The Good and the Bad News for Minnesota's Iron Range Employment

by Drew Digby
February 2011

By many measures the current economic situation and the forecast for Minnesota’s Iron Range are quite good. Mining has strongly rebounded from the recession and is back at its prerecession peaks. Mining, steel, and metals companies are planning billions of dollars of investment in the future of steel and precious metals. Mining jobs are some of the highest-paying blue collar jobs in the state, with the average weekly wage in the second quarter of 2010 being slightly more than $1,500.

Health care and tourism are doing well. Long-term care facilities on the Range are bringing in clients from around the state. Leisure and hospitality employment in the core of the region was as strong in the summer of 2010 as it’s ever been.

By the third quarter of 2009 construction work in the region was only a few percentage points off its all-time peak, in part because of major projects under way throughout the region such as mine expansion and rehabilitation work and the construction of a major oil pipeline across the state. Architecture and engineering firms have been adding staff to do a combination of large project work. The out-migration from the region that also added to the sense of doom and gloom has reversed, with a new slight trend of in-migration starting in 2007. On the negative side, there are no sustained signs of recovery in the wood products industry, although paper manufacturing is employing almost as many workers as it had before the recession began.

But with mining and engineering industries and occupations going through significant transformations, business and workforce leaders in the region are worried about keeping up a steady stream of qualified applicants to fill the good jobs. In addition, industries like mining have a significantly older workforce than other industries in the area. As workers are recovering from the recession and believing they have the resources to retire, significant numbers are doing just that.

More than 60 percent of the workers in northeast Minnesota in two high-wage industries — utilities and mining — are over the age of 45 (see Table 1). While the overall workforce on the Range is older than the state’s as a whole, there are gaping differences in the age profiles of different industries. While 55 percent of the workers in manufacturing are over 45, just 40 percent of those in construction are over 45.

According to estimates by the Iron Mining Association (IMA), the mines on the Iron Range might end up hiring 900 new people in 2010 and 2011 combined, more than a quarter of their total workforce. According to Craig Pagel from IMA, 600 to 700 of the jobs will be replacements for retiring employees, but 200 will be new positions. That’s before new mining projects, such as expansions at a number of existing mines, the Essar Steel project in Nashwauk, and new copper/nickel mines, come online. While some projects are still waiting for permitting (most notably the Polymet copper/nickel mine), Essar Steel is on track to become operational by the end of 2012 and has said they plan to have 500 permanent employees by 2015.

Polymet’s nonferrous precious metal mining project in Hoyt Lakes still has plans to open in 2012 if they can get approval for their Environmental Impact Statement in the summer of 2011. Although changes in the scope of the project might reduce its employee count to 360, the operation would add even more demand for mining and engineering workers in the region. Other mining projects could add another 200 jobs to the region over the next few years.

But together, the aging existing workforce, along with changes in how the mines operate and in the duties of miners, has created strong concerns about how the Range will find thousands of qualified technical workers over the next five years. Not only mining, but also health care, utilities, architecture and engineering, and information technology are worried about finding qualified workers

Part of the problem has been to attract and retain a workforce with a college education. Just 21 percent of the population of St. Louis County outside of Duluth has a bachelor’s degree, almost 10 percent lower than the state as a whole. The rest of the counties in northeast Minnesota also lag behind the state average by as much as 17 percent in the number of bachelor’s degrees in the population (see Table 2).

Those low educational attainment percentages are a problem for the mines, engineering firms, and others investing in the region. According to research done by the Range Readiness Initiative, a collaborative partnership led by the Iron Range Resources and Rehabilitation Board, the technical workers that employers want to hire are going to need college degrees and have skill sets that allow them to adapt to new technologies and new ways of doing business.

Part of the success of the Iron Range mines has been massive increases in productivity per worker. Total output by the mines increased by 130 percent from 2002 to 2007 according to research done by the Bureau of Business and Economic Research at the University of Minnesota Duluth.

But to get there, the mines can no longer hire workers directly out of high school. At the very least, employers were worried that technical education in high schools has been ignored in the past decade, producing graduates without basic technical skills. In addition, almost all of the mines, as well as engineering firms, hire employees with at least a two-year technical degree. More and more jobs are requiring four-year programs of study.

To meet those needs, several efforts are under way to upgrade offerings in K-12 education plus build stronger bridges with post-secondary institutions. The Applied Learning Institute is a partnership connecting 17 northeast Minnesota school districts with the five colleges of the Northeast Higher Education District to create programs for high school students to get better career and technical education. A second program is the Iron Range Engineering program, which is a collaboration of Bemidji State University, Minnesota State University Mankato, and the University of Minnesota Duluth to make it possible to attain a bachelor’s and master’s degree in engineering while staying on the Range.

Together these programs are part of a plan called the Arrowhead Institute of Technology, which is trying to get industry to talk directly to educational institutions about the skillsets they need today and in the future. A 2009 report found that many of the educational institutions in the region were disconnected from regional industries and produced graduates lacking both technical skills and soft skills like having a businesslike approach to working.

One key element is the Applied Learning Institute (ALI) which offers classes at the high schools in construction trades, industrial technology, advanced automotive, pre-engineering, health care, natural resources, and entrepreneurship. In the first full year of programming, 2009-2010, enrollment in the ALI courses in the 17 school districts was nearly 1,500 students. Because the programming was developed in cooperation with the schools of the Minnesota State Colleges and Universities system in the region, most of the high school students are earning college credits as part of the program. Nearly 1,700 college credits were granted in the last school year.

But the new programming has not come without a cost. Shops and labs in the high schools needed new equipment and technology. High school and college technology labs have been updated with welding equipment and supplies, CNC milling machines, lathes, torches, power tools, hand tools, computers, 3-D printers, volt meters, scanners, lasers, and other equipment. More than $2.3 million has been spent since 2007 on the program.

Each year the program coordinator meets with a steering committee of educators and business leaders to assure that the program continues to train students in the skills and technology needed for the jobs that are expected to be available. There’s recognition that just improving K-12 technical education, while an important component, is just the start to meet the needs. In addition to mining, engineering is another growth industry in the region and another industry where educational and skill requirements are also increasing.

Combined architecture and engineering firms have done well in northeast Minnesota in the last five years. Even with setbacks from the recession, firms in that sector have grown by 8.6 percent while average weekly wages have grown by 16.3 percent to $1,054. That led to a shortage of employees that has forced several firms to spend increasing amounts of money to recruit skilled engineers and technical staff from farther and farther away.

The Iron Range Engineering collaboration between three different universities provides engineering education to the communities of the Iron Range. Minnesota State University
Mankato runs a program that leads to a bachelor’s degree in engineering. This professional four-year engineering degree is hosted by Mesabi Range College in Virginia. This program builds on the two-year pre-engineering program at Itasca Community College. Its project-based curriculum makes it a first of its kind in the state of Minnesota. Students need to complete a two-year pre-engineering program before entering this program or to transfer from a four-year institution with those equivalencies.

A second program from Bemidji State University produces students with a bachelor’s degree in applied engineering. Generally, students enter the program with a two-year technical degree and take online courses to advance their professional career. A third program through the University of Minnesota Duluth (UMD) grants a master’s degree in engineering specifically designed to work with engineers at transition points in their careers or who need specific licensure or need to broaden their areas of employability.

UMD also recently created a new undergraduate program in civil engineering which is expected to graduate its first students in 2012. The latest regional occupational projections showed a need for nearly 800 people with training in architecture and engineering over 10 years in the region, although most local experts expect that estimate will be on the conservative side.

Beyond the educational piece, the next part is making sure those with the needed education stay in the area. Local leaders are confident that they are recruiting people who are coming to the region or coming back to it, not only because of jobs, but because they like the lifestyle in the region and the outdoor amenities it provides year round whether they want motorized or non-motorized recreation. A recent study by faculty at UMD and the University of Minnesota Extension shows that those who already live on the Iron Range love it. Just 5 percent of their survey ranked the quality of life as “below average.”

The trick will be finding the right way to match the quality-of-life assessment to new workers in the labor force. Workforce and economic development professionals need to convince those who grow up on the Range that the right training will produce good jobs if they stay, and they need to convince those from outside the region that the area’s amenities and its jobs make it a good place to live.

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