Minnesota Real Estate Journal

From a precious metals mine in Hoyt Lakes, a power plant expansion in Grand Rapids to a state-of-the art high-energy neutrino detector in Orr, the Iron Range is gearing up for a building boom.

And these aren’t just new Starbucks and service stations. Officials at the state-run Iron Range Resources office in Eveleth are planning for about $5 billion in construction from now through 2011, translating into thousands of construction jobs, more than 2,000 permanent jobs and up to 12,000 spin-off jobs created by vendors and suppliers.

Not bad for an area that has spent most of the last 30 years trying to cope with job losses. As Mark Twain once joked about himself, the reports of the death of the Iron Range may prove greatly exaggerated.

Of course, the new growth comes in an area that today has 3,000 mineworkers, down from more than 16,000 in the boom year of 1979. And most of those jobs have been gone so long that many of the suppliers, vendors and workers are gone as well. That means the new boom will require huge new mines, buildings and equipment, new development and new demands for suppliers and vendors.

Add to that the growth in tourism and recreation homes spurring demand for consumer amenities, and the optimism is palpable. “We’re very bullish, the way things are going,” says Greg Wegler, director of development for Kraus-Anderson Construction Co.’s office in Duluth.

“More people are getting positioned to do something. We’ve been talking with developers about retail development, about some hotels and restaurants.”

Kraus-Anderson is even more interested in what the new projects will need, from parts and repair to shipping. “One would like to spin off, maybe, half of it as industrial,” Wegler says.

Rangers have seen many promises broken, so the mood is different across Northeastern Minnesota, rising in direct relation to actual construction schedules. In Grand Rapids, Minnesota Power already has 500 workers building a $200 million expansion of its Boswell 3 Energy Center.

But the story is different in nearby Hibbing. “Everybody seems to be in a holding pattern waiting to actually see MSI (Minnesota Steel Industries) proceed,” says Duane Northagen, community economic development coordinator.

And with good reason. At $1.65 billion, the planned new steel mill is the largest project now on the boards, with 700 permanent jobs and 2,000 construction jobs at stake.

“We’ve actually had a nice, strong economy in the last five years,” Northagen says of the less dramatic but more diversified business community: “We’re seeing additional activity in retail and also housing developers.”

The city has industrial park land available and more open space ready to develop — and a steady stream of inquiries from possible tenants and developers. With a four-year timeline leading up to production, suppliers and vendors can afford to be cautious.

“I’ve got a list of a dozen or more that have approached me in the last few months,” Northagen says. “They’re not so much holding as hovering.

When we see MSI put shovels in the ground we’ll see the others follow.”

In Virginia, P&H MinePro Services has continued to serve its mining clients through good times and bad, taking care of the giant equipment needed to get the ore out of the ground. James Wilson, general manager for the Milwaukee-based company, says P&H has been meeting with the city about a new, larger site.

“I do see a lot of opportunity on the Iron Range,” he says. “They’re trying to produce more, either by mining more property or using more efficient processes. That, at a minimum, brings stability.”

P&H has about 90 people working in service and administration in Minnesota and could add six to 12 people a year, depending on demand.

Wilson says that growth alone may not be impressive, but the combined impact of all the growth will be.

“We’re just one additional piece,” he says. “There are people who supply us. As we grow we help other businesses as well.”

The benefit of the long downturn is that cities, counties and the state have invested heavily in creating business parks, providing services and marketing the area, all moves that have helped the area diversity its economy.

Blue Cross Blue Shield of Minnesota, Northwest Airlines, the Minnesota Revenue Department, and others have built call centers and processing operations. Tourism has grown and the area’s many lakes have seen small cabins replaced by expensive vacation and retirement homes.

Iron Range Resources can help developers link with land or local officials.

Hibbing native Joe Ryan moved to the Minneapolis-St. Paul metro area decades ago and today is head of Oppidan Development in Minnetonka. He does retail projects all over the country, and on the Range, where he used to be an owner of the Hibbing Park Hotel and where his brother is a citizen member of the Iron Range Resources board. He concedes the area has struggled for a long time, but he believes the situation is changing. “With the investment by the mining companies from around the world, clearly the development opportunities are growing,” he says.

He is impressed with the work area officials have done to develop so many large projects even while they worked to diversify the economy.

“That story needs to be told,” he says. “They’re doing some good things up there, with great effort by so many.”

• Iron Range is driving the region’s economy -5/7/2008
• Sigurd Olson Environmental Institute receives $150K grant from Xcel Energy -5/6/2008
• Two Harbors Area Fund grants nearly $30,000 -5/5/2008
• 9 nominated for Duluth Hall of Fame -5/2/2008
• Bigfork Valley Hospital ranks No. 1 in Minnesota patient satisfaction survey -5/1/2008