With front-row view of the Iron Range economy, retiring Mark Phillips 'very optimistic'

Through all the boom-and-bust cycles of the Iron Range economy, Mark Phillips has maintained that key trait necessary for any career in business development: relentless optimism.

The commissioner of the Department of Iron Range Resources and Rehabilitation (IRRR) is retiring after eight years on the job and more than four decades in economic development roles around the region.

The future is bright for northeastern Minnesota, he says, for one clear reason.

"Any place there's a big hub of economic activity, that's because it's usually a good place to live," Phillips, 72, said by phone from his home in Tower last week. "This is a cool place to live."

The IRRR and its advisory board of legislators (IRRRB) have a unique role in assisting both public works projects and private businesses using proceeds from taconite production taxes, which are paid by mining companies in lieu of property taxes.

Phillips made it his mission to focus the department's efforts on high-paying jobs — though his support for logging and mineral extraction may have ruffled environmental activists from time to time.

"We tend to follow where people need our resources, which is why we end up in wood products, minerals or heavy industry," he said. "We have people who know how to do that."

Q: The Iron Range and the rest of northeastern Minnesota have seen plenty of ups and downs over the past decade. What moments stood out to you during your tenure leading IRRR?

A: The rough patches where we had some of our taconite down, especially early in my tenure, was because of steel dumping. We got the Obama administration to prosecute trade cases in a more timely manner. Then Trump got elected and put on pretty severe tariffs and probably did more than they were asking for.

Production was up and down, and the sad thing is it wasn't market-related. Most of the ups and downs in the Iron Range economy have been created by government more than the market. There are more states with manufacturing — that like cheap steel — than there are states that produce iron. So Congress really ignores the problem, and it has cost the Range 30 percent of our population over a number of decades.

Q: What's your read on the health of the region's economy right now?

A: I think we're doing pretty well. We have a few dark clouds on the horizon with some of the taconite plants, but we're working on diversification. The oriented strand board plant in Cohassett is huge. The growth of ASV in Grand Rapids where they make track vehicles — that's 300 jobs.

If we can get a Polymet open and eventually something like Twin Metals — it would really prosper. We have the infrastructure for a robust economy up here.

Q: Let's talk more about those major projects on the horizon. What do you expect will happen with the Huber mill and other nonmining pursuits?

A: We think the wood products industry needs to grow very carefully, so we don't necessarily disagree with the critics when they get nervous about the resource and how it's harvested and where.

We trust our partners at the Department of Natural Resources, the U.S. Forest Service and others. And can you imagine the board of directors of a company investing $440 million in a plant here if they didn't think there's enough wood? We looked over their shoulder, and so did the DNR and everybody. We would not propose or put public money incentivizing something that would harm the environment.

Minnesota is a tough place to permit something, and that's a double-edged sword. People like me, who live here, we want a great environment. So if you have tough standards, and they can be met, isn't that the greatest thing? Why do you sue? We still run into this obstruction, and we'll get through it, because the Huber mill is the right thing to do.

We've made a lot of strategic investments with our communities that maybe 10, 15 years ago people would look at and say: 'Why is the IRRRB working on a big fountain in Virginia?' Because the place is packed all summer every evening.

I'm very optimistic about the future. We have a desirable place to live. That's one of my theories of economic development — any area that rises their quality of life where people want to live there, they usually figure out how to find employment or start a business.

Q: On the mining front, will Cliffs and U.S. Steel be able to access the ore they need to continue operating?

A: There's plenty of ore. There's a corporate chess game going on, now that Cliffs is a steel company. They both do a really good job and are excellent companies doing what they do. I would caution everybody, including the press, to listen closely to the banter about this from corporate heads: 'If I can't get this I'll do this.' They have other options but they don't want to talk about those because that will blow their strategy.

The overcapacity for steel in China is three times what we produce here. You've got to worry that our steel industry could go away because it's supplied elsewhere, just like beef is supplied by Brazil now. But I think the U.S. is waking up and saying, 'Was it really so great to have all our stuff supplied from somewhere else in the world during the pandemic?' So I think there's a bright future for minerals and a lot of different industries that went overseas before.

A: When I first got here eight years ago, I helped lead an effort to do some strategic planning, which we called "Recharge the Range." We brought together business leaders and community leaders, and we asked: What should IRRRB be investing in now? What came out of that is broadband, new trails programs, efforts in child care — people are probably unaware we created hundreds of child care slots up here. We worked on reducing occupancy costs.

We weren't previously in K-12 education either but helped build a number of new facilities and consolidate. Now we are hearing cries for housing as something the IRRRB needs to get into. And for our higher-ed efforts, you don't have to leave the Range to get a four-year engineering degree from Mankato.

There are all kinds of examples of how you can attack a problem. The Minnesota Veterans Home in Silver Bay was having trouble staffing, because there's no child care. We partnered with the local business community and the school district and ended up putting it in a space the district wasn't using. I'm not sure the labor issues for the home are totally over, but it's one step in the right direction.

Q: What advice do you have for incoming commissioner Ida Rukavina?

A: I've been observing her in action at the Range Association of Municipalities and Schools (RAMS). She has jumped in front with leadership on the housing issue, and she did a lot with getting a new model for rural broadband. She has a great style with the way she approaches problems, and if she sticks to her own style, she'll be just fine.