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Iron Range cities diversify business as unemployment plunges

Iron Range communities are experiencing record-low unemployment.

That shouldn't be surprising.

The desirability of taconite has caused a resurgence in the mining industry. And when mining jobs return to the region, there's a spillover effect for other jobs.

"We know with our relationships with mining companies that the taconite plants are at full production," said Mark Phillips, commissioner of the Iron Range Resources Rehabilitation Board (IRRRB). "Usually when that happens, and there's full mining employment, then the community of vendors that supply that industry are also at full-tilt."

The rehabilitation board, which works to diversify the economies of Iron Range cities, estimates that for every mining job filled, three more open up in nearby communities. That's welcome news to many of the mayors of those municipalities.

Cities like Grand Rapids, Virginia and Hibbing are experiencing the lowest or second lowest unemployment numbers on record. Compared to a year ago, the numbers are far lower in 2018.

• Grand Rapids: in May of 2018, the unemployment rate was 4.2 percent. A year ago, it was 6.2 percent

• Virginia: in May of 2018, the unemployment rate was 4 percent. A year ago, it was 5.6 percent.

• Hibbing: in May of 2018, the unemployment was 3.7 percent. A year ago, it was 5.8 percent.

"I'm not surprised by the low numbers; I'm encouraged by it," said Virginia Mayor Larry Cuffe. "I don't think it's because of the city council or mayor, it's the economic perspective or climate right now. We're just reaping the benefit of that."

Cuffe says having the mines in use is one of the "major reasons why the unemployment rate is so low." The ancillary positions that open up have helped as well.

"Whether it's restaurants or parts, the industry is driven by the strongest economic thing we have, which is our mining operations," said Cuffe. "Unfortunately we don't have a lot of diversity up here besides health care and mining, so as the mining goes, that's how our economy goes."

Even so, cities are working to grow businesses untethered from the mining industry. Recently, a Caribou Coffee and Einstein Bros. Bagels opened up in Virginia. The city has also tapped into the health care industry with new dental and eye offices opening.

Hibbing manufacturer L&M Radiator also recently expanded. The cooling products maker was expecting an uptick in business, so they consolidated their facilities in the city to increase efficiency. But the business has run into hiring challenges since it's competing with the mining industry. While L&M Radiator hired over 100 people since January 2017, they still struggle to compete with the mines.

"The problem is there is just not enough people to fill all of the jobs up here," said Dan Chisholm, president of the company. "No matter what we do, we'll always be compared to mines. It's hard to compete with them when they offer such high wages."

To combat that barrier, the business has worked to offer other things to employees. Chisholm says they've tried promoting a more family-feel when working at L&M Radiators or through job stability that the mining industry can't offer.

Problems like L&M Radiator's is not unique. The high wages of the mining industry is what Phillips said makes it difficult to diversify the region's economy.

"It's very difficult to attract a lot of industry that isn't dependent on natural resources up in our neck of the woods," he said. "So, if you had a little factory making some kind of widget, would you want to build next to the highest paying employer in the state? So, that's been our challenge."

One possible solution for Iron Range communities is boosting business through health care. With the help of the rehabilitation board, Grand Rapids recently had a hospital expand in the city.

"We just had a $2 million expansion at our hospital and clinic to do cancer care infusion," said Grand Rapids Mayor Dale Adams. "About $300,000 of the project was covered by (the rehabilitation board) on infrastructure. So, parking lots and some of the underground stuff that has to happen."

Adams says more business is on the way. He wouldn't disclose upcoming announcements, but said manufacturing businesses like Swan Machine have relocated to the city as well.

"It's not just timber. It's not just taconite," Adams said. "We're actively pursuing multiple businesses in different fields and different areas. We're seeing businesses wanting to relocate and to build in the area."

Hbbing is also dipping its toes into the health care industry.

"I get a sense from my patients who work in the mines or who work in healthcare or other industries that supply the mines that they all have jobs, they're all working hard," said Sam Harms, a physician with Orthopedic Associates. "It seems like the economy, at least in the area or the region, seems to be thriving a lot right now."

Harms works at the Orthopedic Associates location in Hibbing twice a week. He said they opened up a full-time facility in response to not having enough room at their old building.

"Our ability to open a standalone facility probably has more to do with the demand for medical care," said Harms. "There's not a lot of speciality care for orthopedics in the Iron Range, so it's a market we felt was underserved and we could take advantage of that."

With a seasonal boost to employment expected to keep jobless rates low on the Iron Range this summer, the focus now turns to keeping folks working for the long term.

"As a city, we're not just looking at mining. We want new businesses coming into town," said Hibbing Mayor Rick Cannata. "My opinion is we've been going after the money and we're going to keep going after the money. We work well with organizations like (the rehabilitation board) and that'll help keep Hibbing growing."