From a recent presentation by Jim Skurla on the Economic Impact of Ferrous & Nonferrous Mining which will soon be on youtube.com . The presentation was sponsored by Mining Minnesota, Jobs for Minnesota, Up North Jobs Inc, Ely Area Development Association, and the Ely Echo. Jay Mackie also spoke at the presentation which is highlighted below:
Citing census data, local food shelf distributions, a growing number of empty storefronts and the recent struggles of local governments and Ely's hospital, Jay Mackie took direct aim Wednesday at mining opponents who contend that the area is sustainable, or even thriving. His remarks follow:
My understanding of the meaning of sustainability- which is based on my education and experience - is the ability to maintain a certain desired state for an extended period of time without requiring outside intervention, help, aid or support. For northeast Minnesota and more specifically Ely- to me that means providing broad based economic opportunities, both today and tomorrow, which will allow a widely varied population group the ability to support itself - their families, the schools, and to maintain a desired level of services provided by city and county governments. Today, in our area which also includes the communities of Hoyt Lakes, Tower, Soudan, Babbitt, Aurora, and Biwabik - we are not able to provide those required economic opportunities.
You may ask - how can I support that statement? In order to hopefully understand my premise, I am going to give everyone here just a little short history lesson of what I have seen and experienced during my 70+ years in Ely. The experience which contributes to my understanding of sustainability.
First off, let us start in the early 1940s-
The economy was based on two primary foundations and they were strong - mining and logging with mining the predominant foundation providing raw material for the US steel industry supporting the Allies winning efforts in WWII. At the time, logging was primarily supporting the underground mining activities providing lagging material and secondarily providing dimension lumber for the building industry. The tourism industry was quite limited at the time and consisted of a few area resorts such as Burntside Lodge. Primary transportation to this area was by railroad and secondarily by Greyhound Bus. Access was limited to say the least.
Next - After 1945 -
With the mustering out of 100s of thousands of soldiers across the US, the Economic foundation of NE Minnesota experienced a major improvement as did most of the US. Here jobs for the returning soldiers were to be had in one, a rapidly growing mining industry supporting the postwar expansion, and two, in the logging industry expanding to provide materials for the housing boom and thirdly, a new industry began to grow and flourish - tourism. In the Ely area a number of new resorts were built. These resorts, the majority of which were built on Canadian/US border waters, catered primarily to fisherman. Access was provided by float plane and by motor launch. At this time the canoe outfitting business was in its infancy. Ely and NE Minnesota was a booming place. Anyone who wanted a job could get one. The cities of the Arrowhead had their financial coffers filled with tax money from the mining companies and as a result real estate taxes were virtually nonexistent. St. Louis County and the independent school districts were also without financial wants and similar to the cities - the real estate mill levy was very small.
Now come the 1950s, '60s and '70s -
The '50s saw much of the same as experienced in the late '40s but with growth being centered in the tourism sector - primarily in the canoe outfitting business. Wilderness Outfitters and Canoe Country Outfitters became models of thriving summer businesses and the resorts on Basswood, Crooked Lake, Fall Lake, and Moose Lake were booked with fisherman solidly from the opening of fishing season until mid-September. The mining industry was still the mainstay of our economic foundation providing year round living wages to all employees.During the late '50s in the East Range we saw the expansion of the mining industry with the advent of the taconite mines at Babbitt and Hoyt Lakes - Reserve Mining Company and Erie Mining Company. Completely new communities were established to support the massive influx of people required by this industry. The timber industry, in like fashion, was flourishing providing material to the mills in Cloquet, Grand Rapids, International Falls, and to mills in Wisconsin. The economy of NE Minnesota was supported by 3 strong and independent industries which in turn supported each other. City and school districts had no financial wants which in turn benefited all with extensive opportunities not available in other areas of Minnesota. Real estate taxes, commercial, residential and seasonal, were not a burden. The ability to have a home in town and a cabin by a lake was prevalent. Supporting infrastructure requirements and their upgrades were not major issues as they are today while government provided services were extraordinary. We were experiencing the ability to be sustainable.
However, in the late '60s and culminating in the '70s, dark clouds began to be seen on the economic horizon. The enactment of the air ban and wilderness act which led to restricted access to and ownership of the resorts on the border waters, culminated in 1965 and all were gone. The canoe outfitting business was flourishing but did not include the multitude of high paying customers that had previously supported the resorts. The customer base was a completely new group. The underground mines in the area ceased operating and the industry was now supported totally by the taconite operations which were still expanding, primarily in the west range area as far west as Keewatin. The timber industry took a great kick in the pants with the Federal Government removing huge tracts of land from timber harvesting. Our sustainability, the ability to continue and grow the vision of our fathers and grandfathers, most of whom were immigrants, began to falter.
So, with the end of the 1970s the economic foundation of NE Minnesota and of Ely began to feel some major pinching. The mining industry was still operating at a relatively high rate though employment levels began to drop due to increases in productivity, the timber industry was imploding - no wood to cut, no resorts were left in the area now referred to as the BWCAW. The outfitting business though, continued to expand with the addition of new entrepreneurs however, at best it still was and is today, a 4 month per year seasonal industry. The question which next needs to be asked is -- What happened as a result of these negative influences?? - What happened to the level of sustainability experienced since 1945????
First, was the requirement of the county, cities and school districts to raise the levels of Real Estate taxation in order to meet the service needs which the constituents were used to. This was met by much consternation and in many cases, the level of taxation forced many folks to sell - especially cabins. Taxes had become confiscatory for some residents.Secondly, came the requirement for additional government provided services which heretofore had been only minor considerations.
Thirdly, there were few economic opportunities available for the young people who had grown up here and had been educated here to stay and raise families. Demographics of all NE Minnesota began to change. We began to see ourselves becoming a community of old people. In 1985 the average age in Ely was above 60.The 1980s saw another economic blow to the East Range - the largest employer in the Ely area, Reserve Mining Company, ceased operations principally due to a harsh US economic recession which resulted in the bankruptcy of LTV Steel Corp - half owner of Reserve. At that time Reserve in its two facilities at Babbitt and Silver Bay employed nearly 3,000 full time employees. The loss of wages to individuals and taxes to governments was devastating. The recession also saw a further reduction in the wood products industry and the tourism industry also felt its impact. What was the impact to Ely?? As you can imagine it was not good - real estate taxes were pushed to the maximum mill levy allowed by law, demographics began to shift more rapidly as major reductions were seen of those folks in the wage earner class as there were fewer and fewer year round living wage jobs to be had. Now many government provided services were being curtailed, cut, or charged for - electives and sports opportunities in our school were drastically reduced and fees for participation were instituted. This was the real 'belt tightening' time, a time to be frightened by what was happening to our community. One result of this recession, which most people do not know, is that our hospital was a hair breath away from declaring bankruptcy. When I was on the hospital board in 1985 the ongoing occupancy was less than 1 patient per day.
The 1990s and into the new century we saw some respite from the ugly economics of the 1980s. The recession was tamed and with it came a resurgence of folks with disposable income for vacations. The tourist business, with primary focus on outfitting, saw a resurgence of customers though many were the same ones that supported the industry in its infancy - and - they were getting older and the request for total outfitting packages was dramatically reduced. Through the years for holidays like Christmas and for birthdays, gifts came to these folks in the form of packsacks, cook kits, sleeping bags, air mattresses, axes, saws, etc. The income to the outfitters began to decline and without seeing new young customers to replace the aging fleet, the outlook for the future had become clouded. The increase in restrictive governmental regulations had also negatively affected the vacation choices of those contemplating a visit to NE Minnesota. However, there was a bright spot in the area economy and that was the rebirth of Reserve Mining in what is today Cliffs Northshore Mining Company. Though the employment levels are considerably less than in the heyday of Reserve, approximately half of the Babbitt employees are Ely or surrounding area residents. Wages and benefits are excellent with an average yearly wage package in excess of $70,000. The Vermilion Community College is another bright spot experiencing a stable enrollment. The sad note is that the wood product industry is now a mere image of its former self and is getting smaller day by day.
So, here we are in 2014 - where are we at today?? - The first question which we need to answer is: what is the status of our community we wish to sustain?? And secondly, how are we going to sustain it, what is sustainable about an economic model with only two quite different legs to support it??? We now have been reduced to the basic demographics of a retirement community without the numbers to support it. The population of Ely is now about 3450 vs 6,000+ in its heyday. Year-round living wages are provided by the mining industry which is primarily Cliffs Northshore Mining, the Ely Bloomenson Community Hospital, Independent School District 696, Vermilion Community College and a few local businesses. Meaningful static economic sustainability, discounting any growth, is in serious doubt without the addition of new businesses such as PolyMet, Twin Metals, Duluth Metals and Tech America. Wishes or rose colored glasses do not provide the hard dollars necessary for sustainability.
Our local governmental units - city and school - have become panhandlers - they are much like a business that cannot make back its cost of sustaining capital much less provide any growth to its shareholders. Eventually, like it or not, they will economically implode - better known as bankruptcy. If we were to measure the present well being status or rather the ability to thrive, for Ely today, it is my opinion this is what we need to address:
A recent independent study of the 5 best states in the US to live in placed Minnesota as one of the five - in 2012 the mean household income for Minnesotans was $58,906. In a recent plea letter for assistance from the Ely Area Food Shelf, it stated that the median household income here is less than $35,000 --- this means that for Ely we are $24,000 or nearly 41% less than the state average ---- IS THIS WHAT WE WANT TO SUSTAIN???????
In the same food shelf letter it went on to explain that 17.4% (approximately 600) of Ely's population live below the poverty level compared to 11% for the remainder of Minnesota - the average yearly income for this group is less than $23,050. According to the Food Shelf letter this segment of our population is growing as measured by increasing demands for assistance which in 2012 was 10,000 pounds of food distributed per month. With this level of income for such a large segment of our population, how can they afford to pay the taxes necessary to keep up city services or to support the schools - with this level of income the ability to thrive as families is in serious jeopardy. IS THIS WHAT WE WANT TO SUSTAIN??????????
Our business community is also in dire straits as indicated by the vacant lots and closed businesses - some for the winter season which averages 7 months and some for good. On Sheridan Street from 1st Avenue West to 6th Avenue East - 7 blocks - there are 30 businesses which today are shuttered. In the two blocks on Chapman Street from Central Avenue to 2nd Avenue East there are 8 businesses which today are shuttered. IS THIS WHAT WE WANT TO SUSTAIN????
Unemployment levels, another meaningful measurement of well being or the ability to thrive, as reported in 2009 are as follows: Minnesota - 6%, St Louis County - 8%, Ely - 8%, Hoyt Lakes - 16%, Hibbing - 9%, Virginia - 11%. IS THIS WHAT WE WANT TO SUSTAIN????????
I hope that we all answered an emphatic no to the previous four questions. If no was your answer, it is my belief that we all need to work together and to work diligently to support new businesses such as PolyMet, and to insure that the requirements for operation of such businesses meet the strict environmental criteria which has been established by our regulatory agencies. In my long association - 50+ years - with the mining and minerals industry both here in the US and Internationally, I am convinced that the PolyMet project and others like it can be done safely and in an environmentally responsible manner. The rules and regulations which these businesses are required to abide by insures that. These are the businesses which will enable us, our children, and grandchildren the opportunity to be economically sound and sustainable today, tomorrow and well into the future. The viability of Ely and of NE Minnesota will be insured and the environment which we know and enjoy today will continue to exist. Without these businesses and others like them, I am afraid and convinced we will continue to experience overall economic decline accompanied by a population decline and eventually see the demise of our hospital and with it, the demise of our community.
I BELIEVE AND I HOPE YOU BELIEVE THIS IS NOT ACCEPTABLE!!!