Hibbing: The recovery that wasn't

Guy Gangl
Guy Gangl has mined at Keewatin since 1976. He says the current downturn feels a lot like the 1980s -- a time when some mines closed altogether and a lot of people left the region.
MPR Photo/Bob Kelleher

The Hibbing area in northeastern Minnesota has the highest jobless rate of any city in the state. It's also in the center of the state's taconite mining industry. The industry is seeing a mild rebound after a summer shutdown, but so far the upturn has skipped Hibbing.

Mining accounts for only 3 percent of the jobs in St. Louis County, but a recent study gives the industry credit for one-third of St. Louis County's gross regional product. Mining jobs pay an average of about $68,000 a year, which is double the typical wage in the county.

Earlier this year, the recession hit mining hard. At one point this past summer, the state's entire taconite industry -- six mines -- had shut down.

Some of them are open again. But within a short drive of downtown Hibbing, the area's two taconite mining companies remain idle, along with their 900 workers.

When the mines are hurting, nearly everyone here feels the pain.

On a recent October afternoon, Mike Banovitz was wandering among the booths at a jobs fair at the Irongate Plaza mall in Hibbing. He wasn't laid off from a mine, but from a construction project.

The crusher, Hibbing Taconite
In this file photo, a mining truck dumps its load of taconite rock into the crusher building at Hibbing Taconite. Communities in Minnesota's Iron Range have seen double-digit unemployment rates as all the region's major mining operations shut down for at least part of the past year.
MPR Photo/Bob Kelleher

"I am a mechanical engineer, and I was looking to find a job so I could stay here in northern Minnesota," said Banovitz. "Otherwise I'm going to have to hit the road and work elsewhere."

Banovitz wants to stay near Ely. But the clock is winding down on his unemployment benefits, and he may have to go job hunting out of state.

"Right now it looks like that's where I'm going to end up having to go, so I came to the job fair here to see what was available in northern Minnesota -- see if I can't stay closer to home," he said.

But at this job fair, there are more booths offering education than employment. None of the area's taconite mining companies are here.

That's not surprising, according to Charlotte Hanegmon with the Department of Employment and Economic Development in Hibbing.

Looking for a job
Mechanical engineer Mike Banovitz has been unemployed since March, when financing fell through for a Wisconsin company's egg processing plant. Banovitz was looking for work at a recent jobs fair in Hibbing.
MPR Photo/Bob Kelleher

"It's hard getting employers to come to a job fair this year," said Hanegmon. "Many of the major employers that we've had in the past chose not to come because they have people off work."

Companies that supply the mines are nowhere to be seen, and there aren't many construction or non-mining companies here either.

"Everything revolves around what the mines are doing," said Hibbing Police Sgt. Jeff Ronchetti, who is at the job fair recruiting for his department.

"If the mines are doing poorly, all the spinoff businesses do poorly," he said. "The regular business climate also starts to deteriorate, because it's dependent upon the people getting salaries and their paychecks from the mine."

The town of Nashwauk is about a dozen miles west of Hibbing -- and just as reliant on the mining industry.

Empty cafe
The Wauk-In cafe in Nashwauk, virtually empty in the middle of a weekday afternoon.
MPR Photo/Bob Kelleher

Longtime miner Guy Gangl is one of the few customers in the nearly empty Wauk-In cafe, the only one in town. Gangl says the times feel a lot like the 1980s -- a decade when some mines failed and thousands of people left the Iron Range for good.

"For any jobs that's available, I'm sure that there's hundreds of applications put in for the jobs," Gangl said. "I have three sons that are currently looking for work also. They were never employed in the mines, but -- a lot of young people looking for work. A lot of old people looking for work."

Gangl says the tight times have nearly everyone very cautious about spending.

Just a couple of weeks ago it looked as though things would change, when U.S. Steel recalled more than 100 workers at its KeeTac plant a few miles away.

"We all went in and took our physicals to go back. And then because of the economy, or whatever it was, they said, 'We're not going to open this winter," Gangl said.

Miner out of work
Louis Chellico, an idled worker of the KeeTac mine, at his home in Nashwauk. Chellico has lost his medical insurance, and expects to exhaust unemployment benefits in December, unless there is movement in Congress to extend federal benefits beyond that. Seated in Chellico's lap is his dog, Lucky.
MPR Photo/Bob Kelleher

U.S. Steel said the KeeTac plant may not reopen until next April. Gangl and other steelworkers interviewed by MPR say they're shocked and frustrated that they're facing another winter's high heating bills without work.

The company blames market conditions. But the two plants near Hibbing are the only ones still idle in Minnesota. A slight improvement in the market convinced four other plants in the state to come back online between July and the end of September. Hundreds of workers have been called back to work at those plants.

Still, the steel market remains soft, and that means the demand for taconite is soft, according to Phil Englin, Manager-Special Projects from World Steel Dynamics, which monitors the world steel industry.

Englin says the budding rebound in iron mining is based mostly on a need to replace depleted steel inventories. He says there's no evidence of any sustained increase in demand for products made of steel.

"The number of washers, dryers, cars that are being sold -- the Cash for Clunkers being an exception -- a few more cars got sold in August. After that they fell off a cliff again," said Englin.

Empty store
An empty store building at Hibbing's Irongate Plaza Mall.
MPR Photo/Bob Kelleher

Inventories, he says, will soon be replenished and manufacturers are not likely to boost production without a strong signal from consumers that they are ready to buy again.

"I think the outlook is sort of tough for the next year or two, in the advanced world. Things will probably be a little better in the developing world," he said.

In the long run, Englin says, the industry will rebound.

That's because for mining companies, it's not like the 1980s any more. The industry has learned how to weather the ups and downs much better.

In the past. they would keep producing until they went out of business. Now, the mines can shut down quickly when demand slows, and resume production almost as quickly.

But the repeated regional booms and busts don't get any easier for residents, according to Dr. Steven Carter, a psychologist who practices in Virginia.

"People have lost their jobs. They believe they're going to get them back. They've gone through similar ups and downs in the past, but they're not fully secure in that belief," said Carter.

That insecurity is showing up in Carter's practice in Virginia, where the local mine just reopened a month ago, after closing in the spring.

"I've seen more marital distress. I've seen couples that I don't think would normally be requesting help come in," said Carter. "And I've seen some of them losing perspective -- that what really is stress from the economic situation that they find themselves in is being interpreted as problems in the relationship."

A few miles away in Nashwauk, Louis Chellico is passing another afternoon at home. He's one of the workers who was hoping to be called back to at the KeeTac mine, but was not.

It's a lot of stress. It's hard on a guy," said Chellico.

Now, with the one-year anniversary of his layoff approaching, Chellico faces a cutoff of his unemployment compensation. He's hoping a much-discussed extension of federal benefits will come through to help with the bills.

"Just like everyone else -- car payment, truck payment. If we don't get that extension ... I don't know what we're going to do," said Chellico. "It's getting more and more stressful as it gets closer and closer."

If the experts are right, the two closed mines might reopen early next year. But for many people like Louis Chellico, that might not be soon enough. Unemployment benefits will be exhausted next month for those who were in the first wave of layoffs at the KeeTac mine.