Iron Range endures yet another downturn: 'The strong survive'

"We always know we have to have money in the bank to rely on just in case times like this come," he said, "whether it be the economy or something crazy like this."

Though at first it was spared, northern Minnesota's natural resource economy in recent weeks has begun to fall to the pandemic, with mine and paper-mill closures ripping up the region's biggest paychecks. Spending has slowed and small businesses have closed, some for good.

The Iron Range has been through many downturns and may be better prepared than other parts of the state to deal with this one.

That doesn't mean it hurts any less.

"It's something to prepare for but you don't know what's actually going to happen until it happens," said Haines, 31, who was laid off for a year during the 2015 downturn. "Every day we show up to work and wonder, is Friday going to be our last day?"

So far four mines have announced layoffs — Hibtac, Keetac, Northshore Mining and Minntac — which will leave about 1,750 out of work. While many workers have been able to return after each recent downturn, 1,600 mining jobs have disappeared over the past two decades, a 25% drop.

Haines is still running equipment at Minntac in Mountain Iron for now and didn't know on Friday if his position would be among those cut starting May 10.

"Hopefully it's short-lived like they're saying," he said.

His union president, Steve Bonach, had been getting calls every day last week leading up to Friday's layoffs.

"It's basically the flip of a light switch sometimes," said Bonach, 60, a third-generation miner.

Last week Pete Hyduke watched as some of the last loads of taconite were trucked out of Hibbing's massive Hull Rust Mahoning Mine for the time being. He was laid off from that mine decades ago but had prepared for that possibility; he's now nearing retirement after a long career with the city.

"I think people learn to live this way," he said.

The region's fortunes will continue to be tied to the riches in the ground and the boom-and-bust cycles that accompany it.

"Every day they're working on something for the future," Bonach said. "That's what the Iron Range is."

'Snowball effect'

Taconite production had been running at full tilt for several years now — 37 million tons were shipped to steelmakers last year. An area that typically has higher-than-average unemployment rates even during boom times was finally seeing signs of sustained success.

"Two months ago if you wanted a job, there were signs everywhere looking for help," said Brad Hadrava, a retired maintenance director for Eveleth-Gilbert Public Schools and an Eveleth City Council member. "Right now you couldn't scrounge a job if you wanted to."

In typical downturns, when mining jobs go, the rest follow. This time the order was reversed, with forced closures of restaurants and salons preceding April's layoffs.

Hadrava started working in the mines just before the 1980s bust that cost 10,000 mining jobs that never came back.

"I hate to see anybody go through what we did," he said.

It's unlikely the pandemic will eliminate many mining jobs permanently — Bonach said there will be pent-up demand for steel as the nation emerges from quarantine — but miners aren't sure when things will get back to normal, either.

Depending on how long production is slowed, a dip in the taconite production taxes that fuel schools and cities could spread the pain of the pandemic over several years.

"It's a snowball effect, and it's going to hurt a lot of people a year from now if the county and city don't get their money," Hadrava said.

Virginia is poised to furlough more than two dozen city staffers to deal with a budget shortfall. Mayor Larry Cuffe said it's the first time the city has had to make such sweeping cuts.

"We're not going to be the same as we once were, just as Main Street won't be the same it once was," he said, noting the permanent closure of the longstanding North Gate Cafe. "Less business, less revenue, less city employees, but as a community as a whole we'll be resilient and we'll come together to make the changes needed."

Where to diversify

If taconite was having a heyday before the pandemic, timber was already in trouble.

Employment in the industry has been cut in half in the past 20 years, with most of the losses coming from mills.

The current shutdown at UPM Blandin in Grand Rapids has put about 240 out of work, and coupled with revolving layoffs at the Sappi mill in Cloquet, that means less work for loggers, whose numbers have managed to remain steady in recent years.

"The longer this thing goes on, the more challenging it gets for our loggers and those who work on the forest floor," said Mike Birkeland, executive vice president of Minnesota Forest Industries and Minnesota Timber Producers Association.

Itasca County is especially vulnerable to swings in the wood and mining industry, with unemployment rates soaring during downtimes — the jobless rate jumped to 8.5% in 2016, more than double the statewide rate. Before the pandemic, the county's unemployment rate averaged around 6%.

"Our area is facing some huge pressures," said Tamara Lowney, CEO of the Itasca Economic Development Corporation, who also pointed to the potential closure of the Boswell coal-fired power plant. "We're trying to work on diversifying even more than we have."

Mark Phillips, commissioner of the Department of Iron Range Resources and Rehabilitation, sees a brighter future for the region's forests products industry even as he said it consumes 1 million fewer cords of wood per year than it used to.

"We're not going to diversify into making rockets, we're going to get it in our natural resources — making siding or high-tech products or chemicals from wood," he said.

Phillips also pointed to the idled Louisiana-Pacific Corp. siding plant in Cook that he projected could have opened next year, in normal times. He expects the paper industry to bounce back, as the machines that remain are too competitive to walk away from.

"The strong survive," Phillips said. "Right now UPM in Grand Rapids and Boise Paper in International Falls are two of the survivors."

Despite the headwinds, Grand Rapids is adding residents and is in a strong position, said Tom Pagel, city administrator. With six construction projects totaling $60 million across the city of 11,000 and hopes for a strong tourism season, Pagel said the worry isn't for the big businesses but the small ones.

"Those small mom-and-pop businesses, you just feel for them," he said. "That's tough everywhere."

Weather the storm

In typical downturns, when the mines close, the money stops flowing through the community, said Vicki Hagberg, president of the Hibbing Chamber of Commerce.

"Historically there's a culture of planning and saving in our area that can help weather the storm," she said, but there needs to be some level of local spending to keep local businesses alive. "That goes anytime, but especially when facing these economic challenges."

When the state shutdown orders came, Paula VanBaalen had to lay off her six employees at Ohana Therapeutic Massage and delay plans to open a massage school in Hibbing. Even the last wave of layoffs didn't hurt that badly given the wide range of people she serves, but now even health care workers are being temporarily laid off as the region braces for COVID-19.

VanBaalen has found a way to stay in business by offering digital self-care and selling online while her husband continues to work at Minntac.

"We were able to shift the trajectory of what we're doing online," she said. "People haven't stopped injuring themselves."

VanBaalen is hopeful she will be able to get back to hands-on work this summer. In the meantime, she's grateful to have more time outside with their new dog, Hok'ee, and wait for the economy to rise again like it always has.

"This is hitting different people at different lengths of intensity," VanBaalen said. "Everyone is in the same storm, just in different boats."