Jake Friend has been through this before.
Friend, a welder in the truck shop at U.S. Steel’s Keetac mine and pellet plant, was one of 375 employees laid off from the Keewatin facility in May as the pandemic caused the demand for steel to plummet. It’s the fifth time the 34-year-old has been laid off from the mine in his 12 years there.
As the economy improves and the steel industry recovers, and all of the other Iron Range mines have returned to production and called back workers, Keetac remains the only mine still shut down. Its “indefinite” idling status means the company hasn’t provided a callback date to the laid-off employees, leaving them unsure of when they’ll return.
“The worst part about it, in my opinion, is the uncertainty,” Friend said. “It’s the fear of the unknown.”
Friend was last laid off for 19 months during the steel downturn in 2015 and 2016.
Five months into the current layoff, Friend considers himself and his family lucky. Additional unemployment aid through the CARES Act has helped. He enjoys being home more with his two kids — Veyda, 12, and Pryce, 7 — especially when school went online this spring. His wife, Terra, remains employed as a paraprofessional and the only debt he has is a four-wheeler payment.
But his family isn’t getting ahead during his layoff, and he’s ready to return to work.
“We’re tapping into our savings every month,” Friend said.
Friend, a union officer at United Steelworkers Local 2660, which represents Keetac employees, said some of the other laid-off workers aren’t as lucky.
“Some people have medications they have to take, and they’re worried that their health insurance is going to run out now,” Friend said. “They’re trying to get jobs at other facilities or other places.”
But other employers are often unlikely to hire a laid-off miner because when the mine, which likely pays much better, reopens, the workers will likely go back right away and quit their newer jobs, Friend said.
So until U.S. Steel sets a callback date, most Keetac employees wait.
“All you can do is kind of watch the economy,” Friend said.
Economy, industry improving
When the pandemic hit and lockdowns across the country started, demand for steel plummeted, forcing blast furnaces and three Minnesota mines supplying them — Keetac, Northshore Mining and Hibbing Taconite — to idle.
By late summer, all but Keetac had restarted production and called back their employees as demand for steel increased.
In the seven months since the start of the pandemic, the economy is starting to improve, said Tony Barrett, professor emeritus of economics at the College of St. Scholastica in Duluth, and that’s helping the steel and mining industries restart. He pointed to the automotive, manufacturing and housing industries as driving the recovery.
“It’s not like (the economy is) growing. We’re still trying to recover what we lost, but demand for steel has recovered fairly respectively,” Barrett said.
Domestic raw-steel production had been holding steady at about 1.9 million net tons per week through early 2020 until March and April, when production fell. It bottomed out the week ending May 2 at 1.1 million net tons, a 39.9% drop in production from March 7, according to the American Iron and Steel Institute.
Steel production has increased to 1.4 million net tons for the week ending Oct. 3, according to the most recent data released Monday.
Similarly, the country’s blast furnace utilization rate fell from 81.6% on March 7 to 51.1% on May 2, but reached 66.6% for the week ending Oct. 3.
Barrett pointed to Cliffs’ recent announcement that it will buy ArcelorMittal’s U.S. assets, which include steelmaking plants throughout the country and two mines and pellet plants in Minnesota, as positive news for the industry and said it “really upped (Cliffs’) bet on the steel industry.”
“So to me, the fact that they’re doing that tells me the steel industry is in good shape — not great, but different,” Barrett said.
In a news release last month, U.S. Steel president and CEO David Burritt said market conditions were improving, but updated guidance predicted a $320 million net loss in the third quarter of 2020.
“Improving market conditions experienced in June and July have accelerated through August and September. … We have grown confident in the recovery that is underway in North America and Europe. While we believe this recovery is enduring, we remain relentlessly focused on what we can control, including management actions to stay nimble, reduce costs, and preserve cash,” Burritt said.
Keetac usually last mine back
Despite a recovering economy and steel industry, U.S. Steel continues to consider Keetac an indefinite idle with no callback date set for its employees, even as the other mines return to production and bring back employees.
During the last downturn on the Iron Range in 2015 and 2016, when cheap Chinese steel flooded the market, Keetac was also the last Minnesota mine to go back online when its 19-month shutdown ended in January 2017.
“U.S. Steel has always taken Keetac down first, and it’s always the last one to return because it’s (U.S. Steel’s) smallest operation,” said Dan Pierce, a diesel mechanic at Keetac and Local 2660 president.
Pierce said because Keetac directly supplies the U.S. Steel’s Granite City Works in Illinois, where one of the blast furnaces still sits idle, its pellets aren’t yet needed.
That blast furnace could remain offline for the rest of 2020, the Times of Northwest Indiana reported in August.
Barrett said Keetac’s small size doesn’t help either.
“(Keetac is) a relatively high-cost producer,” Barrett said. “Their ore is good, but they don’t have the economies of scale some of the other mines do.”
Keetac produced just over 5 million tons of pellets in 2019, while Minntac in Mountain Iron, U.S. Steel’s other mine and pellet plant, produced almost 13 million tons of pellets, according to data provided by St. Louis County. While Keetac had 451 employees last year, Minntac had 1,460.
“If the current trends in steel and the U.S. economy continue for another year, I would expect to see Keetac reopened,” Barrett said. “But I don't think it's going to happen soon.”
Asked Monday by the News Tribune when Keetac or the blast furnace it supplies at Granite City might reopen, Meghan Cox, a U.S. Steel spokesperson, declined to comment, citing the company’s “quiet period before earnings.”
Friend, the Keetac welder, said he reminds new union members just beginning their mining careers that while the jobs are some of the best-paying on the Iron Range, long layoffs are to be expected.
“It’s feast or famine,” Friend said. ”When it’s good, it’s good. When it’s bad, it’s bad.”