Northern Foundry closing Hibbing facility and laying off 91, partly blaming Minnesota Power utility rates

Northern Foundry in Hibbing is shutting down and laying off 91 employees at the Iron Range manufacturing plant this spring.

Parent company Metal Technologies Inc. (MTI) specifically cited Minnesota Power utility rates as one factor leading to the shutdown in a company announcement Friday.

“Electricity cost is a major expense,” MTI said in a news release. “Minnesota Power’s repeated electricity rate increases ... mean Northern Foundry pays substantially more per kilowatt hour than MTI’s other facilities.”

MTI’s comment did not go unnoticed by Minnesota Power.

“We are sorry to hear today’s unfortunate news and the impacts to the region and working families,” said Amy Rutledge, a spokeswoman for the Duluth-based utility. “The costs to generate and deliver energy safely and reliably while advancing a clean-energy future are increasing.”

Minnesota Power implemented a rate hike last year and asked for another at the end of 2023. The state’s entire electric grid is undergoing transformation as renewable-energy sources are straining capacity, requiring new high-voltage transmission lines.

MTI went on to say it was not feasible for the company to invest in or replace and upgrade equipment at the Hibbing site. The Indiana-based company also pointed to the high costs of scrap metal used for recycling into castings and freight costs.

“It’s a sad day. It’s devastating for our community,” said Pete Hyduke, mayor of Hibbing. “I know there’s a few factors that they talked about.”

MTI acquired Northern Foundry in 2013. It is the smallest foundry in MTI’s portfolio and its only site in Minnesota.

Hyduke said that the facility had a longstanding presence in the city.

“Northern Foundry’s been there about 50 years,” Hyduke said.

The ductile iron foundry specializes in making small, high-volume castings. It’s one of Minnesota Power’s key large industrial customers — alongside mines, pipelines and paper mills — that comprise a majority of the utility’s power sales.

Employees were notified on Friday. The facility will close on or about April 30.

In its letter to the state of Minnesota about the layoffs, Metal Technologies said that it would be a “total closure” of its operations in Hibbing.

“The unfortunate reality is that we need to align ongoing production and investment at our other locations to continue to compete in the global foundry industry,” said Matthew Fetter, CEO of MTI, in a statement.