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CATHERINE WINTER: I'm Catherine Winter, here with Martin Kaste, and this is a special Mainstreet Radio broadcast. Minnesota Public Radio's Mainstreet Radio is supported by a major grant from the Grand Rapids-based Blandin foundation, working in partnership with rural Minnesota groups to strengthen communities. We're coming to you live today from City Hall in Nashwauk.

We're sitting in a beautiful hall with elegant woodwork. This whole building has hardwood floors and fancy antique fixtures. It was built as a soldier's Memorial in 1926, when Nashwauk was a mining boomtown and was flush with cash.

MARTIN KASTE: Nashwauk sits on the Western end of Northeastern Minnesota's Mesabi range. The range runs about 90 miles. It's a series of towns set on the edges of huge open pit mines, mountains of rock dug from the pit surround the towns.

At one time, Minnesota provided almost two thirds of the iron ore consumed in this country. Iron mining brought people from Finland, Italy, the Balkans, and other parts of Europe, all looking for well-paid jobs. In the industry's good years, they found some of the highest industrial wages in the country.

CATHERINE WINTER: But today, the number of people employed by mining has dropped to just over 5,000. In the past decade, several ore processing plants have closed, throwing thousands of people out of work. Many people inside and outside the mining industry predict that more plants will close and that if the mining industry survives at all, it will never provide for the range as it once did.

MARTIN KASTE: In the next half hour, we'll look at efforts to keep the Iron Range alive. We'll talk about whether the state should pay to bail out ailing taconite plants and why the range seems to have an unusual amount of political clout. We'll hear from politicians, union officials, and steelworkers. And later in the program, we'll take your questions over the telephone and from our audience here in Nashwauk.

CATHERINE WINTER: And we do have a sizable audience here in Nashwauk at the City Hall. It's nice to see everyone turning out today.

We chose Nashwauk for today's broadcast for a number of reasons. In many ways, it's a typical mining town. At the end of the main street, you can stand on a platform and look down on an enormous pit mine stretching out to the horizon.

Sheer red walls drop dizzyingly hundreds of feet to frozen water. A sign tells you that this mine was the first in Itasca County and that workers dug 25 million tons of ore from the ground here between 1902 and 1962. Mining drew thousands of residents and dozens of businesses to Nashwauk in the early part of this century, but now this mine and others in the area are abandoned.

Nashwauk's mining company, Butler Taconite, shut down in 1986. Young people have been moving away. Businesses have closed. Buildings have been torn down. Nashwauk has become a retirement community.

MARY ENGLUND: Whoa, there's a lot of changes. Oh, my god.

CATHERINE WINTER: In an apartment above the barber shop on Main Street, Mary and Milton Englund look through books of Nashwauk's history, prepared for town anniversaries.

MARY ENGLUND: Yeah, that's my uncle, my mother's brother. He was the one that started the first bakery, the first show house, right over there.

CATHERINE WINTER: Mary Englund has lived in this building for 77 years, all her life. Milton Englund, called Swede by his friends, worked in the mines here for 40 years. They remember when the town had a hotel and several groceries and clothing stores, and the streets were full of people of different nationalities.

MARY ENGLUND: Well, yeah, everybody carried a gun, and nothing was really like it is now, no. If something didn't go right in all these saloons and they got into a fight or somebody had a grudge, they shot them, and that was it.

MILTON ENGLUND: We had restaurants. Nonsie was open 24 hours a day. After we'd come home from a party or that 1:00, 2 o'clock in the morning, the little restaurant was full down there. Everybody had the steak sandwich and barbecued ribs.

MARY ENGLUND: For a little town like Nashwauk, at one time, we had two theaters.

MILTON ENGLUND: And a mortuary.

MARY ENGLUND: Yeah. All these things have gone, see.

CATHERINE WINTER: Nashwauk still has one grocery store, a couple of restaurants, several bars, and a half dozen churches. But in the past 20 years, more than 200 buildings have been torn down. A few historical buildings remain, but there's not much money to maintain them. The old City Hall building was once a showpiece, but the city offices moved across the street in the 1970s to the Soldiers Memorial building, and it took a while for anyone to notice that the old building had sprung a leak. City clerk, Ed Balph, stands on the ruined hardwood floor under a gaping hole in the ceiling in what used to be an elegant ballroom.

ED BALPH: Here's where we used to have all the dances for all the youth.

SPEAKER 1: Wow, look at the chandeliers.

ED BALPH: I know. It would be nice if this would be fixed and used for a historical site or something else. But who's going to run it? We'd never be able to afford to heat this building anymore.

CATHERINE WINTER: Cities such as Nashwauk are strapped, partly because they're now paying for things that were once provided by mining companies. Mining companies plowed streets and fixed streetlights. Tax money from the mines built beautiful schools with swimming pools.

The Nashwauk Keewatin High School has had a pool since the 1920s. Its library has a large, glittering mosaic that depicts a bustling town and a working mine. On a recent weekday, senior high students stood in line for hamburgers and french fries. Ninth grader, Shad O'Neill, says he'd like to live on the range when he graduates, but he expects he'll have to leave.

SHAD O'NEILL: You know, it's just so hard to get a job around here. My brother's been looking for a job for a long time. The only job he could get is McDonald's or something. That's all he could find.

CATHERINE WINTER: Young people started moving away from Nashwauk after Butler Taconite closed. The plant's closure came as a shock to people who had expected the mines would employ them all their lives. Other closings followed, including, most recently, National Steel Pellet in Keewatin. Just after National closed, 55-year-old Joe Krznaric sat with friends at the Huddle Cafe in Nashwauk. Krznaric worked for National for 36 years.

JOE KRZNARIC: This is going to affect everybody in all the businesses. It's bound to, a lot of even the schools and the whole district. A lot of them will probably have to leave, like when they did Butlers and Butlers went down.

CATHERINE WINTER: Krznaric's wife, Sue, is furious with the company.

SUE KRZNARIC: Our schools are going to go. I mean, we got a lot of people that are going to lose jobs. I mean, the grocery store here, I can't go and buy groceries the way I used to.

CATHERINE WINTER: Do you think about leaving?

SUE KRZNARIC: We can't. It costs too much to go somewhere else, too. I mean, we wouldn't get anything for our houses.

CATHERINE WINTER: Like other range cities, Nashwauk is working to try to bring in jobs. Mayor Bob Fragnito says the city has brought in a bank and a few other small businesses.

BOB FRAGNITO: We've got a proposed motel and a housing unit that we're looking at for the spring and a car wash.

CATHERINE WINTER: Mayor Fragnito says Nashwauk has a good future, but its future is as a retirement community. Already, well over half the residents are retired. Fragnito and other residents say the quality of life in Nashwauk draws them back-- the low crime rate, the nearby fishing, the friendly people.

And many residents believe that someday mining will make a comeback, and range towns will boom again. And bust cycles have shaken the region for decades, and people who live on the range have long been uneasy about the region's dependence on mining. Conventional wisdom teaches that the only way to cushion the inevitable shocks is to build up businesses unrelated to mining. Martin Kaste has a look at diversification efforts.

MARTIN KASTE: At Giant's Ridge Ski resort near Biwabik, the regulars have noticed a definite change in the clientele. More and more of the skiers come from outside the Iron Range. At least, that's the assessment of two skiers from Virginia.

SPEAKER 2: A lot of people are from out of the area. There isn't that many local people skiing here anymore. It's basically out of the area from Canada. The cities, mm-hmm. Don't you think so?

SPEAKER 3: Yeah, they used to bring in big busloads from out of the area.

SPEAKER 2: Mm-hmm, but not that many local people anymore.

MARTIN KASTE: The Canadians and twin citizens skiing at Giant's Ridge could be a sign that the resort's 10-year-old campaign to broaden its customer base is succeeding. Giant's Ridge is publicly owned and has long been dependent on cash infusions from taconite tax funds. But Director Mike Gentile says the operation is beginning to break even. Gentile says the next step is to turn Giant's Ridge into a year-round tourist spot.

MIKE GENTILE: In our master planning, in our long-range planning, all of the arrows, so to speak, pointed to golf as an alternative for a summertime operation.

MARTIN KASTE: Gentile says he hopes the new golf course will attract hundreds of new vacation and retirement homes to the area. He thinks there's a chance that as many as 250 housing units could be built after the golf course is completed in 1995. And that's the real purpose behind Giant's Ridge, he says, attracting new money from outside the range.

Former Duluth Mayor, John Fedo, now heads up the Hibbing Economic Development Authority, and he says Iron Rangers need to understand that diversification is the key to their future.

JOHN FEDO: The quicker that occurs in terms of a mindset, the quicker we as a community will be able to achieve that diversification. And I think it's a realistic proposal and something that's achievable. But again, it's a case of trying to figure out what are our strong suits and then using those assets. That's where you try to build on that diversification.

MARTIN KASTE: The Minnesota Department of Jobs and Training recently predicted a 6% increase in the number of jobs in Northeastern Minnesota in the period from 1989 through 1996. That's only two points lower than the relatively healthy 8% predicted for the Twin Cities. But economist Rick Caligiuri points out that the Northeastern Minnesota figures have been boosted by growth in the Duluth area.

And he says the Iron Range proper probably won't do as well as the numbers seem to indicate. Caligiuri says the numbers also don't reflect the fact that the new jobs on the range are in service industries and retailing, jobs that don't provide the same kind of high wages and good benefits traditionally available in the mines. Tom Wedward, Director of Jobs and Training in the Virginia Hibbing area, says, when a young adult enters the Iron Range job market, he usually has a hard time finding a living wage.

TOM WEDWARD: What would happen is that this person either would take one-- well, let's say, a little over minimum paying job, and probably the spouse would enter the labor field at the same time. Or this person may have to put together several part-time jobs and possibly work more than the 40-hour week and with or without the spouse entering the labor field.

MARTIN KASTE: There have been some success stories in the effort to foster new manufacturing industries on the Iron Range. At the Hibbing Electronics Plant, employees wearing anti-static electricity smocks manufacture computers, circuit boards, and other electronic equipment for customers such as IBM and Siemens of Germany. Company Vice President, Charlie Krebs, shows off one of the latest products.

CHARLIE KREBS: This is a full system that we're manufacturing here.

MARTIN KASTE: Full computer system?

CHARLIE KREBS: Yeah. This is a network server that you hook terminals into, and we're manufacturing all of the boards that go into it. And then we buy some cable assemblies from other Minnesota manufacturers. We go out and we buy some power supplies that are coming from Minnesota, and we simply put it together.

MARTIN KASTE: Hibbing Electronics has grown into a $40-million-a-year business since two Hibbing natives started it in a garage 20 years ago. Charlie Krebs says the local workforce is what's kept the company from moving away.

CHARLIE KREBS: We are successful. One of the reasons we are very successful is because of our workforce. I think it's a very highly educated workforce.

We do not have the same problems here that I have heard in other parts of the country where companies are out there teaching basic mathematics and teaching people how to speak and how to read. And we don't have that in Minnesota. We have a very intelligent workforce from that standpoint.

MARTIN KASTE: But the Iron Range workforce, with its tradition of strong labor organizations, can also be a complicating factor when businesses consider locating in the area. In the mid-1980s, a controversy over unionization played a part in disrupting entrepreneur Gina Paulucci's plan to build a carpet factory in Hibbing. Paulucci says he's now thinking of opening a frozen pasta factory in the same area. But he says the attitudes of organized labor still give him cause for concern.

GINA PAULUCCI: The one disadvantage they have is the mentality that we all know. You talk to anybody about the Iron Range, whether you're in Saint Paul, or Kokomo, or New York, and they say, well, isn't that strike city? Because all you hear about is labor stoppages. And that's something that I think has been maybe magnified more than reality. But reality, to a great degree, is their.

MARTIN KASTE: Union activist, Bob Root, says the reputation for strikes is overblown. And he says Iron Range workers have no interest in keeping businesses out.

BOB ROOT: When they're organized whatever union they organize with will try to get the highest contract they can based on what that employer can pay. And that runs the gamut of what type of contract you can come. You never ask for more of you may ask for. You never settle on a contract that's more than the employer can pay.

MARTIN KASTE: At the area Department of Jobs and Training, Tom Wedward says Iron Range workers understand that there is no longer any guarantee of finding high wages.

TOM WEDWARD: I think they're very, very realistic. I don't think that they like to take the lower-paying job. But they're realistic, and they are concerned about their families. And they will put several of these types of jobs together until something better comes along.

MARTIN KASTE: Outside observers often argue that it's not realistic for the Iron Range to expect to build up major new industries outside of mining. Hibbing Administrator, John Fedo, admits there's a possibility that economic diversification is doomed to fail. But he says that possibility is irrelevant. In his opinion, which is increasingly shared by most business and government leaders in the area, the Iron Range has no choice but to try to cushion itself for the next great shock from the iron mines. This is Martin Kaste, Minnesota Public Radio.

CATHERINE WINTER: You're listening to a special Mainstreet Radio broadcast, live from Nashwauk. I'm Catherine Winter, here with Martin Kaste. Joining us now at Nashwauk City Hall are three people here to discuss the future of the Iron Range. Fritz Knaak is a former Independent Republican State Representative from White Bear Lake. Tom Rukavina is a DFL lawmaker from Virginia just a few miles up the road.

And Jim Gustafson is Commissioner of the Iron Range Resources and Rehabilitation Board, or IRRRB. Thanks to all of you for being here. If there are members of the audience who have questions they'd like to put to our panelists, I'd encourage you to seek out Mainstreet Radio reporter Rachel Reabe, who's standing at the back of the room with a microphone. So if you'd like to just raise your hands or walk over and find Rachel if you'd like to put a question to our panelists. Later on in the program, we'll also hear from representatives of the Steelworkers Union and the state Iron Mining Association.

MARTIN KASTE: Let's start with IRRRB Commissioner, Jim Gustafson. The IRRRB is an agency that collects special taxes from taconite producers and spends the money on projects such as city sewers, mined land rehabilitation, and economic diversification projects on the range. Commissioner Gustafson, what sorts of projects is the IRRRB currently funding?

JIM GUSTAFSON: Well, Martin, the agency is most famous, I think, for the infrastructure projects that you make reference to, and that is the substitution of IRRRB money, in some cases, for local taxpayer money for sewer projects and other projects within the communities. Actually, that's only a relatively small part of the money that-- a part of the money that is spent by the IRRRB. The balance of the money is spent in tourism projects, economic development projects, mining reclamation projects. mining reclamation, for example, has planted over 2 million trees in the area.

We have a division which raises old buildings and, since 1970, has virtually knocked down a building a day, five days a week, since that time. Currently, the focus is on the mining and minerals industry. There was a time where there was a sense of antagonism between the mining and minerals industry and the IRRRB.

The industry felt that the production tax money that went to the agency was foolishly squandered, and they were overtaxed. And many of the people in the agencies felt that the mining companies were not treating the employees fairly. And there was a sense of antagonism between the two. I think we've changed that a lot.

There is now a closer relationship between the mining and minerals industry and the IRRRB. One of the programs that we have in place is a $2 million grant program to improve the efficiency of any taconite plant that would meet certain criteria. And that is that if a taconite company is willing to develop a $8 million project and make a commitment to a long-range commitment to the Iron Range and invest $8 million in modernizing their plant, they can receive a $2 million grant from the IRRRB.

CATHERINE WINTER: So is the bulk of the IRRRB's money not spent on projects such as putting in golf courses at Giant's Ridge and that sort of thing?

JIM GUSTAFSON: Well, it depends on how you define that sort of thing.

CATHERINE WINTER: Projects to encourage tourism, for instance.

JIM GUSTAFSON: The direct economic development-- which, we consider the golf course at Giant's Ridge economic development. Direct economic development is probably about 40% of our budget. The remaining 60% is a combination of infrastructure projects, diversification of industry, mining reclamation, service projects--

CATHERINE WINTER: And then the money to fund these projects comes directly from a tax on the mining industry. Is that correct?

JIM GUSTAFSON: Yes. For simple mathematics, the mining companies pay $2 a ton of production tax, and the last several years have been producing at the rate of about 40 million tons. So $2 times 40 million is $80 million. Of that $80 million, about a third goes to the IRRRB, and the remaining goes to the cities, towns, county, and for tax relief.

CATHERINE WINTER: I wanted to ask former representative Knaak, I know that there's been some discussion about that tax money going directly into Range towns and into the triple IRRRB. Is there a feeling, do you think, among lawmakers from other parts of the state that money ought to be going into the state's general fund and be shared generally by the rest of the state?

FRITZ KNAAK: Oh, I'd say, yeah, there is a feeling. What there is more than anything now is a growing awareness among politicians in other parts of the state, on, that this fund even exists because for a long, long time, I think, it was something that wasn't openly debated and discussed in legislative halls for no other reason than it just wasn't. I mean, that was not the habit in the legislature.

And now they're more aware of it. It is a statewide resource. And I think people have lost focus as to what the overall history of that fund was, which was a statewide debate about whether we were going to be allocating this resource for this purpose locally for economic development. And in that particular case, I think the argument was made that it was needed for local development, and that argument won.

But the other side still hasn't entirely gone away. And I think you're seeing more and more that mineral resources generally are being seen again as a statewide resource. How you do that or how you go about doing that without doing serious damage to the efforts that are going on up here is another matter. But yeah, I think you're starting to hear that voice. It hasn't arrived at a point in the legislature where I'd say it's likely to prevail, but I think you're going to hear it more and more.

CATHERINE WINTER: Did you want to respond to that, Representative Rukavina? I saw you leaning toward your microphone.

TOM RUKAVINA: I certainly would want to respond to that. And, Catherine, just to let the listeners across the state know, there is no state money in the IRRRB. It is a local property tax. In a sense, the production tax is paid in lieu of property taxes.

Prior to the taconite amendment, in natural ores, as we used to pay an ad valorem tax and work much like a property tax. Fritz knows this. Commissioner Gustafson also knows this.

And all the Republicans who always harp about the IRRRB-- they also know this. And I just want to get that message out. The fact of the matter is that, also, if we want to talk about our minerals being a statewide resource, they are. But over the last century, the citizens of the Iron Range, through mineral rights that are paid to the state-- state ownership right down the road here is an example.

The University of Minnesota has mineral rights probably worth $200 million yet that are unmined. There is right now about, I believe, $190 million in the Permanent University Fund and approximately $700 million in the State School Trust Fund. That goes to all the citizens of this state.

That adds up to almost to $1 billion that was put in there by the citizens of the Iron Range. We do not get the benefit of the taxes that are property taxes that are paid with an IDS building or a General Mills building in the Twin Cities area. That goes to local taxes, school districts, cities, counties, and just as our production tax does here.

MARTIN KASTE: Well, speaking of the citizens of Minnesota, we have a few callers who would like to jump in on this debate. Go ahead, please.

AUDIENCE: Hi, my name is Jessica Sterum, and I am from Nashwauk. But right now, I'm in St. Paul, Minnesota.

I go to college at Hamline University. And I just want to attest to the decline of the Iron Range. I remember when I was in high school, after Butler closed, the number of students that did finally leave because their parents just didn't have any more jobs left at Butler plant.

And I don't think that it's accurate to just say that the Iron Rangers in Nashwauk and others are just complaining that the mines are closing down. We also want to bring in new jobs and industries into the area. And we're not closed to that idea.

CATHERINE WINTER: Well, what do our panelists think? Are the rumors of the death of the Iron Range exaggerated?

FRITZ KNAAK: Oh, let me jump in and say, yes. And I see Tom smiling. I think he'd probably say something else. But I think--

CATHERINE WINTER: This is Fritz Knaak speaking, I should tell our listeners who can't see him.

FRITZ KNAAK: OK. I think there was a lot of doom and gloom being talked about rural Minnesota. In Minnesota, we've got basically the three Minnesotas. We've got metro outstate, at least, and the Range. And a lot of rural Minnesota was written off, a lot of rural communities that people thought shouldn't be existing after 1990 are out there, and, one way or another, thriving.

And I think what you're seeing on the range certainly is a downsize in a one-industry region. But I think anybody that writes off this part of the state is not only being premature, they're not all being realistic. I think that there's a lot going on here. But you're certainly going to see-- and this has been a process.

This is not new. I mean, this has been going on, and it's been causing earthquakes and aftershocks in overall statewide politics in Minnesota, really, since the 1950s. It's been a slow, difficult process, as it has in rural Minnesota, the change in the rural economy and other parts of the state. What will happen and what will emerge will be different, but it will be something, and it will be here.

CATHERINE WINTER: What do you think, Commissioner Gustafson, as someone who's working on projects to try to keep the range alive? Obviously, it's been through boom and bust cycles. Is this just another bust and it'll come back? Or is it in a slow slide?

JIM GUSTAFSON: Well, the simple answer is no, that the Iron Range is not going to dry up and disappear, as some counties and regions in Southern and Western Minnesota have. The minerals industry basically is relatively strong. We had two taconite plants that were not very competitive in the world market.

One has closed, although we think there's a possibility that it may reopen under a somewhat different configuration. The other plant, Eveleth Mines, which is also known as a high-cost producer, I think, is struggling hard to be competitive, and I think there's a good chance that they'll stay open. The remaining iron mining companies are very strong. The ore body at least has 100 years, and our plants are very competitive.

As far as tourism, we're seeing a terrific growth in tourism. And back to the golf course at Giant's Ridge, right near the property that is being developed, there's already been over $2 million of private investment, not a nickel from the IRRRB or any public money that has been developed in high-priced condominiums. And those are continuing to grow and be built.

And as Mike Gentile said earlier, there's a high probability that over a 10-year horizon, we'll probably have a 250 to 300 condominiums and residences developed along there. And finally, we are moving ahead with diversification with back office industries, and telemarketing companies, electronic companies, and so on. So the question is now, is the Iron Range going to die, but, what will it look like 10 years from now? And it will look somewhat different, but it certainly will still be here and employing lots of people.

MARTIN KASTE: Representative Rukavina, is downsizing the future of the Iron Range?

TOM RUKAVINA: Well, I think you're going to see-- and I think there are those that will agree with me and those that disagree that we're producing approximately 40 million tons. And if National does close permanently, there are a lot of people that say that the other taconite companies on the range will pick up quite a bit of that tonnage so that we will continue to produce that 40 million tons. we've died many deaths and been written off before, and we've always come back.

And we're working hard with our mining industry. But one of the goals of the IRRRB and one of its directives in state statute is to diversify. And I can say to the previous caller, the young lady who has moved away from the Range, that we are working very hard to try to diversify that economy so that we don't export our children to other parts of the state. But I do want to comment, and I just would like to say that I can only imagine what Senator Knaak and Senator Gustafson would have said if Rudy Perpich proposed a $4 million golf course at Giant's Ridge or the money that the Northwest Airlines proposal, there would have been a hue and cry from all over the state and certainly from Senator Knaak.

FRITZ KNAAK: I think I did do a bit of a hue and cry, at least over Northwest.

TOM RUKAVINA: I haven't heard you on the golf course, Senator.

FRITZ KNAAK: I haven't heard about it. I'm shocked and dismayed.

[LAUGHTER]

MARTIN KASTE: Well, before we get into Northwest Airlines, let's go to another caller.

CATHERINE WINTER: Go ahead, please. What's your question?

AUDIENCE: Yeah, my name is Henry Harris. I'm from Aitkin, Minnesota. And I question the IRRRB's policy here. We see three brand-new town halls being built around the area-- money which would finance two, or three, maybe four small businesses, which are hard-pressed to get any kind of financing. And I think the money is being misspent in that it creates no jobs and pays no property tax. Would you answer that, please?

CATHERINE WINTER: What do you think, Commissioner Gustafson? You do hear that criticism that IRRRB our money goes to beautifying towns that are already there and that money ought to be spent instead on developing businesses.

JIM GUSTAFSON: Well, Catherine, I'd say this, that there is probably two dozen different kinds of programs that the IRRRB has. I think if you examine each one of them, there is a rational and intellectual justification for it. But I'm not sure if there's one program of the 20 that doesn't draw criticism from somebody from some source. It's true that there is a Main Street redevelopment program that's available to the small businesses along the Iron Range-- not too different from the same program that's available in Duluth and other cities, where the IRRRB does give a grant to the city.

The city gives low-cost loans to the merchants. The merchants refurbish their storefronts, pay it back to the city, and then that's recycled through the community. I think the net result is that as you drive around the Iron Range, contrary to many other parts of rural Minnesota and rural United States, that the towns look pretty good, are cleaned up, not many vacant buildings. And basically, considering the downsizing of the towns and the outmigration, the small towns, the Iron Range look pretty darn good. And I think that's important in terms of attracting both residences and businesses.

CATHERINE WINTER: So perhaps you don't see an immediate, you know, business spring up. But by keeping the towns good looking, that helps to promote the economy of the range in the long run?

JIM GUSTAFSON: You bet, I think so. And, in terms of the budget, the IRRRB, it's probably less than 1% a program like that.

FRITZ KNAAK: Well, if I can just address a little bit of what the caller was saying, though, from my perspective, again, from where we are down in the Cities, and you see what's going on up here, as I was driving up, for example, the caller's right. I drove right by the brand spanking new, gorgeous, I might add, Clinton Town Hall and the new fire hall. And I was wondering some of the same questions. And, you know, these are the kinds of answers that the range is going to have to deal with if it is interested in diversifying them.

I always complained about the incredibly high commercial property taxes in the Twin City Metropolitan area, which were comparable on a square footage basis with Manhattan. And we were trying to attract business from other parts of the country here. The Iron Range commercial property taxes are even higher than they are down in the cities. And how you expect to be attracting business development and bringing jobs into the Iron Range when you aren't taking a direct attack on those kinds of commercial property tax rates is really, to my way of thinking, a key question.

How are you going to form, if you're really-- you're not near markets here. If you're looking at expanding the job base here, if you're looking at actually building buildings to house businesses, to employ people, how are you going to compete up here? You've got an educated workforce that's good. But, if where you're going to put them is more expensive because of the commercial property taxes in other places, the reality is you're not going to be able to attract the jobs up here.

So I think the caller's point is very well taken, and that that's an ongoing chronic problem that the Range is facing right now as it's phasing out of its reliance on mining.

TOM RUKAVINA: Well, Catherine, if I could jump in, too, because the caller brought up the--

CATHERINE WINTER: Representative Rukavina, go ahead, please.

TOM RUKAVINA: --the town hall program. And, you know, the Iron Range shipped billions and billions of dollars of wealth to out East, and a lot of people like the Rockefellers and that made their fortunes off the Iron Range. As I said, there is no actual property tax anymore paid for by the mining companies. I have been in the Twin Cities, Sir Fritz. I have been around where we had the mini session in one of the northern suburbs. I can't remember if it was Roseville.

Their city hall folks and Iron Range listeners has a swimming pool and a water slide in the city hall. So I think the citizens of the Iron Range certainly deserve to have some infrastructure up here that will help us to attract businesses and not showcase us as some kind of dying area like Appalachia.

FRITZ KNAAK: No, Tom.

CATHERINE WINTER: Fritz Knaak.

FRITZ KNAAK: That's not what I'm talking about. Not really.

TOM RUKAVINA: No, that's what the caller was talking about, Fritz.

FRITZ KNAAK: Well, but I think that, in terms of attracting business up here, if we're really interested in diversification and those kinds of things, addressing things like as fundamental as high commercial property tax rates has to occur. And what I'm concerned about in terms of what your response is, is it's kind of typical in a way of, when you try to approach a range problem of the us versus them mentality, that seems to come out of it.

I mean, I agree. I mean, I understand. A tremendous amount of wealth was taken out of this region. And it went largely out east to build fortunes and whatnot. What does that have to do right now with changing the commercial property tax rate structure in the Iron Range?

TOM RUKAVINA: Well, there hasn't been a call that I'm aware of yet that is talking about changing the commercial industrial.

FRITZ KNAAK: We're talking about business.

CATHERINE WINTER: We do have a call on the line if we-- first, let me remind our listeners that you're listening to a special Main Street Radio broadcast live from Nashwauk City Hall. And let's find out what our next caller has to say. Go ahead, please.

AUDIENCE: Hi, I'm Kim Stokes from Britt. And I want to thank Representative Rukavina for saying what he just said. I, for one, would be very willing to share our resource with the rest of the state, give it all to the state of Minnesota if we could get back what we have already given in return. When I drive through the suburbs down the Twin Cities, and I know exactly what you're talking about, Tom, Shoreview, Woodbury Eagan, Eden prairie, Bloomington, I see incredibly beautiful public schools and public buildings.

I believe we should also get some of those same resources. I'd love to have ours updated the way that the rest of the state has theirs. And to answer Representative Knaak, there is an us versus them. But perhaps if we were treated equally with the rest of the state of Minnesota, there wouldn't be such an us versus them.

And then, finally, just one slight comment. When you're talking about the future of the Iron Range, I know you're talking mostly about the economic future, but we do have another future, quite a bit of futures up here in terms of our culture and families and family values and the way that we live our lives up here. And I'm just a little disappointed that you left out over half the population and couldn't find a woman to participate either in your panel or in some of the previous interviews that I heard. And I'll get off the phone and listen to the comments. Thanks.

CATHERINE WINTER: Well, I agree with our listener. We had hoped to try to have the panel more balanced, and I wish that we had done that. But we are glad to have the panelists that we do have. And I would like to get your response, especially Representative Rukavina, to this idea that there is a special culture here on the Range worth preserving. What makes the Range different from the rest of the state?

TOM RUKAVINA: Well, I don't know if we're different. You know, when our children leave, we hurt just as bad as when other parts of rural Minnesota lose their young people. I guess the fact perhaps that we are a conglomerate of 40-some different ethnic groups that were brought here and thrown together to be in a way at that time in the early 1900s indentured servants for, you know, the industrialists out East. And I know Fritz will have fun with that statement.

But we stood up for ourselves as early as the 1907. We had a major strike that shut down the Iron Range where the people stood up and demanded to have at least a little bit of the piece of the pie that was being made. We learned to tolerate each other. I can remember some of the stories told to me as I did oral histories across the range, how the Finns learned to play bocce ball from the Italians in some of the locations. And the Italians and people from the Serbs, the Croats, Slovenes learned to take saunas from the Finns.

So, I mean, it is a rather unique culture. But I think the underlying fact is that we have never been afraid to stand up for ourselves and demand our fair share and piece of the pie.

MARTIN KASTE: Speaking of standing up for yourselves, our audience would also like to participate in this discussion. Minnesota Public Radio's Main Street reporter, Rachel Reabe, has taken a microphone out to talk to one of the people listening here today.

RACHEL REABE: I have John Ball with me, Martin. He says he is a relative newcomer. He's been here since 1942 in Nashwauk. John, you told me, when you started with the mines in '42, the prognosis that they gave you was not good.

AUDIENCE: That's right.

RACHEL REABE: What did they tell you in '42?

AUDIENCE: They told me they had three years, three years to go.

RACHEL REABE: So in '42, they told him there were three years left with mining. Now, you worked how long for the mine, John?

AUDIENCE: 31.

RACHEL REABE: You told me that you had seven children. Two of them have moved away, but you have five kids that remain here. We heard in one of those earlier pieces that Nashwauk has become largely a retirement community. Tell me what your five children have found to do for a living in this community.

AUDIENCE: Well, most of them worked at national. And they ain't working now. They're just waiting to see what's going to happen. My daughter is a school teacher. And that's about it. One is a teacher's aide.

RACHEL REABE: And, John, what kind of advice do you give them when some of them are just waiting to see what happen? There's cycles that you have seen living in Nashwauk for 50 years. What kind of advice do you give these kids about the future here?

AUDIENCE: There ain't nothing you can give them. You don't know what to tell them. I've seen through my life that you tell them one thing, and something else happens.

RACHEL REABE: Sometimes people in the rest of the state think, well, if they can't get a job here, just get in a car, move, go someplace else where you can find a job. Is it just not that easy?

AUDIENCE: No, it's pretty hard to do that too. I don't know how-- They don't know where to go. Go to the cities, and then you get them cheap jobs, that they got to have two or three jobs to make a living. And the rent is so high you can't afford it.

RACHEL REABE: So there are no good options for them. If they were to listen to you, John, if they would listen to your advice, what would you tell them?

AUDIENCE: Kids don't listen.

RACHEL REABE: But if they would listen, John, would you tell them, stay, hang tough, or get out?

AUDIENCE: I really don't know what I could tell them. I really don't. The trouble here is Japan owns this country, and it's all up to them what happens with national, as far as I can see.

RACHEL REABE: So you feel helpless.

AUDIENCE: Pretty close. Next thing to helpless.

RACHEL REABE: That's John Ball, a Nashwauk resident for over 50 years.

CATHERINE WINTER: OK Thank you, Rachel. We have another caller on the line with a question, too, for our panelists. Go ahead, please. What's your question? We did have a caller. Is there still one there?

AUDIENCE: Hello

CATHERINE WINTER: Hi. Do you have a question for our panel or a comment?

AUDIENCE: Hello?

CATHERINE WINTER: Apparently, our caller is having some trouble hearing us. Can you hear me?

AUDIENCE: Mankato calling.

CATHERINE WINTER: OK. What's your question?

AUDIENCE: I am a businesswoman. I believe in diversified industry. That's the only way you're going to support those other work industries. If you do not have big SuperValu markets, drugstores, and retail stores, entertainment of some kind to support those people so that they don't have to move out. Brainerd is a good example to take after.

CATHERINE WINTER: Jim Gustafson, if you could comment on what are the hopes do you think really of bringing diverse businesses into this region?

JIM GUSTAFSON: Well, I mentioned earlier about tourism, and we do think that we can build a tourism powerhouse in Northeastern Minnesota over the next decade and longer. And many of those jobs, contrary to what are often portrayed, are not all minimum-wage jobs being dock boys, but in fact, many middle and high priced jobs that you can support a family on.

But, beyond that, we recognize that we're at a disadvantage as to freight. And so we looked at industries that are not freight intensive, and we have been successful just in the last few years working with biotechnology firms, working with telemarketing firms, back office firms. In fact, this morning I was visiting with an investment banker out of the Twin Cities on a plastics recycling operation. And we talked a little bit about the financing that might be available through the IRRRB.

And, as we finished up, I said, besides the financing, let me give you a little bit of a commercial that the workforce in the Iron Range is extremely productive, that the youngsters that graduate from the high schools here have some of the best SAT scores and some of the highest work ethics that you can find anywhere. And one of the firms just down the road from my office, Fingerhut, which has operations all over the country, finds that they've had almost 200 employees. They're going to add another 100 and have told me that they have the lowest turnover rate in the country and really the most productive, one of their most productive offices in the United States is located right here in Eveleth.

So, if it is not freight intensive, we think that we have a good shot at them. And, of course, the IRRRB, under the statute, exists today whether people in Mankato like it or not. The fact is that we do have an advantage with production tax money that we want to recycle into jobs. And I would say that we're reasonably successful in that. And I think that we'll be able to announce a couple of major employer opportunities within the next six months.

CATHERINE WINTER: OK. I don't want to let this panel slip by the time we have for this panel without at least a little bit of talk about politics. So we have one more piece we'd like to present during this first hour. DFL candidates for governor and US Senate have been making pilgrimage to the Iron Range and the rest of Northeastern Minnesota for months now. Despite the declining population and the economic hardship on the Range, many political observers still believe that a DFL candidate must win in this area in order to win a statewide election.

Iron Rangers played a major role in Minnesota politics throughout the past 15 years, and the Range continues to benefit from their political influence. Mike Mulcahy reports.

MIKE MULCAHY: Governor Rudy Perpich used to say that his father, a Croatian immigrant, owned only one necktie. He wore it only when he went to church on Sunday and when he went to vote on election day. The story illustrates a fundamental truth about politics on the Iron Range. The immigrant mine workers who populated the region saw voting as a sacred American right, one not granted to them in their native countries.

Voter turnout was always high in the state's Eighth Congressional District, which includes the Range, Duluth, and the rest of Northeastern Minnesota. And voters generally cast their ballots for the DFL party, the same party allied with the unions that brought decent working conditions to the mines. Al Zdon is Managing Editor of the Hibbing Daily Tribune.

AL ZDON: The whole area voted one way. You know, it always voted DFL. And so, when it came primary time, the area drew a lot of attention because really how the Range voted was how the DFL primary would go. So, in that way, it had probably influence beyond the actual number of voters or people that lived here.

MIKE MULCAHY: The DFL base on the Iron Range helped keep Rudy Perpich in office longer than any other Minnesota governor, and the Range may have reached the peak of its political power during the Perpich years. For many of those years, Duane Benson from Lanesboro in Southeastern Minnesota was the Republican leader in the State Senate.

DUANE BENSON: You know, it wasn't that long ago, we had Ron Dicklich was chairing education finance. Doug Johnson was chairing taxes. And what's that? 2/3 and 3/4 of our budget really was massaged through those two committees. So they had a tremendous amount of influence. And we had a governor who was an Iron Range governor.

MIKE MULCAHY: But as the Range's political power reached its zenith, the economy of the area foundered. The collapse of the US steel industry in 1979 meant the closing of many mines. The unemployment rate on the Range reached more than 20% in the early '80s. Young people moved away, and the politicians looked for new economic development projects that would create jobs.

RON DICKLICH: So you make your political speeches, make your accusations, your smart talks and your big words while there's people on the Iron Range that are going to hurt.

MIKE MULCAHY: DFL State Senator Ron Dicklich of Hibbing arguing on the Senate floor in 1987 that the state should lend Endotronics Corporation $24 million of taconite tax money to open a plant in Hibbing. The plan fell through after the FBI started investigating and eventually the company's founders were convicted of securities fraud. The Endotronics debate was a warm up of sorts for the debate over the Northwest Airlines bases, still yet to be built in Hibbing and Duluth.

Dicklich and Perpich are out of office now, and longtime State Representative Joe Begich of Eveleth retired in 1992 when redistricting cost the Range a seat in the house. But the Iron Range still has a strong power base at the Capitol. Doug Johnson still chairs the powerful Senate Tax Committee. New House Speaker Irv Anderson comes from just North of the Range in International Falls. One of his close allies is Tom Rukavina from Virginia.

Representative Dave Battaglia of Two Harbors chairs the Natural Resources Funding Committee in the House. But the experience and skill of the Range politicians may not be enough to counter the changing demographics of Minnesota. Republican Duane Benson says, even if Rudy Perpich and/or Doug Johnson run for governor this year, Minnesota may have seen its last Iron Range chief executive.

DUANE BENSON: You know, the first governor for a long time that really came out of the metro was probably Arnie Carlson. Before that, the state generally elected governors from greater Minnesota. And I think that, with the shift, particularly after the last census, I think it will be easier to elect a governor that has that base of the metro area.

MIKE MULCAHY: Hibbing newspaper editor, Al Zdon, agrees that the political influence of the Iron Range will continue to wane as the area's population decreases. He says, though, that politics will always be an important part of life on the Range.

AL ZDON: Well, they say, you know, on the Range that politics and sports are what gets you through the winter. And so that may be what-- because politics is the major indoor sport up here that people just tend to get good at it.

MIKE MULCAHY: I'm Mike Mulcahy, Minnesota Public Radio at the Capitol.

MARTIN KASTE: Coming up a little later in this program, we'll talk about the environmental effects of iron mining. And we'll talk to a spokesman for the US steelworkers and the Iron Mining Association of Minnesota. Now, our current panelists are former State Representative Fritz Knaak of White Bear Lake, Representative Tom Rukavina of Virginia, and IRRRB Commissioner Jim Gustafson. Tom Rukavina, you are the quintessential Iron Range politician as well. Why are iron Rangers such good politicians?

TOM RUKAVINA: Well, maybe we get a lot more credit than we should, Martin. I don't know. And you've got a governor from the area. And. As Senator Benson said, you have a chair of the Tax Committee, a chair of the Education Finance Committee, chair of the Appropriations Environmental Committee, Appropriations Committee. We have a tendency to stay in office for quite a long time. And seniority means a lot down at the Capitol.

That's one of the reasons why we do have some clout. Also, I think the fact that our folks believe that government can be good for people, that government isn't evil, and we participate. We turn out 90% in a primary, and probably 85% of that 90% votes DFL.

So, for all of those candidates that are running for governor, United States Senate, don't forget us because you know who's going to control that DFL primary even if we've lost some population. And they know that. And that's why they're up here. Well, I guess I think one of the reasons, though, that we've been very successful is we don't take our fights in the open, out into the open.

We settle our differences amongst ourselves. And believe me, we have differences at times, but we settle them, and we do what's best for our constituents. And, you know, we love the area we represent and the people that we represent. And we're going to do the best job that we can for them down there. And so, if we do get an argument with each other, we settle them amongst ourselves. Then we go out there. And for those of us that might not agree, we swallow hard, and we do what's going to help our constituents.

CATHERINE WINTER: Do you think that the heritage on the Range makes people more politically active, more likely to vote?

TOM RUKAVINA: Well, I think the fact, Catherine, that, you know, they came from an area where-- let's face it, you know, a lot of our people up here are Slovenes, Croats, Serbs, Italians who were part of the Austro-Hungarian empire. The Finns at the time had just gained independence from the Russian Empire. They didn't have a vote. They weren't treated well. a lot of them weren't educated people, but they were intelligent people.

And when they came over here, they learned how to use the system. They ran for office. And looking back in history, you have people that were immigrants that were getting on-- elected on county boards and school boards and city councils, and they were taking care of their people. And we've continued to try to do that all along here.

MARTIN KASTE: We have a caller on the line right now. Go ahead.

CATHERINE WINTER: Do you have a question or a comment for our panelists, caller?

AUDIENCE: Are you talking to me?

CATHERINE WINTER: You bet I am.

AUDIENCE: Hi, my name is Bill Norcross. I'm at the University of Minnesota in Minneapolis. And I understand that one reason the market for taconite has shrunk recently is that new technologies for making iron and steel simply can't use taconite pellets. They have to use other kinds of ore. And so I've heard the solution for Minnesota is new technology that will allow us to make iron in Minnesota using Minnesota ore. And I wonder if your panelists have any sense of if and when those new technologies will arrive in Minnesota.

CATHERINE WINTER: Right. We do plan to-- a little bit later in the program, we'll expand on that issue, the question of new technologies in iron ore. And we'll also have a spokesman for the Iron Mining Association and for the steelworkers up here, both of whom can probably expand on that, too. But perhaps one of our current panelists would like to talk a little bit about technological changes in the industry. Jim Gustafson?

JIM GUSTAFSON: The caller is correct, that the only customer that we have for our taconite pellets is the blast furnace. And you'll get some argument about what the life of the blast furnaces are in this country. But it's fair to say that, 20 years from now, at least under the current type of technology and the kind of telescope that we can look into the future, that most of the blast furnaces probably will be closed down primarily because they are so expensive to build and/or reline.

So what that means is that, if everything stays the same, our taconite industry will probably disappear to a great extent over the next 20 years. However, the emerging technology are the electric arc furnaces, which principally use scrap as their feed. However, as scrap gets more and more expensive and also with tramp materials often associated with scrap, that a high-quality, direct-reduced iron product needs to be introduced into those electric furnaces.

And, right now, there are projects right on the table to start that type of technology. When you start with the taconite conglomerate and, instead of making taconite balls, wind up with a higher quality briquette, about 92% iron. And we think that that holds great promise for the region. And my guess is that, within the next year, we'll see an announcement of at least one direct-reduced iron plant on the Iron Range.

TOM RUKAVINA: Catherine, quickly, the caller--

CATHERINE WINTER: Tom Rukavina, go ahead.

TOM RUKAVINA: --brings up a good point. And, you know, to remind the listening audience, the taconite, the beneficiation process was actually invented by a professor from the University of Minnesota. We shipped that technology and never had a royalty on it or a patent, so to speak. And, in the end, it has helped create taconite plants all over the world that we have to compete with.

But we discovered that here, because the University of Minnesota knew the value of our minerals and at one time did a lot of research, they have kind of abandoned that. But in the last legislative session, we were successful at the Range delegation in setting up an endowment that will cap at $25 million. And we will use the interest at the Natural Resource and Research Institute of University of Minnesota, Duluth, at their coleraine facility, to continue to work, not only on improving our pellets, but also on other value-added products that will help the Iron Range continue to survive.

MARTIN KASTE: We'd like to go to one more caller quickly before the top of the hour. Go ahead, caller, please.

AUDIENCE: Yes, I'd like to-- I'm calling from Alexandria. I'd like to, first of all, say the people out there in Iron Range, they're a pretty tough bunch. It's too bad there isn't more of them around because they really are a bunch of underdogs. And I know it's kind of hard to tell them to hang on and things are going to get better because they probably haven't seen things get better in so long. It seems like it's never going to come.

But it's too bad that the people don't-- I mean, when I say people, I mean like the city people, turn it around, so to speak. Because, actually, that's been our ace in the hole for so many years, and we've gone and forgot about it. It's just like our tourist trade, Minnesota's. You know, it's just the tourists. Unbelievable amount of tourists come to the state of Minnesota. And I think that's an ace in the hole, too.

And I think that we should do something for them, people up there. They've had a rough sledding for years. I really don't know what--

CATHERINE WINTER: Very briefly, let me ask our panelists. I know I spoke yesterday with the Office of Trade and Economic Development in Minnesota, and they told me that mining actually makes up only a very small percentage, 0.4, 4/10 of a percent of Minnesota's economy. How important is this area to Minnesota as a whole?

FRITZ KNAAK: Well, I don't think that there's any question that is--

CATHERINE WINTER: Fritz Knaak.

FRITZ KNAAK: --tremendously important in terms of its economic and political effect. We've kind of stepped away a little bit from the whole issue of the enormous historical influence the Iron Range has had on DFL politics in particular. But I think what's going on here is, because of those numbers and the percentages, and it hasn't been a large tourism area, and the reality of this state is that slowly but inevitably we're progressing towards a situation where the politics is more oriented towards the Metropolitan area and the suburban Metropolitan area.

I mean, 20 years ago, no one talked about the suburban Metropolitan area. Now, everybody's talking about it politically. Increasingly, I think what you're seeing is that people are starting to forget about the Range. They are starting to forget about the unique culture up here that you've just kind of touched on a little bit that really is unique.

I mean, I don't know where else you could go in the country where you saw these particular ethnic groups in an isolated situation like this, develop this kind of a culture. And you're getting a whole generation of Minnesotans. Maybe a majority of whom don't really have a feel for what the Range is or represents.

And increasingly, when the Range comes to places like the legislature, it's not understood when it asks for things and expresses needs, and, more particularly, the attitude which is kind of a cultural historical attitude of the range, which is kind of an in-your-face sort of politics, isn't appreciated for what it is. And instead, people are kind of defensive about it.

And I think that, though, there's going to have to be a real educational process that's going to be going on with these decreasing numbers, or it's going to get worse. It's not going to get better. People are going to start, I think, ignoring the problems up here because there are plenty of other problems and things like crime in the cities, you know. And the fact is it's not worried about up here as much, largely because there isn't any crime relative terms up here, which is a benefit.

So those kinds of things that people that are familiar with the Range-- and Tom knows that I go back with some family history here quite some generations-- are sympathetic about it. But, increasingly, I think you're going to see less and less important role for the Range unless that voice is heard.

CATHERINE WINTER: Tom Rukavina, did you want to respond to that quickly?

TOM RUKAVINA: Fritz hasn't told the listening audience out there that he is part Slovenian, and that his grandfather's probably turning in his grave because he became Republican. But Fritz, you know, that's OK.

FRITZ KNAAK: Things did warm up a bit in Hibbing when I drove by.

TOM RUKAVINA: But, you know, the caller brings up a very good point for all of rural Minnesota, and it's probably a fairly simplistic attitude. But, you know, unless farmers create wealth from the soil and Rangers create wealth from turning rock into taconite pellets and the forest industry makes trees in the paper, the Twin Cities metro area won't survive. And those folks down there should realize that a healthy, rural Minnesota means a healthy metro area.

As an example, the forest industry, while all the trees are out here in the 14 forested counties in Northern Minnesota, Northeastern and North Central Minnesota, I believe it's something like 85% of the forestry-related jobs such as the printing industry and in places like cabinet shops that are located in the metro area. So the role we play in all of rural Minnesota should never be forgotten. And the metro area should certainly realize that a healthy, rural Minnesota means a healthy metro area.

CATHERINE WINTER: OK, I don't want to cut off this discussion, but we do have to pause just very briefly for station identification. Main Street Radio coverage of rural issues is supported by the Blandin Foundation, providing leadership training through the Blandin community leadership program.