D" word. But, with the town's only real employer shut down, many are thinking the federal stimulus is the only thing standing in the way of depression.