‘Value-added’ setback reminds of Range’s inherent value

The Mesabi Daily News penned a Sunday, Dec. 2, editorial about the decision by Magnetation to locate their pellet production plant in Reynolds, Indiana, instead of on the western Mesabi Iron Range where they mine and partially process their raw ore. The Bill Hanna opinion is one shared across the region: disappointment.

“And that should be a wake-up call for Minnesota leaders who need to do more than just sound the “jobs, jobs, jobs” mantra. They need to aggressively fight for ones up for grabs and seek out others that could be lurking out there.”

I had to chuckle because in January 2011 Hanna wrote, “The “jobs, jobs, jobs” mantra for the [Iron Range Resources and Rehabilitation] agency must never be replaced by a more “nuanced” approach to economic development. It needs to be jobs, jobs, jobs and then more jobs.” Nevertheless, it is nice to see Bill let go of the overused Rudy Perpich quote just a tiny bit.

I, too, was very frustrated after having learned more about Magnetation to see them move their plant south. It is a convenient scapegoat to say that Minnesota’s regulations and environmental review process are solely to blame. There was substantial support to help Magnetation navigate through the permit process more quickly. As Magnetation officials point out, this decision was in large part related to logistics, like train tracks. This Indiana site is very near AK Steel’s steel mills, the chief customer of Magnetation’s products, and AK Steel wanted the pellets nearby.

Here’s the close of the MDN editorial:

“… once again, the mineral will be shipped off the Range and value added elsewhere. That’s a pattern that the Iron Range has been stuck in for more than 100 years.

And it continues.”

Absolutely. It’s wonderful to see this in print. We must not repeat the parts of our history that have laid us low in modern times. But here’s my only quibble. The Iron Range, just like a lot of Rust Belt places looking for a new lease on life, often falls victim to thinking of jobs as truffles — rare, delicious foodstuff that can be acquired in great numbers if we send enough pigs out to root them out of the ground. No luck? Try more pigs.

Another way of looking at “jobs” is to think of them like light, which, as a scientist would say, acts as both a particle and a wave. A “job” is a physical thing that can be created and destroyed, but it is also a byproduct of larger forces. Economic activity and population growth create organic new jobs that the government doesn’t control. Economic and cultural stagnation aborts jobs before they even exist.

So yes, we’ve long tried to get “value-added” jobs in Minnesota’s iron mining industry, and for good reason. Adding the steel-making or advanced processing to our local repertoire strengthens our role in the steel industry supply chain, adds more stability to our local employment and creates scads of jobs in the process. But as this Magnetation story shows, we don’t get to make that final decision because it’s not our money causing the plants to be built. We can chase the regulatory boogie-men all day and night, but ultimately “value-added” industry that functions by market forces alone will always be subject to leaving or shutting down. THAT is the part of Range history I am least interested in seeing repeated. 

I love the Iron Range, our people, our culture and stories. But our towns often look like crap. Young people are isolated and alienated. We focus our economic development building depressing rectangular buildings on the edge of town, while no body cares a whit about doing something better with all the empty space left behind in the heart of town. I still have to talk about the internet like it was a unicorn when I speak with many public officials.

Good thing. Unlike Magnetation’s decision to locate a plant in Indiana, these problems may be reversed. We have the power to gradually change these things and, when we do, we might find, remarkably, that there are more people (and jobs) willing to call the Iron Range home. Maybe hundreds. Maybe thousands. And if all that’s too abstract, remember that we sit on one of the world’s largest supplies of fresh water, possess vast natural resource stores, and will probably fare better than most as the effects of global climate change set in.

We will happily add value to our iron products if you let us. We welcome such development. But the real value of the Iron Range is in its people, its natural resources, its story and its spirit. And we can add value to these things ourselves, if we are willing. We only lose these things if we give them away.

Comments

  1. As stated numerous times before Aaron, Lehtinen is a businessman. He’ll never say it publicly, but a major reason the pellet plant is in Indiana is northern Minnesotas anti-business attitude, and … unions. Why in the world would he want to deal with the likes of Sertich et al if he doesn’t have to?

  2. It’s interesting that Magnetation is willing to move all of that additional bulk to Indiana before the value-added labor is performed. To offset that cost, there must be another significant margin to exploit (read: a workforce willing to accept lower wages).

    Whaddya know: Here are BLS estimates for median wages in construction/extraction, as of May 2011:

    Minnesota: $23.62
    Indiana: $20.32

    Source: http://www.bls.gov/oes/current/oes_mn.htm#47-0000

    What’s more, Indiana’s governor signed a right-to-work law in February. Then its voters went for Romney/Ryan in November, making it unique on both counts among Great Lakes states. I can see why management would be excited about this state of affairs, but that doesn’t mean that labor has to be.

  3. Right on cjh, amen, nice work.

    Sounds like you’ve worked in an environment, are in a job, where you’re held accountable..and can’t afford to be held hostage to uncompetitive demands by your employees.

  4. Next time I post a comment I’ll try to make my position more clear. Thanks anyway.

  5. Not a problem cjh…

    With the upcoming Mn legislative session, there’ll be plenty of posts/opportunities to comment on the evils of unions stealing hard earned money from workers checks under the guise of so-called dues.

    The majority of these workers are fully capable of representing themselves, and would prefer to vs. have a third party speak on their behalf.

    Be patient, Minnesotans will eventually see the light as we do.

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