Can Silver Bay survive latest round of mining layoffs?

Even in a region where a lot of towns depend on a mining operation that's vulnerable to changing economic conditions, Silver Bay stands out.

Joe Nicklay, principal of Silver Bay's William Kelley Schools, says just about every student and employee of Northshore Mining, which operates a taconite plant that stretches a mile and a half between Highway 61 and Lake Superior, knows someone who's been laid off at the plant.

"We try to keep things as normal as possible here at school, we don't even bring it up," he said. "Kids have to live with that. Parents are sheltering their sons and daughters from those situations right now as best they can."

But it's impossible to escape mining's fingerprints on Silver Bay. Even the school's name comes from mining. William Kelley was the first president of Reserve Mining, which built the plant, the town and the school in the 1950s.

The company built the golf course, health clinic, an entire neighborhood with four alternating styles of simple houses, and bigger dwellings for upper management with commanding views of Lake Superior. It hired doctors and teachers.

"Everyone in the town was really dependent on the plant, because it was a company town," said Kent Kaiser, a communications professor in St. Paul who grew up in Silver Bay and recently compiled an oral history called "Company Town."

"As I interviewed long-time residents, you really got the sense of how much they appreciated the company, and how good the company was to them. People in Silver Bay really viewed it as a real benefactor," Kaiser said.

But in 1986, Reserve Mining declared bankruptcy and shut down the plant. There was an exodus of families from Silver Bay. The plant reopened three years later, but the town has never entirely recovered.

"In sixth grade we had 126 kids in our class. When we actually graduated six years later, it was 45," said Lana Fralich, city administrator. She grew up in Silver Bay in the 1980s. Her dad and her husband's father both worked at the plant.

"My dad worked in the concentrator, and his father worked in the pelletizer," she said.

And now her husband works there — for Cliffs Natural Resources. Cliffs bought the plant and the mine near Babbitt in 1994. Fralich says Silver Bay is nearly as dependent on the plant now as when it was first built.

"They're phenomenal jobs. There's many people in the industry known to make six-digit salaries, by year end, because there's overtime, bonuses, then their benefit package on top of it is wonderful," she said. "Our restaurants, grocery stores — everything is dependent on it."

Which is why it was such a big deal when Cliffs announced the temporary closure in early December. Nearly 500 workers were laid off at the plant and the mine. The company blames the layoffs on cheap, imported — and many say illegally — subsidized steel.

Ever since the 1984 bankruptcy, Silver Bay has tried to diversify its economy beyond mining. But that's proven tough. A business park the city developed 25 years ago still sits empty.

City leaders plan to ask the state for $2.3 million to help build two campgrounds — one in town, the other near Black Beach, which gets its name from old taconite tailings that Reserve Mining used to dump into Lake Superior. Mayor Scott Johnson says studies have shown the beach is safe.

"If the wind is blowing right, once or twice a year, you can go swimming there," he said.

But Johnson and other city leaders says it would take a lot more to offset the loss of high-paying mining jobs.

"I'm of the opinion we can't survive on tourism alone," said City Council member Shane Hof, who worked at the plant for 12 years. "But it would definitely help us diversify a little bit, and bring more people and money to the community which is solely needed."

Locals say they're confident the plant will reopen this spring. Johnson says if the shutdown extends longer than that, he'll start to worry.

Senate Majority Leader Tom Bakk and other legislators travel to Silver Bay Wednesday night to hear residents' concerns following the December layoffs at Northshore Mining.

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