Strength of Iron Range economic recovery surprising to locals

HIBBING – When Jim Bailey lost his oil fracking job last year, the Bemidji resident took a chance relocating his family to Hibbing, which lies in the heart of the Iron Range and its boom-or-bust economy.

Bailey and his wife, Tracy, bought the shuttered Courtyard Cafe on historic Howard Street. In December, they received some splashy company when the large BoomTown Brewery & Woodfire Grill opened a block up the road.

Not far away, cranes and cement trucks are cranking out factory additions at the pipemaker Iracore International, the truck cooling-system maker L&M Radiator and the custom manufacturer Range Steel Fabricators.

Stores also are opening, and anecdotes of a healthier economy echo across Minnesota's Mesabi Range, an ore-rich swath that rambles for 110 miles and has seen thousands of layoffs in recent years as the taconite industry weathered a severe slump.

"Since we got here we noticed there is more activity in the area and more people in the streets," said Tracy Bailey while dashing to serve a customer pancakes. "We have been really busy."

The level of activity has surprised some locals, but the reason behind it is clear: The iron ore companies are healthy again. Idled plants are reopened, with 2,000 employees back to work.

"When all the major taconites are operating, that is a good sign," said Mark Phillips, commissioner of the Iron Range Resources and Rehabilitation Board (IRRRB). "When you hire one taconite worker, you have three other people who end up working because of that one job."

With residents working again — and some of the operations expanding — people are eating out more, shopping and spending more cash in general in their communities, Phillips said.

"We are having another boom to an extent," Phillips said.

Jim Bailey and his wife had hoped the area would grow again when they moved there.

"We thought, it would be great to see people not worry about the next layoff," he said. "And it would be great to see all the population back and people making money."

This latest surge has people hoping the Great Recession and then 2015's painful mining downturn are behind them.

Manufacturers and iron shipping firms across the region report business has improved greatly since late 2016. They note a host of factory expansions, street repairs, fresh upticks in product orders from the big mines and taconite-laden ships leaving Duluth's harbor.

"Last year was the largest iron ore tonnage shipped through the Port of Duluth-Superior in a decade," said Adele Yorde, spokeswoman for the Duluth Seaway Port Authority.

The only wild card now is the tariffs on steel and aluminum that President Donald Trump's administration has imposed. They should help the iron ore industry but are, in the short term at least, causing issues at other manufacturers.

"Certainly stabilizing the iron mining industry has benefited our communities and the regional economy," said Lory Fedo, president of the Hibbing Area Chamber of Commerce.

Keetac, Minntac, United Taconite and Northshore Mining all have reopened since idling three years ago due to an onslaught of underpriced imports and the crash in global ore and steel prices.

Fedo said many factors, including tariffs put in place by President Barack Obama and Trump's additional tariffs, slowed the illegal dumping of underpriced Chinese steel into the United States. That helped the Iron Range.

U.S. Steel recently announced that its Keetac taconite plant in Keewatin will produce iron pellets for the company's newly reopened blast furnace in Granite City, Ill. In Silver Bay, Northshore Mining is in the midst of a major upgrade. In Forbes, United Taconite built a new $75 million pelletizing plant last year and is now expanding its iron ore mine near Eveleth, Phillips said.

In another piece of good news last week, Gov. Mark Dayton announced that the investment group headed by Virginia billionaire Tom Clarke secured the financing necessary to resume construction of the bankrupt $2 billion Essar Steel Minnesota project in Nashwauk.

Plans call for operating an ore mine, taconite plant and a more modern, technology-enriched DRI ore processing plant that combined could create up to 350 permanent jobs.

Phillips said the state and IRRRB are also working on projects not tied to mining to diversify the economy.

For example, he said Sweetwater Energy, a New York company, is still in talks with state officials about building a possible plant in Mountain Iron that can convert timber into chemical sugars used in plastics and biofuels. And Louisiana Pacific may still want to convert the shuttered Ainsworth strand-board plant it bought in Cook in 2016 into a siding factory.

However, while the IRRRB strives to diversify commerce, officials concede the local economy will probably always be tied to its natural resources, which traditionally has meant timber, paper, various minerals and of course iron ore.

Still, several small manufacturers made it through the mining downturn and now are growing.

Take Range Steel Fabricators (RSF). Grand Rapids natives Jeff and Gina Halter lived in Florida for years running a successful real estate development firm. But the desire to raise their three children closer to family prompted a move back to Minnesota and the purchase of the seven-employee Range Steel in October 2016.

At the time, more than 40 percent of the business relied on mining customers, yet four major ore plants remained shut from the downturn.

"We didn't move up here thinking that the mines were booming. We knew they were strained. We knew there was a calculated risk," Jeff Halter said. Moving back to the Range "was a leap of faith" that the industry would come back.

With mining orders rising again, Range Steel hired 16 new workers last year and now has 23. Halter plans to add more.

"I have high expectations for the future of Range Steel Fabricators," Halter said. "We intend to expand our services, create new job opportunities in Hibbing and meet our customers' product needs with a modern manufacturing facility."

Foreman Robert Timmerman, who has been at RSF for 14 years, weathered a layoff in 2010 and saw the industry recover and then decline again in 2015.

"When the mines were shut down … pretty much everybody was laid off. It was pretty slow," Timmerman said. "There is a huge difference compared to now and before."

For the Main Street businesses, that mine activity means more full seats and more full plates at dining establishments such as Bailey's Courtyard Cafe and the new BoomTown restaurants in Hibbing and Eveleth.

"Things are way better than I anticipated. And I think it's that the miners are back to work," said Wendi Thompson, the BoomTown manager who ran the Eveleth restaurant before helping to open the new spot in Hibbing in December. "You can't spend money if you can't make it," she said. "I know all about the mines being down. I lived it. My dad was a miner."