The Empire Mine Layoff and Economic Future of the West End and Marquette County By

Michael J. Broadway

&

Olivia Engelhardt Department of Earth, Environmental and Geographical Sciences Northern Michigan University Marquette, MI 49855

Figure 1: The Tilden and Empire Mines from the air, looking north. Note: The town of Palmer is in the right center portion of the picture, while Ishpeming is left of the center of the picture behind the tailings, close to the horizon.

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Acknowledgments This report was prepared with the assistance of a grant from the Michigan Economic Development Corporation and the support of Northern Michigan University’s Center for Rural and Economic Development. The authors are grateful for the assistance of the following persons in the report’s preparation: Bob Eslinger, Doug Lionais, Erika Shea, Rankin MacSween, William Elliot, Ashten Vlahovich, Cindy Paavola, Melissa Matuscak and Daric Christian. The views expressed are those of the authors and not Northern Michigan University. Any mistakes are the sole responsibility of the authors.

Northern Michigan University’s Center for Rural and Economic Development

The Center for Rural Community and Economic Development at Northern Michigan University combines research, public service, education, and training to enhance the quality of life, support economic development and improve the delivery of services in the Upper Peninsula and surrounding region. The center is a clearinghouse for information on rural issues, coordinates rural research, and works with state agencies, local governments, business and industry on issues of importance to rural Upper Peninsula communities. For more information on the center, visit www.nmu.edu/ruralandlocal/

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Table of Contents Page Project Empire & Report Overview 4 List of Tables & Figures 6 Executive Summary 8 Part I Introduction 11 a. Mining’s role in Marquette County and the West End 11 b. Impact of Layoffs on Workers and their Families 13 c. The Challenge of Economic Diversification in Mining Communities 14 Part II Marquette County and the West End’s Current Economic Landscape 18 a. Demography 18 b. Economic 25 c. Social 33

Part III The Challenge of Economic Diversification 38 a. Rebuilding a Local Economy 38 b. Elliot Lake, Ontario: A Case Study 41 c. New Dawn Enterprises a Community Development Corporation 50 Part IV Conclusions & Next Steps 58 Appendix 1: The University, the Arts and Downtown Revitalization 61 Appendix 2: From Coal (Iron) Miners to Coders? 66 References 68

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Project Empire & Report Overview

In March 2016, Cliffs Natural Resources announced at its annual Marquette County breakfast meeting that it would be discontinuing operations at the Empire Mine and would be laying off 400 workers. Over a year later, the facility remains idle.

Figure 2: Empire Mine, Palmer, Mich., June 2017.

In August 2016, Governor Snyder announced the creation of Project Empire, to ‘bring technical assistance and help local leaders take advantage of state and federal programs to address challenges that lie ahead in the near future while planning long-term economic strength and social well-being’ (Snyder 2016). This report is part of the Project Empire effort. It has three goals. 1. Provide a social and economic overview of current conditions in Marquette County and specifically the west end communities of Ishpeming and Negaunee; 2. present an example of a mining community that diversified its economy and provide an example of a community self- help model of economic development; and 3. identify the key factors in successful economic diversification efforts and make recommendations as to the next steps in planning for Marquette

County and the west end’s economic future.

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Part I provides an overview of mining and its importance to Marquette County,

Ishpeming, and Negaunee; a brief summary of research findings dealing with the impact of layoffs on workers and their families, and the unique economic development challenges confronting mining communities. Part II provides a comprehensive analysis of demographic, economic and social indicators for the west end and Marquette County from 2010 to the present and outlines the challenges of generating new employment opportunities within the region. Part

III summarizes the process of economic diversification with a case study of Elliot Lake, Ontario and includes an example of a community development self-help model. Part IV includes some conclusions and outlines the next steps in dealing with the challenges of economic development in Marquette County.

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List of Tables and Figures

Page Table 1 Ishpeming and Negaunee Population, 1890- 18 2015 Table 2 City of Ishpeming Population Cohorts, 1990- 19 2010 & Population Characteristics Table 3 City of Negaunee Population Cohorts, 1990- 20 2010 & Population Characteristics Table 4 West End Township Population 21 Characteristics, 1990-2010 Table 5 Occupied and Vacant Housing Units, 2000- 22 2015, Ishpeming Table 5a Occupied and Vacant Housing Units, 2000- 22 2015, Negaunee Table 6 Marquette County, Live Births and Deaths 23 Selected Years, 2000-2015 Table 7 Marquette County 2011-2012 to 2014-2015 24 Net Migration Trends Table 8 Adjusted Gross Income of In and Outmigrants 24 to Marquette County, by year Table 9 Marquette County Population 1970-2015 25 Table 10 Marquette County Employment by Industry 27 and Location Quotient, 2015 Table 11 Negaunee and Ishpeming Employment 30 Location Quotients, 2015 Table 12 Employment Gains/Losses by Sector, 31 Ishpeming, Negaunee, 2010-2015 Table 13 Employment Gains/Losses by Sector, 32 Marquette County, 2010-2015 Table 14 Largest Job Gains in Michigan by sector, 32 2010-2015 Table 15 Census of Employment and Wages, All 33 industries (Private) Marquette County, 2012- 2015 Table 16 Marquette County, Labor Force, Total 33 Employment and Unemployment, 2012-2016 Table 17 Selected Social Indicators, Ishpeming, 2010- 34 2015 Table 18 Selected Social Indicators, Negaunee, 2010- 34 2015 Table 19 Number of Percent of Students in Ishpeming 35 Public Schools Eligible for Free/Reduced Lunches, 2010-2016

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Table 20 Number of Percent of Students in Negaunee 35 Public Schools Eligible for Free/Reduced Lunches, 2010-2016 Table 21 Selected Social Indicators, Marquette County 36 and Michigan, 2010-2015 Table 22 Community Transitions Stages 40 Table 23 City of Elliot Lake, Population 1986-2016 47 Table 24 Lessons learned from Economic 49 Diversification Efforts in Elliot Lake Table 25 New Dawn Enterprises’ Divisions 55

List of Figures

Figure 1 The Tilden and Empire Mines from the air, 1 looking north Figure 2 The Cliffs shaft mine in downtown Ishpeming 11 Figure 3 Abandoned storefront on Republic’s Front 17 Street, June 2017 Figure 4 Marquette County Labor Force, 2000-2016 25 Figure 5 Marquette County Total Employment, 2000- 26 2016 Figure 6 NMU Fall Enrollment, 2010-2016 28 Figure 7 Elliot Lake, Ontario 41 Figure 8 Elliot Lake has two lakes within its city limits 44 that are used for recreation Figure 9 Site of the now closed White Mountain 45 Academy of the Arts Figure 10 City of Negaunee Downtown Building Use 63 Figure 11 City of Ishpeming Downtown Building Use 64 Figure 12 Nardi Building, City of Ishpeming 65 Figure 13 Kirkwood Building, City of Negaunee 65

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Executive Summary Introduction • Iron mining has been a core component of Marquette County’s economy since the late 1840s and particularly its west end communities of Ishpeming and Negaunee. • The nature of mining brings with it unique challenges for mining communities as they are dependent upon a non-renewable resource for their economic well-being. When the resource is exhausted or it becomes uneconomical to operate, the mine will shut down. • The Empire Mine layoff in summer 2016 is part of a much broader pattern of mine closures in the Marquette Iron Range, dating back over a 100 years. • A September 2016 survey of 203 laid off workers found that: 92 percent were male, 54 percent were aged over 40 years, 12 percent possessed a college degree, all of them earned over $20 an hour and 11 percent expressed a willingness to relocate in order to find employment. • Previous research dealing with displaced workers indicates that layoffs are associated with significant periods of non-employment, declines in subsequent earnings and increases in depression. Unemployment Insurance is highly effective in transferring funds to persons who need to spend it, but it does little to support jobless persons’ identity, sense of purpose or self-regard. Demography • The city populations of Ishpeming and Negaunee have been in long-term decline dating back over a hundred years. • Since the 1990s, young families and children have left the city of Ishpeming. K thru 12- enrollment in the city’s public schools has fallen by over 200 students since 2002. • Negaunee has benefited from gains in young families with children and K thru 12 enrollment has increased over the past 15 years. • Between 1990 and 2010, the number of persons aged 65 and over residing in Ishpeming and Negaunee declined. • Population decline has weakened the real estate market, with prices per sq. ft. for comparable houses being significantly lower in Ishpeming than in Negaunee and the city of Marquette. • The 15 county Upper Peninsula region’s population is down about 11,000 from its 1980 peak, while the total number of people employed in the region fell by 16,000 persons between 2000 and 2016. • Marquette County’s share of the Upper Peninsula population has remained relatively stable for the past half century, despite its drop in population in the aftermath of the Sawyer Air Force base closing. • Since 2000, the number of births in Marquette County has exceeded the number of deaths by just 2 percent; this means that maintaining the area’s population is largely dependent upon in-migration.

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• IRS migration data for the 2011-2015 period indicate that Marquette County experienced a net outflow of persons, which reduced the amount of local purchasing power by $5 million. Economy • Four sectors dominate Marquette County’s economy: mining, public administration, education/health care and hospitality. The County’s three largest employers, UP Health System, Northern Michigan University and Cliffs Natural Resources are all reducing their number of employees. These declines in employment appear to be having a ‘ripple effect’ throughout the region’s economy as other employment sectors are also experiencing reductions in employment. The construction sector is the major exception to these trends, having experienced employment gains. • Thirty-seven percent of Ishpeming residents 16 years and over work in the city, the corresponding figure for Negaunee is 18 percent, i.e. the majority of residents are dependent upon employment outside their place of residence. • Between 2010 and 2015 the total number of employed persons in Ishpeming and Negaunee dropped. • Between 2012 and 2015, the number of private business establishments in Marquette County declined by 5%, total annual wages dropped by 1.6%, while annual wages failed to increase. • Median household income in Marquette County experienced minimal growth between 2010 and 2015, when compared with the state of Michigan. • Marquette County’s estimated number of Food Stamp recipients increased by 36 percent between 2010 and 2015, compared with a statewide increase of 32 percent. • The estimated median household income in the city of Ishpeming declined between 2010 and 2015, while the number of food stamp recipients almost doubled. The percentage of students eligible for free or reduced school lunches in Ishpeming increased between 2010 and 2016 from 48 to 52 percent. • The estimated median household income in the city of Negaunee increased between 2010 and 2015, while its percentage of students receiving free or reduced lunches decreased between 2010 and 2016 from 29 to 27 percent. The Challenge of Economic Diversification • It is ‘normal’ following an industry shutdown for people to hope that it will reopen. Communities that anticipate and prepare for closures (e.g. Presque Isle Power Plant, Eagle Mine) are better able to attract new businesses. • Communities that become dependent for their prosperity upon a single industry need to diversify their economies. • Community leadership is critical to any successful diversification effort. In Elliot Lake, a mining executive was instrumental in starting the community’s diversification efforts once it was clear that the mines were going to close.

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• Identifying and marketing a community’s unique attributes to existing businesses and potential businesses is essential in today’s competitive economy, where more businesses are ‘footloose’ i.e. they can locate anywhere. • The entire community’s input is a requirement of a successful economic diversification strategy; Elliot Lake’s diversification strategy had six main goals, and five were met. • Government funding was important for some of Elliot Lake’s diversification initiatives, but even more important was the involvement and commitment of local volunteers to ‘saving’ their community. • New Dawn Enterprises is a community driven enterprise whose mission is to ‘engage the community to create and support the development of a culture of self-reliance.’ • New Dawn has grown over the course of 40 years to employ over 175 people providing a wide range of services for community members. • New Dawn raises funds to support local hi-tech firms with export potential. • Volunteers and the local university are critical to the success of New Dawn. Conclusions • Two fundamental challenges confront Marquette County’s economy: the small incremental increase in employment since 2011 and the need to diversify the economy away from its dependence upon mining, health care and higher education. • The Elliot Lake and New Dawn Enterprises case studies illustrate that with trustworthy leadership focused on overall community well-being it is possible to meet the challenge of economic diversification. • Community engagement is critical to any economic development strategy whether it be government led or from the ground-up. • Any economic development strategy should focus on Marquette County’s existing assets. • One possible development opportunity lies with investing in the Arts.

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Part 1 Introduction a. Mining’s role in Marquette County and the West End Iron ore mining in Marquette County dates back to the 1840s, with the first ore shipments out of the region via Lake Superior dating back to 1852. The discovery set off over a hundred years of underground mining, with over twenty different mines operating within the vicinity of

Negaunee (Schuster 2005). By the beginning of the twentieth century, the high-grade ores that were once plentiful became harder to find and more costly to extract and underground mines closed. In the 1950s, the industry turned to open pit mining and refining lower grade ore into taconite pellets. The Republic, Humboldt, Empire and Tilden Mines operated in this way until the early 1980s, when the Republic and Humboldt Mines closed.

The importance of mining to the region is evident in Marquette County’s landscape.

Figure 2: The Cliffs shaft mine in downtown Ishpeming. It opened in 1879 and operated until 1967.

Fly into Marquette’s Sawyer airport from Minneapolis and the flight path takes passengers above the vast taconite tailing ponds south of the Tilden Mine (Figure 1). Drive along US 41 and there

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are signs for the Michigan Iron Industry Museum, outside of Negaunee. Travel off the highway and head for downtown Ishpeming and its mine frames are a stark reminder of mining’s historic importance. Mining remains at the core of the west end’s identity, visitors to Negaunee are welcomed to ‘Historic Irontown USA,’ and Iron Street is at the core of its downtown, while local schools’ nicknames are reminders of the industry’s historic importance, the Negaunee ‘Miners’ and Ishpeming ‘Hematites.’

The Empire and Tilden Mines operated by Cliffs Natural Resources remained the only iron mines operating in Marquette County until the Empire’s shut down in 2016. The two mines are adjacent and lie south of Negaunee and Ishpeming. The Empire Mine began pellet production in 1963, while its larger counterpart the Tilden Mine began production in 1974. Tilden has estimated reserves of 214 million tons and a projected life span of another 30 years (Marquette

County 2012). In 2015, Empire produced 3 million tons of pellets and Tilden produced 7.6 million tons. Combined they employed 1,292 persons and had a payroll of $173 million. In addition, they purchased $462 million worth of local services and supplies and paid $16 million in state and local taxes (Cliffs Natural Resources 2016). Mining as a sector in 2014 accounted for about 5 percent of total county employment, but 28 percent of the total value of all goods and services produced within the county (Lake Superior Community Partnership 2016). In short, mining is a significant contributor to the county’s economic well-being and particularly its west end.

The past 10 years produced a number of significant challenges for the US iron mining industry. Prior to the 2008 financial collapse, Cliffs’ stock peaked at close to $120 a share, today its shares have tumbled to around $6 a share. The dramatic drop in stock value reflects the fall in iron ore prices from around $180 a metric ton in 2011 to a low of $41 in early 2016. At the same

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time, domestic demand for iron ore slipped due to foreign steel imports that undercut domestic steel production. In 2014, a hedge fund took over Cliffs’ operations and began selling assets including coalmines in Alabama and West Virginia and a Quebec iron ore mine, so it could focus on its iron ore business in the US. In early 2016, it announced that it would be idling the Empire

Mine and laying off 400 employees by the summer. b. Impact of Layoffs on Workers and their Families

A September 2016 survey of 203 former Cliffs employees completed for Michigan

Works found that: all fulltime employees earned over $20 an hour at the time of their termination, 92 percent were male, 54 percent were 40 years and older, 12 percent possessed a college degree and 11 percent expressed a willingness to relocate. An extensive body of research indicates that job displacement arising from layoffs is associated with significant periods of non- employment and declines in subsequent earnings and job quality (Brand 2006; Fallick 1996;

Farber 2005; Hammermesh 1989; Jacobson, LaLonde, and Sullivan 1993; Kletzer 1998; Ruhm

1991; Stevens 1997; Bluestone and Harrison 1982). Job displacement is also linked to increases in subsequent levels of depression (Burgard, Brand, and House 2007; Dooley, Fielding, and Levi

1996; Gallo et al. 2000; Gallo et al. 2006; Kasl and Jones 2000; Turner 1995). Job disruptions among older workers may be particularly damaging, as late-career employment transitions are less common and older workers are more likely to have accumulated non-transferable firm- and/or industry-specific skills, wages, and benefits, leading to poor reemployment prospects and substantial economic hardship (Dooley and Catalano 1999; Farber 2005; Price, Choi, and

Vinokur 2002). Moreover, lost labor earnings can reduce wealth accumulated through pensions,

Social Security, and other savings, thus threatening retirement security.

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Beyond economic losses, displaced workers may find that, when reemployed, their jobs are of lower quality in comparison to their former job and the jobs held by their non-displaced counterparts (Brand 2006). Older workers may also face age discrimination when they search for a new job (McCann and Giles 2002). Some evidence suggests that many displaced workers in their late 50s and early 60s opt for early retirement rather than take on new jobs of lower quality

(Farber 2005). However, workers forced into early retirement may be inadequately prepared to meet their retirement consumption needs (Bernheim et al. 2000).

Unemployment taints a person’s job application, since it creates skepticism among employers about the value of the job applicant and pushes applicants towards the bottom of the hiring queue (Blau and Robbins 1990). As a result, job loss tends to carry long-term financial scars: the unemployed eventually find new jobs, but at substantially lower pay (Gangl 2006;

Fuller 2008). Unemployment brings on deep distress that is greater in magnitude than the effect of changes in family structure, home-ownership or parental status. The distress of job loss is also hard to ameliorate: family income does not help, Unemployment Insurance appears to do little and even reemployment does not provide a full recovery. As a macroeconomic stabilizer,

Unemployment Insurance (UI) appears highly effective, quickly transferring income to persons in need who will spend it (Chimerine, Black and Coffey, 1999); as a microsocial stabilizer, however, UI does little to support jobless person’s identity, sense of purpose or self-regard. UI aside, job loss has consequences that linger even after people return to work. Finding a job, on average, recovers only about two thirds of the initial harm of losing a job. It is not clear how long it takes for the nonpecuniary effect of unemployment to heal (Young 2012).

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c. The Challenge of Economic Diversification in Mining Communities

A mining community is defined as ‘one where the population is significantly affected by a nearby operation’ (Veiga et al 2001: 191-2). This definition and others imply that mining communities are characterized by their heavy dependence on the mine or mines that, in most instances, brought the town into existence (Stephenson and Wray 2005). The nature of mining brings unique challenges for affected communities. First, their fortunes are tied to resources that are non-renewable. When the resource is exhausted or it becomes uneconomical to operate the mine, the mine will shut down. The ‘life span’ of the non-renewable resource varies according to market conditions, wage rates, technological change and other factors (Bridge 2004). In the case of the west end and Marquette County in general, the exhaustion of its non-renewable resources

(iron ore and nickel) in the near future is a reality that needs confronting.

Mining communities tend to be located in areas that are peripheral to major metropolitan areas. This physical remoteness compounds economic marginalization when a mine closes or downsizes and the city searches for alternative economic activities (Veiga et al., 2001), particularly knowledge-based, high-tech industries that require frequent face-to-face interaction

(Polese and Shearmur, 2006). In Michigan, the major employment growth centers are located in the southern half of the state; employment in the Grand Rapids-Wyoming metropolitan area for example, increased by over 100,000 between 2007 and 2017, while in the Ann Arbor area the equivalent figure is 10,000. By contrast, the number of persons employed in Marquette County over the same period declined by over 2,000 (Bureau of Labor Statistics, Local Area

Unemployment Statistics n.d.).

Economic instability is a feature of most mining communities; their fortunes are linked with the ‘boom and bust’ market cycles in the demand for minerals. In the year prior to the

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Empire Mine’s closure, for example, a slump in the demand for taconite pellets led Cliffs to lay off 350 workers over the summer. At the same time, technological improvements have produced productivity gains for the mining industry as a whole and the need for fewer workers, even when there is an increase in the demand for the resource (Dansereau 2006).

Mining communities, by virtue of their location, miss out on the sophisticated knowledge networks where highly competitive corporations are located (Castells, 2000; 2002). Corporations

(and their mines) use global knowledge networks, but mining communities are isolated from them. Instead, they receive the ‘place dependent’ impact (e.g. a boom and bust economy and environmental disruption) while the global knowledge where the corporation is located is

‘footloose,’ meaning that it can be located anywhere. When corporations leave and remove the community’s financial basis, the environmental and unused infrastructure legacy stays, not the global knowledge (Martinez-Fernandez and Wu, 2009). Skills and knowledge disappear as the more skilled and talented leave for employment opportunities elsewhere, further hampering a community’s future economic development. In sum, the unique features of mining communities typically results in population and economic decline, once the mine closes. The Keweenaw

Peninsula, with its abandoned mines and ghost towns is an excellent example of this process playing out on a large scale.

The Empire Mine’s shutdown is the latest in a long line of mine closures in the Marquette iron range. Back in 1981, Cliffs closed the Republic Mine, about 30 miles southwest of

Ishpeming, due to a fall in the demand for domestic steel production. Many businesses in

Republic subsequently closed. The Republic Township Commission noted in their Master Plan that those people who remained after the mine closed were ‘distressed by conditions they had little control over’ (2009: 1-3). The report added:

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One of the little noted effects of the economic problems has been the loss of trained and successful managers. Very little capital was left in the community and the business closures left few venturesome individuals in the community. The best and the brightest of the high school graduates moved on to live their lives elsewhere. The combination has left the community with an ongoing series of problems both economically and socially (2009:1-3).

The challenge for Ishpeming and Negaunee is to avoid a similar fate.

Figure 3: Abandoned storefront on Republic’s Front Street, June 2017.

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Part II

Marquette County and the West End’s Current Economic Landscape a. Demography

The populations of Ishpeming and Negaunee have followed the mining industry’s fortunes in the west end. Population peaked for both communities around the beginning of the twentieth century and each city’s population has fallen by a half since then (Table 1).

Table 1 Ishpeming and Negaunee Population 1890-2015 Year Ishpeming Negaunee 1890 11,197 6,078 1900 13,225 6,935 1910 12,448 8,460 1920 10,500 7,419 1930 9,238 6,552 1940 9,491 6,813 1950 8,962 6,472 1960 8,857 6,126 1970 8,245 5,248 1980 7,538 5,189 1990 7,200 4,741 2000 6,686 4,576 2010 6,470 4,568 2015 6,517* 4,609* *estimate Sources: U.S. Census Bureau, Census of Population and U.S. Census Bureau 2011-2015 American Community Survey 5-Year Estimates Based upon the rate of decline between 1900 and 2010, a regression analysis indicates that

Negaunee’s population will be 3,792 in 2020, and Ishpeming’s 5,398. These projections represent a further population loss of another 500 persons for each city over the 2010-2020 period. However, the U.S. Census Bureau’s estimates of a small increase in population between

2010-15 obviously fail to consider the effect of the Empire layoffs, while a cohort analysis of

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each city’s population indicates a pattern of outmigration, which makes reliable predictions difficult.

Cohort analysis is a way of examining a community’s population structure. For example, if in 1990 there were 1,000 people under the age of nine in Ishpeming, 10 years later that same cohort would be aged 10-19 and it would be expected that there would be 1,000 of them unless there was outmigration or in-migration to affect the total.

Table 2 City of Ishpeming Population Cohorts, 1990-2010 & Population Characteristics Age Cohort 1990 2000 2010 0-9 995 807 817 10-19 926 729 20-29 915

Median Age 36.1 38.9 40.3 Persons 65 and older 1,425 1,267 1,098 Source: U.S. Census Bureau.

As Table 2 illustrates Ishpeming’s 0-9 cohort dropped in each successive decade from 1990 to

2010, while during the same period the number of persons aged 65 and over fell by 327. In 1990, there were 995 people under age 10 living in the community; a decade later, that cohort dropped to 926, and 915 in 2010, for an overall loss of 80 persons. The numbers in the 0-9 cohort fell from 807 in 2000 to 729 in 2010, for a loss of 78 persons. These data indicate that families with young children are leaving the community, which does not auger well for the community’s future population growth. There was a slight increase from 2000 to 2010 in the number of children aged between 0-9; if the past is any guide some of these children and their families will move out of the community during the current decade, and this does not include the mine layoffs’ impact on families needing to move to find other employment. An analysis of K thru 12

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enrollment in Ishpeming Public Schools provides further evidence of population decline.

Between the 2002-2003 and 2016-2017 school years overall enrollment in the school district fell from 1,012 students to 778, a drop of 234 (MI School Data n.d.). Schools are critical to a community’s economic development, since falling enrollment usually results in cutbacks in educational programming and teachers, which hampers the ability to attract newcomer families.

Table 3 City of Negaunee Population Cohorts, 1990-2010 & Population Characteristics Age Cohort 1990 2000 2010 0-9 606 497 605 10-19 638 586 20-29 539

Median Age 37.1 40.4 39.7 Persons 65 and older 898 862 762 Source: U.S. Census Bureau

Negaunee’s demographic structure is significantly different from Ishpeming’s (Table 3).

Its 0-9 cohort in 1990 increased from 606 to 638 in 2000. Similarly, in 2000 its 0-9 cohort increased from 497 to 586 a decade later, which suggests that the local school district may be attracting young families. Indeed, K thru 12 enrollment in Negaunee’s Public Schools increased between the 2002-2003 and 2016 2017 school years from 1,465 to 1,532 students. However, after students graduate from high school many move away, with the 10-19 cohort in 2000 dropping from 638 to 539 in 2010, indicating that a lack of employment opportunities maybe a factor. Outmigration is not restricted to young people, the number of persons aged 65 and older fell by 136 between 1990 and 2010. The number of children in the 0-9 cohort increased from

2000 to 2010; but if there are few job opportunities when they reach their late teens and mid-20s some of these people will move away like their older counterparts. This will further hamper economic development and harm the local tax base.

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There is some evidence that the population losses in Ishpeming and Negaunee are associated with gains in surrounding townships. Between 1990 and 2010, Negaunee Township’s population jumped 30 percent, which may be attributable to its location between the cities of

Marquette and Negaunee and exurban growth around the city of Marquette (Table 4).

Table 4 West End Township Population Characteristics, 1990-2010 Year Ishpeming Township Negaunee Township Ely Township 1990 3,515 2,368 1,946 2000 3,522 2,707 2,010 2010 3,513 3,088 1,952 Percent change 0 30 0 1990-2010 2010 Median Age 45.1 41.1 43.3 Source: U.S. Census Bureau

Ishpeming and Ely Townships experienced minimal growth during the same period. The median age values for each township in 2010 all exceed 40, which is higher than for Marquette County as a whole (39.4) and indicates that many township residents are either retirees or close to retirement age.

Ishpeming and Negaunee’s continued fall in population is reflected in a shrinking housing stock and an increase in vacant properties (Tables 5 and 5a). Between 2000 and 2010, the number of occupied housing units fell by 61 in Ishpeming and 68 in Negaunee, during the same period vacant units were up by 30 and 37 respectively. The Census Bureau estimates a large rise in vacant units between 2010 and 2015 and a further shrinking in the numbers of occupied housing units; however, these data should be treated with a degree of caution. The 2015 estimates are from the American Community Survey, whereas, the 2000 and 2010 data use a 100 percent return from the U.S. Census of Population and is more reliable. Property values are significantly lower in Ishpeming than in Marquette and Negaunee. A comparison of asking

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prices in June 2017 for 3 bedroom, 2 bathroom homes built between 1970 and 1990 found that the average price per square foot in Marquette was $92 (n=3), $84 in Negaunee (n=2) and $57 in

Ishpeming (n=2). Lower property values while they generate less revenue for a city, can also serve to attract potential new residents.

Table 5 Occupied and Vacant Housing Units 2000-2015, Ishpeming 2000 2010 2015 Housing Units 3,210 3,149 2,747* Vacant Units 295 325 362* *estimate Source: see Table 1 Table 5a Occupied and Vacant Housing Units 2000-2015, Negaunee 2000 2010 2015 Housing Units 2,008 1,940 1,858* Vacant Units 142 179 216* *estimate Source: see Table 1 The consequences of continued population decline for both communities imply higher taxes to maintain existing infrastructure or fund new projects. The alternative is cuts to basic services. A contracting housing market and falling public investment in infrastructure, reduces the demand for building materials and construction work. With fewer people, there is less demand for goods and services, which negatively affects local businesses and contributes to the downward spiral in community economic well-being. At the same time, the economic fortunes of

Ishpeming and Negaunee cannot be divorced from economic conditions in the Upper Peninsula and specifically Marquette County. In 2015, 37 percent of persons 16 years and over worked in

Ishpeming, with 60 percent working in Marquette County; in Negaunee just 18 percent of

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persons 16 years and over worked in the city, with 80 percent working in Marquette County

(U.S. Census Bureau, 2011-2015 American Community Survey 5-Year Estimates).

The 15 county Upper Peninsula region’s population in 2015 was estimated at 309,000, its lowest level since the 1970s when many rural areas in the United States experienced a brief period of population growth during the so-called rural renaissance (Fuguitt, Brown and Beale

1989). Beginning in the 1980s, many rural areas experienced a return to their long-term trend of outmigration and population decline and the Upper Peninsula is no exception. From 1980 to the present, the overall population is down about 11,000. The biggest percentage decline since the

1980s is associated with the White Pine Copper Mine closure in Ontonagan County, which has seen its population drop by over 50 percent. The largest percentage gain occurred in Chippewa

County along the Canadian border, near Sault Ste. Marie. The effects of outmigration on the region’s population were until recently offset by the countervailing effects of births.

Table 6

Marquette County, Live Births & Deaths Selected Years, 2000-2015

2000 2005 2010 2015 Births Deaths Births Deaths Births Deaths Births Deaths 606 633 599 634 641 582 618 683 Source: Marquette County Health Department

Between 2000 and 2015, the number of births in Marquette County totaled 10,201, while the equivalent figure for deaths was 9,999. This difference of just 202 increases the importance of in-migration to maintaining the population. However, IRS data on county in-migration and outmigration, based on address changes on individual income tax returns over consecutive years, indicates a troubling pattern. Despite the fact that not all people file tax returns, the data clearly indicate (Table 7) that outmigration exceeds in-migration (a change in IRS methodology

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precludes comparisons with earlier years). Net migration over the 2011-15 period amounted to a loss of 636 households.

Table 7

Marquette County 2011-2012- to 2014-2015 Net Migration Trends

Years In-migration Outmigration Net Migration 2011-12 1,203 1,337 -134 2012-13 1,114 1,334 -220 2013-14 1,118 1,295 -177 2014-15 818 923 -105 Source: IRS SOI Tax Stats Migration Data (https://www.irs.gov/uac/soi-tax-stats-migration-data)

Table 8

Adjusted Gross Income of In and Outmigrants to Marquette County, by year

Years In-migrants Out-migrants Difference (in-out) 2011-12 $45,272,000 $47,510,000 -$2,238,000 2012-13 $46,846,000 $50,535,000 -$3,689,000 2013-14 $56,380,000 $56,555,000 -$175,000 2014-15 $34,907,000 $34,954,000 -$47,000 Source: see Table 7

Interestingly, when the adjusted gross income for in and out-migrants is included, Marquette

County has experienced a loss of about $5 million in local purchasing power. Clearly, less income in the community will translate into less demand for goods and services and ultimately fewer jobs.

The County’s population peaked in 1980 at approximately 74,000 and has since fallen by

6,500 over the last 35 years, with the biggest drop occurring during the 1990s due to the closing of Sawyer Air Force Base (Table 9). However, given the balance between births and deaths and the impact of outmigration it is difficult to be optimistic about the area’s future population growth.

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The county’s share of the Upper Peninsula population has remained relatively stable since 1970, indicating that it is line with the overall demographic trends occurring within the region.

Table 9 Marquette County Population 1970-2015 Year Marquette % of UP population 1970 64,686 21.3 1980 74,101 23.1 1990 70,887 22.5 2000 64,634 20.3 2010 67,077 21.5 2015 67,582* 21.9 *estimate Source: see Table 1 b. Economy

Total employment in the Upper Peninsula fell by over 17,000 persons between 2000 and

2016, with the equivalent figure in Marquette County being 1,257 (Bureau of Labor Statistics,

Local Area Unemployment Statistics n.d.). Not only are overall employment levels down but, so is the County’s labor force (Figure 4).

Figure 4: Marquette County Labor Force 2000- 2016

37000 36000 35000 34000 33000 Labor Force 32000 31000

Year

Source: Bureau of Labor Statistics, Local Area Unemployment Statistics n.d.

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Figure 5: Marquette County Total Employment 2000-2016

34000 33500 33000 32500 32000 31500 31000 Employment 30500 30000 29500

Year

Source: Bureau of Labor Statistics, Local Area Unemployment Statistics n.d.

The total number of employed persons fell from a peak in 2006 and bottomed out in 2011, since then the number of employed has increased by 586, but total employment remains about 2,000 short of a decade ago (Figure 5).

Location quotients (LQ) are a way of quantifying how concentrated a particular industry is in a region as compared to a broader reference region such as a state or country. They can reveal what makes a particular region “unique” in comparison to a national or state average and are critical to understanding an area's economic strengths and weaknesses. If a LQ is equal to 1 then the industry has the same proportion of an area’s employment as it does in the reference area (state or nation). Conversely, a LQ greater than 1 indicates an industry with a greater share of local employment than the reference area, while a LQ value less than 1 indicates an industry that is underrepresented compared with the reference area. In calculating Marquette County location quotients, the state of Michigan is the reference area (Table 10). From an economic development perspective having a number of LQ values that exceed 1, is less than ideal since a

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downturn in a sector that is disproportionally represented can adversely affect the entire economy.

Table 10

Marquette County Employment by Industry and Location Quotient, 2015

Industry Total Location Employment Quotient Agriculture, Forestry, Fishing, Hunting, Mining 1,509 4.0 Construction 1,817 1.3 Manufacturing 1,476 0.3 Wholesale Trade 511 0.7 Retail Trade 3,525 1.0 Transportation, Warehousing and Utilities 1,355 1.1 Information 455 1.0 Finance, Insurance, Real Estate, Rental & Leasing 1,315 0.8 Professional, Scientific, Management & Admin’ Services 1,969 0.7 Education, Health Care and Social Assistance 8,859 1.3 Arts, Entertainment, Recreation, Accommod’ & Food Services 3,572 1.3 Other services, except public administration 1,560 1.1 Public Administration 1,599 1.5 Source: Calculated by authors from U.S. Census Bureau, 2011-2015 American Community Survey 5-Year Estimates

The analysis reinforces the importance of the mining sector to Marquette County with a

LQ value of 4; other sectors that exceed the state proportion of employment include public administration, hospitality (arts, entertainment, recreation, accommodation & food services), education/ health care, and construction. The importance of public administration as an employment sector reflects the city of Marquette’s status as a regional government center for federal, state, county and city offices, while the hospitality sector’s high value reflects tourism’s importance to the local economy. The largest number of persons, nearly 1 in 3, work in the education and health care/social services sector.

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Northern Michigan University, Marquette General Hospital (now UP Health System) and

Cliffs Natural Resources have been the largest employers in Marquette County for several decades, a situation that is unlikely to change in the short term. But all three are reducing their number of employees. For Northern Michigan University, declines in enrollment and the associated drop in tuition revenue have forced the University to cut back on hiring. Total enrollment peaked in 2007, with 9,689 students (8880 undergraduates and 809 graduates), by fall

2016 enrollment was down to 7,865 (7,168 undergraduates and 796 graduates).

Figure 6: NMU Fall Enrollment 2010-2016

10000

9500

9000

8500

8000

7500

7000 2010 2011 2012 2013 2014 2015 2016

Much of the enrollment decline is attributable to a reduction in the number of high school graduates in the Midwest. Falling enrollment has meant a reduction in the number of full-time employees from 962 to 899 during the 2007-2016 period; with the number of full-time faculty dropping from 297 to 273. Part-time employees increased from 228 to 241, and they now account for 21 percent of the workforce, up from 19 percent in 2007 (Northern Michigan

University, Office of Institutional Research n.d.). NMU is an important employer for the west end. An analysis of the university’s 2014-2015 faculty/staff directory found 136 employees

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listing either a Negaunee (n= 76) or Ishpeming (n=60) home address. This probably represents an undercount since employees may opt out of listing their home address in the directory.

In August 2012, Michigan’s Attorney General approved the sale of non-profit Marquette

General Hospital to for-profit Duke LifePoint of Brentwood, Tennessee. A year later, LifePoint acquired Ishpeming’s Bell Hospital. These acquisitions by a for-profit entity mean new tax revenues for local governments. In 2015, UP Health System reported paying $3.6 million in property and other taxes, which is down from $5.8 million they paid in 2013. During the same period, the number of employees dropped from 2,571 to 2,324, while the annual payroll declined from $166.7 million to $161.1 million (Duke LifePoint n.d.). In April 2017, the hospital confirmed in a news release that they had laid off “a few dozen employees” in an effort to ensure the facility is operating as “effectively and efficiently” as possible (Harrington 2017). These declines in employment, combined with the Cliffs’ layoffs, mean the county can no longer look to its largest employers for future job growth.

A location quotient analysis for Ishpeming and Negaunee’s employment structure (Table

11) largely follows the pattern set by Marquette County. However, the LQ values for the agriculture, forestry and mining sector are higher in Negaunee (6.0) and Ishpeming (4.7) than for the County (4.0). This ‘over concentration’ of employment in this one sector emphasizes mining’s importance to the west end and the vulnerability that both communities face with respect to layoffs. The other significant anomaly is the relative importance of public administration employment in Negaunee, while the presence of two moving companies explains its transportation/ warehousing value of 2.0.

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Table 11

Negaunee and Ishpeming Employment Location Quotients, 2015

Industry Negaunee Ishpeming Agriculture, Forestry, Fishing, Hunting, Mining 6.0 4.7 Construction 0.7 1.4 Manufacturing 0.4 0.2 Wholesale Trade 0.5 0.7 Retail Trade 1.2 1.1 Transportation, Warehousing and Utilities 2.1 0.6 Information 0.5 1.0 Finance, Insurance, Real Estate, Rental & Leasing 1.0 1.1 Professional, Scientific, Management & Admin’ Services 0.4 0.5 Education, Health Care and Social Assistance 1.0 1.3 Arts, Entertainment, Recreation, Accommod’ & Food Services 0.9 1.0 Other services, except public administration 0.9 1.8 Public Administration 2.6 1.2 Source: see Table 7

An analysis of the two cities’ employment structure in 2010 and 2015 (Table 12) indicates that overall employment levels dropped, with the largest loss occurring in Ishpeming (192). The analysis also indicates significant shifts in employment structure with Ishpeming experiencing losses of over 100 persons employed in manufacturing and retailing. Manufacturing wages are typically much higher than service jobs such as retailing, so this represents a significant loss of purchasing power in the community. Offsetting these losses were gains in the number of persons employed in the education, health care and social services sector. Negaunee’s gains in the retail sector balance its large drop in the number of persons employed in the hospitality sector.

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Table 12 Employment Gains/Losses by Sector, Ishpeming, Negaunee 2010-2015 Industry Ishpeming Negaunee Agriculture, Forestry, Fishing, Hunting, Mining -10 -10 Construction -22 -37 Manufacturing -136 +27 Wholesale Trade -81 -62 Retail Trade -158 +110 Transportation, Warehousing and Utilities 15 +36 Information -74 +1 Finance, Insurance, Real Estate, Rental & Leasing 93 42 Professional, Scientific, Management & Admin’ Services 7 -36 Education, Health Care and Social Assistance +215 -99 Arts, Entertainment, Recreation, Accommod’ & Food Services -78 -132 Other services, except public administration 86 24 Public Administration -49 62

Overall gain or loss -192 -74 Source: U.S. Census Bureau, 2011-2015 American Community Survey 5-Year Estimates

In Marquette County, estimates of the number of people employed in specific sectors show a consistent pattern of decline over the 2010-2015 period, with the largest drop occurring in the retail sector (Table 13). More significantly, these data estimate an overall drop in employment during the recovery from 2008 recession. The most worrisome aspect of these data is that the largest job gains in Michigan during the same period are associated with education and health care, professional, scientific, and management services, hospitality and manufacturing

(Table 14). However, NMU and UP Health System are reducing their numbers of employees, while estimates of the number of persons employed in manufacturing and hospitality/entertainment employment have dropped.

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Table 13 Employment Gains/Losses by Sector, Marquette County 2010-2015 Industry Gain/Loss Agriculture, Forestry, Fishing, Hunting, Mining -102 Construction +153 Manufacturing -176 Wholesale Trade -316 Retail Trade -784 Transportation, Warehousing and Utilities +81 Information -391 Finance, Insurance, Real Estate, Rental & Leasing -19 Professional, Scientific, Management & Admin’ Services +117 Education, Health Care and Social Assistance -285 Arts, Entertainment, Recreation, Accommod’ & Food Services -163 Other services, except public administration +129 Public Administration -185

Overall gain or loss -1,941 Source: U.S. Census Bureau, 2011-2015 American Community Survey 5-Year Estimates

Table 14 Largest Job Gains in Michigan 2010-15 by sector Industry Gain Education, Health Care and Social Assistance 32,857 Professional, Scientific, Management & Admin’ Services 20,212 Arts, Entertainment, Recreation, Accommod’ & Food Services 19,644 Manufacturing 6,021 Source: U.S. Census Bureau, 2011-2015 American Community Survey 5-Year Estimates

In short, with the exception of the professional, scientific, management and administrative services’ sector the region is not benefiting from broader structural changes in the Michigan economy.

Given the estimates of broad job losses between 2010 and 2015, it is not surprising that

Bureau of Labor data indicate an overall shrinking of Marquette County’s economy. Between

2012 and 2015, the number of private employers in the county fell by nearly 5 percent; total private employment dropped by 1.7 percent; total annual wages were down 1.6 percent and the

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average annual wage increased by just 0.1 percent (Table 15). When public sector employment is added, the total number of people employed in Marquette County between 2012 and 2016 increased, while overall unemployment fell during the period (Table 16). This improvement is largely the result of a shrinking labor force, with 612 fewer people in the labor force in 2016 than in 2012.

Table 15 Census of Employment and Wages, All industries (Private), Marquette County, 2012-2015 Year Annual Annual Avg. Total Annual Annual Avg. Annual Establishments Employment Wages Weekly Wages per Wage Employee 2012 1,553 21,988 $843,619,166 $738 $38,368 2015 1,478 21,612 $830,210,769 $739 $38,415 Change -75 -376 -$13,408,397 $1 $47 2012-2015 % Change -4.8% -1.7% -1.6% 0.1% 0.1% 2012-2015 Source: Bureau of Labor Statistics- Quarterly Census of Employment and Wages n.d.

Table 16 Marquette County, Labor Force, Total Employment and Unemployment 2012-2016 Year Labor Force Employed Unemployed % Unemployed 2016 33,374 31,509 1,865 5.6 2015 33,364 31,374 1,990 6.0 2014 33,759 31,374 2,385 7.1 2013 34,050 31,244 2,806 8.2 2012 33,986 31,240 2,746 8.1

Increase/Decrease -612 +269 -881 2012-2016 Source: Bureau of Labor Statistics Local Area Unemployment Statistics n.d. c. Social

The preceding indicates that despite the recovery from the 2008 recession, all is not well in Marquette County’s economy with overall employment down from its peak in 2006 and no significant increases in average wages over the 2012-2015 period. This deterioration in economic

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conditions is reflected in a number of socio-economic indicators at the community level. The

City of Ishpeming’s median household income dropped an estimated $4,000 from 2010 to 2015

(Table 17).

Table 17 Selected Social Indicators, Ishpeming 2010-15 Indicator 2010 2015 Median household income $39,065 $34,971 Recipient of Food Stamps/SNAP benefits last 12 months 321 592 % of families whose income in past 12 months is below the poverty level 7.1 11.9 % of people whose income in past 12 months is below the poverty level 10.8 20.6 Source: U.S. Census Bureau, 2011-2015 American Community Survey 5-Year Estimates

During the same period, the number of people receiving Food Stamps/SNAP benefits nearly doubled. The drop in income and increase in food stamp beneficiaries is also associated with an overall increase in poverty levels. Negaunee’s estimated household income increased during the

2010-2015 period (Table 18), while its increase in Food Stamp/SNAP beneficiaries (31 percent) is significantly smaller than Ishpeming’s (84 percent).

Table 18

Selected Social Indicators, Negaunee 2010-2015 Indicator 2010 2015 Median household income $43,915 $49,068 Recipient of Food Stamps/SNAP benefits last 12 months 158 208 % of families whose income in past 12 months is below the poverty level 7.5 7.8 % of people whose income in past 12 months is below the poverty level 9.0 11.1 Source: see Table 13

The number of students in Ishpeming’s public schools receiving free or reduced lunches provides further evidence of a deterioration in the city’s economic circumstances. The US

Department of Agriculture program administers the School Lunch program, and family size and monthly/yearly income levels determine free or reduced lunch eligibility. For the 2015-2016 academic year, to receive free lunches, a family of four had to have a yearly income of less than

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$31,590, while the threshold for reduced lunches was $44,955 (Michigan Department of

Education n.d.). Between fall 2010 and fall 2016, the percentage of children receiving free or reduced lunches in Ishpeming’s public schools increased from 48 to 52 percent (Table 19). In

Negaunee, during the same period, the percentage of its students receiving free or reduced lunches dropped, albeit slightly (Table 20).

Table 19 Number and Percent of Students in Ishpeming Public Schools Eligible for Free/Reduced Lunches, 2010-2016 (percentages in parentheses) Indicator 2010 2016 Number of students eligible for free lunches 338 (39%) 328 (42%) Number of students eligible for reduced lunches 81 (9%) 80 (10%) Number of students not eligible 445 (52%) 370 (48%) Source: https://www.mischooldata.org/Other/DataFiles/StudentCounts/HistoricalFreeAndReducedLunch Counts.aspx

Table 20 Number and Percent of Students in Negaunee Public Schools Eligible for Free/Reduced Lunches, 2010-2016 (percentages in parentheses)

Indicator 2010 2016 Number of students eligible for free lunches 290 (21%) 283 (19%) Number of students eligible for reduced lunches 114 (8%) 116 (8%) Number of students not eligible 994 (71%) 1084 (73%) Source: see Table 15

Changes in Ishpeming’s employment structure offer one possible reason for its deterioration in economic circumstances. In 2010 there were an estimated 240 persons in the city employed in manufacturing, five years later this figure had dropped to 104, which undoubtedly has contributed to the fall in median household income noted earlier and contributed to the rise in student eligibility for free and reduced lunches. A summary of social indicators for Marquette

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County provide further evidence of a stagnant economy (Table 21). Median household income between 2010 and 2015 increased by just 0.6 percent.

Table 21 Selected Social Indicators, Marquette County and Michigan 2010-2015 Indicator 2010 2015 Marquette County Median household income $45,130 $45,409 Recipient of Food Stamps/SNAP benefits last 12 months 2636 3588 % of families whose income in past 12 months is below the poverty level 7.9 9.4 % of people whose income in past 12 months is below the poverty level 13.2 17.0

Michigan Median household income 48,432 49,576 Recipient of Food Stamps/SNAP benefits last 12 months 484,952 642,482 % of families whose income in past 12 months is below the poverty level 10.6 11.9 % of people whose income in past 12 months is below the poverty level 14.8 16.7 Source: See Table 13

By contrast, Michigan’s estimated median household income rose by 2.3 percent or over $1,100.

Marquette County experienced a bigger increase in its estimated number of Food Stamp recipients (36 percent) than Michigan (32 percent). Finally, both jurisdictions experienced increases in the numbers of families and people whose income fell below the poverty level.

In sum, these social and economic data indicate that prior to the Empire Mine layoffs, economic conditions in Marquette County were at best stagnant or worse deteriorating, with job losses across a host of sectors, including two pillars of the local economy, Northern Michigan

University and UP Health System. By contrast it is worth noting that during the same 2012-2015 period, Grand Traverse County’s labor force (on Lake Michigan’s eastern shore) increased by

3,000 persons and its number of employed persons increased by nearly 5,000 (Bureau of Labor

Statistics, Local Area Unemployment Statistics n.d.). While the state lost population between

2000 and 2014, Traverse City notched a 3.5% gain, and Grand Traverse County experienced a

16.9% increase. Median household income grew in the county for the same period by 11%.

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Building permits for new housing units in the city for the first nine months of 2015 reached a five-year high. Part of the reason for the region’s growth has been its ability to grow its economy beyond its traditional tourist base. The area now has the familiar problems that confront communities experiencing a booming economy, a shortage of affordable housing, traffic congestion and conflicts over new developments that threaten to alter the character of the town (Dolan 2015).

The experience of Grand Traverse County illustrates that it is possible for a small amenity-rich area in a northern region to have a growing economy. Unlike Grand Traverse

County with its recent gains in local employment, laid off workers in Marquette County will have a hard time finding work. Looking ahead, the County will be confronting other employment challenges with the already announced closure of Wisconsin Electric’s Presque Isle power plant by 2020 and the shutdown of the Eagle Mine in either 2020 or 2022. These impending changes indicate the need to plan for the region’s economic future. Fortunately, other communities have dealt with similar challenges and it is possible to learn from their experiences.

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Part III: The Challenge of Economic Diversification a. Rebuilding a Local Economy

An extensive body of research dating back almost 50 years exists on the economic and social upheavals caused by downturns in mining, steel, textiles, paper, timber, auto, railroad, and other industries. These studies indicate that small- and medium-size cities face three major obstacles to stopping the decline and initiating a rebuilding process: 1. poor location and existing infrastructure; 2. a legacy of externalities, including environmental damage and high wages; and

3. local community leadership that became dependent on a single employer or industry. Mayer and Greenberg (2001) examined community responses among an economically diverse group of

34 small and medium-size U. S. communities (including Ironwood in Gogebic County) that experienced long periods of economic prosperity built around a major employer and then suffered economic decline when the company or companies substantially reduced their workforces. In interviewing local officials, they found a delayed response to this weakened economic position; a decade or more was often required before a plan of action to attract new business was developed. One of the most common reasons given for the inaction was denial, with local officials often believing that the industry or mine would reopen, while others felt hopeless in the wake of the industry’s closure. When asked what advice they would give their counterparts facing a similar situation, the most common response was, “diversify your economy.” They cautioned against becoming dependent on a single company or industry, regardless of how attractive it may appear. Some acknowledged that the jobs they were attracting were in the service sector and did not offer very high wages, but they represented a first step in stabilizing and rebuilding the community. When asked what was the most critical component of a successful redevelopment effort almost all chose either leadership or community involvement.

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Nearly all those interviewed believed that it was critical for the community to take direct responsibility for its own affairs and to participate in all decisions. The authors conclude:

The lack of leadership and a shared vision within the community—or long delays in developing those qualities—is likely to prove economically disastrous. Diversifying today, in spite of the prosperity being enjoyed from strong employment and high wages, will be critical to the economic well-being of the community over the long term (Mayer and Greenberg 2001: 215).

Collaboration between different actors and institutions in resource communities dealing with an industry closure is critical (Marchand 2005). As part of that collaboration, communities need to identify their unique attributes such as the quality of the natural environment, amenities and infrastructure, and aggressively market those assets to either remain or become more attractive to business. This is crucial in the internet age, since this technology can help communities overcome geographic barriers to economic development. However, this technology also means that many new businesses are ‘footloose’ and can locate almost anywhere, which increases the importance of place marketing.

Case studies dealing with industry closings and community transition in the

Pacific Northwest found that the transition from crisis to recovery is a three-stage process of endings, a neutral zone and new beginnings (Table 22). After a community’s members have come to grips with the industry closure, people can begin the formal process of thinking about how to build a new future. At the same time this is occurring, the impacted workers and their families may require support, while changes in service delivery resulting from a decreased tax base and population decline may be implemented.

Managing the transition to a recovery is a long, slow and complex process.

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Table 22

Community Transition Stages

Category Timing Community Experiences Endings Immediately Recognition of what’s being lost; after industry Acceptance, acknowledgment and grieving; closure Defining what has ended and what is left; Compensation. Neutral One year after Time to normalize, clarify, neutralize; zone industry Rebuild sense of identity; closure Monitoring; Creativity. New 3-5 years later Don’t force change, timing has to be right; beginnings Create a long term plan- with a role for everyone; Reinforce new beginning Source: Conway, Corcoran and Tillson, 1996

A review of the literature dealing with community transitions indicates that geography plays a key role in affecting a successful transition to a new economy

(Marchand 2005). Communities that are relatively close to other settlements have more potential to recreate themselves by becoming, for example, a bedroom community or recreation destination for people living close by. Distances from markets can be overcome by the internet. Locally, Getz’s in downtown Marquette is a successful example with over 65 percent of its business coming from on line sales. The internet also creates the potential for knowledge-based industries to locate in isolated areas, in part, because they are more affordable places to do business and live. However, knowledge- based industries tend to locate in larger-medium-sized urban centers because these locations give employees access to urban amenities, a perceived higher quality of life as well as greater educational and social opportunities. Nevertheless, there are examples of

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successful high tech firms locating in isolated regions of North America (see New Dawn section).

The community of Elliot Lake, Ontario, provides an excellent example of a community that has dealt with the challenges posed by a mine closure.

Figure 7. Elliot Lake, Ontario

Elliot Lake shares several similarities with Marquette County; both are isolated from major metropolitan areas (Toronto, Detroit and Chicago) and enjoy the same climate and physical setting. Its selection as a case study is because it avoided the ‘bust’ that traditionally follows a ‘boom’ in mining. The Marquette Iron Range and Keweenaw’s

Copper Country are full of towns that followed this trajectory, including Calumet,

Ironwood, Ontonagon and Republic. Unlike some of the aforementioned towns in the

Upper Peninsula, which are relatively isolated, the west end’s economic future is tied to the overall health of the Marquette County economy by virtue of its close proximity to the City of Marquette, the U.P.’s largest population center. b. Elliot Lake, Ontario: A Case Study

Elliot Lake is a city of approximately 11,000 residents in northern Ontario, 300 miles east of Marquette County. It is a 20-minute drive north of the Trans-Canada highway, approximately

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midway between Sudbury and Sault Ste. Marie. The city owes its existence to the discovery of uranium in the early 1950s; by the end of the decade, there were nine mining companies operating within the vicinity of Elliot Lake producing much of the world’s uranium. Like most mining communities, the city’s fortunes have risen and fallen with changes in the demand for resources. In the early 1960s, the United States announced that it would no longer purchase uranium from Canada and most of the mines closed. Demand then picked up in the 1970s as

Canada expanded its nuclear power production and some mines reopened. A decade later,

Saskatchewan and Australia were producing uranium more cheaply, and Ontario Hydro, the principal purchaser of the area’s uranium, cancelled its contracts. The mines closed with the loss of about 4,000 jobs and predictions that the city’s population would collapse from nearly 18,000 in 1986 to about 500 in 1996, or a 97 percent drop (Farkouh 1999).

With the fall in uranium prices in the 1980s, it became clear to Elliot Lake’s leaders that the mines would close and that for the city to survive it would have to diversify its economy.

Thanks to the insightful leadership of a mining executive, Claire Dimock, the city embarked on an economic development diversification strategy. An economic development committee was formed in 1987; three years later the municipality adopted the committee’s proposed economic diversification strategy. There were six major goals built around theme of creating ‘new opportunities for business development.’ These goals included increasing the number of retirees and tourists and their level of expenditure, retaining and developing local business enterprises, establishing a drug and alcohol treatment center, promoting Elliot Lake as a regional center for arts and culture and becoming a center for applied mining research.

The premise behind Elliot Lake’s transformation into a retirement community is that retirees bring their own income and stabilize the local economy. At the time of the mine

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closings, the city had a plentiful supply of good quality modern housing that was rapidly becoming vacant and it had a regional hospital and public transit system. These core assets provided the basis for recruiting retirees. With initial startup funding from the Ontario government, a community development corporation, Elliot Lake Retirement Living was established in 1991. It started out by acquiring housing stock at little or no cost from the mining companies who were pleased to see it taken off their books as a liability. It then proceeded to market Elliot Lake as a retirement destination for retirees from Ontario and elsewhere. By 1997, over 3,500 retirees had moved to the community. In 2017, Elliot Lake Retirement Living will spend about $750,000 (Canadian) on marketing; each summer, it hosts about 2,000 visitors who sign up for a 2- day visit to the community. In promoting the community, they emphasize its affordability, a 2-bedroom apartment in Elliot Lake currently rents for $602 (Canadian) compared with $1,327 in Toronto. Beginning in 2001, the city of Elliot Lake and Elliot Lake

Retirement Living worked together developing lakefront properties for ‘cottages’ on some of the lakes surrounding the city. Since 2001, over 200 lots have sold, with buyers agreeing to build a minimum size home or cottage within a three or five year period. This venture has aided the diversification effort by providing local contractors, trades people and retailers with additional business.

Thousands of lakes and forest surround Elliot Lake making the area ideal for fishing, hunting, hiking, canoeing, boating, snowmobiling, cross-country skiing and other outdoor recreational activities. The city was able to obtain provincial grants to enhance its tourism infrastructure with the completion of a scenic driving loop as well as new boardwalks, boat ramps and docking facilities on nearby lakes as well as new hiking and snowmobile trails. As a result, the number of visitors to the region increased (Farkouh 1999).

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Figure 8: Elliot Lake has two lakes within its city limits that are used for recreation.

A measure of the importance of the tourism sector is overall employment. In 2011, the accommodation and food service sector employed 7.4 percent of the city’s labor force, compared with 6.2 percent for the province of Ontario (City of Elliot Lake 2014).

The community, with the help of the provincial government, was able to convert a vacated hotel into a drug and alcohol treatment center. The Oaks Center is an accredited facility that offers withdrawal management services as well as limited tapering services for opiate/opioid addiction. This facility, together with the local hospital, is one of the reasons why the health care and social assistance sector is the largest employer in the community, accounting for 18 percent of the labor force in 2011.

In 1998, the White Mountain Academy of the Arts with $10 million in funding from the provincial government opened in a building that formerly housed a nuclear research laboratory.

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Figure 9. Site of the now closed White Mountain Academy of the Arts

The school attempted to combine European and First Nations’ approaches to painting, photography, graphic design and other art forms including water drum making, birch bark canoe construction and hide work (McKinley 1998). The school never attracted a large number of students, and only offered its four-year program to one cohort of eleven students. The academy closed in 2006 after failing to receive accreditation as a degree-granting institution. In speaking with Elliot Lake economic development officials, the academy’s demise illustrates an important lesson about economic diversification, not every idea will be successful in terms of job creation.

Nevertheless, communities must be prepared to take risks if they are to be successful in their goal of becoming less reliant upon particular sectors of the economy.

In the aftermath of the mine closures, there was a need for environmental monitoring and

Laurentian University in nearby Sudbury created a field station for this purpose. Funding for the field station came from a $3 million provincial government grant. The aim of the field station was to assist Elliot Lake in establishing the community “as an international center for Research and Development related to mine decommissioning and waste management.” The initial work of

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the laboratory supported research into the effects of low-level radioactivity on the environment resulting from mine waste tailings. In its first five years of operation, faculty working with graduate students obtained $4.25 million in external grant funding, resulting in an extensive body of research as well as providing technical training to over 100 students (Berthelot 1999). The university still maintains a presence with the Elliot Lake Research Field Station, but its impact is significantly less than in the 1990s.

To help retain and develop business enterprises in Elliot Lake the Economic

Development Committee recognized a need for business planning and management expertise as well as finance assistance. In 1994, the Elliot Lake and North Shore Corporation for Business

Development (ELNOS) was established to assist in this effort. Its mandate reflects the need ‘to improve the long-term economic prosperity of the region by assisting businesses which create wealth and jobs.’ It assists new business start-ups and projects that help stabilize and diversify the region’s economy, as well as communities and individual organizations with projects that improve the local and regional economy. As part of the community’s ongoing commitment to economic development, the city of Elliot Lake hired a full-time economic development officer in

2016.

The success of these diversification efforts is evident in the city’s population figures.

After an initial loss of population following the mine closings, the population has stabilized

(Table 23).

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Table 23

City of Elliot Lake, Population 1986-2016

Year Population 1986 17,984 1991 14,089 1996 13,588 2001 11,596 2006 11,549 2011 11,348 2016 10,741 Source: Statistics Canada

At the end of the 1990s, the long-term mayor of Elliot Lake concluded that the community’s success in dealing with the mine closings, ‘is partly due to the funding programs, but, most importantly, it results from the substantial investment of time and money by the local community in directing and managing its own future. The creative energy contributed by existing businesses in finding alternative means of survival, and of former mine employees in making their business dreams viable sources of profit, cannot be underestimated’ (Farkouh 1999: 195).

Elliot Lake Today

Thirty years after the decision to recruit retirees, the community is dealing with its consequences. As the Elliot Lake Economic Development Advisory Committee (2013) noted

‘the word Elliot Lake has become - for better or worse - synonymous with one thing: old people.

This isn’t a value judgment, it is simply a fact.’ Between 1986 and 2016, the percentage of the population 65 and over went from three to 40 percent, making it one of the oldest communities in

Canada. There is now the realization that the city has replaced their dependency upon mining with retirees and they need to diversify their economy again! This reflects a demographic reality, there is a lack of local skills, trades and professions that are necessary to support a community of

10,000-15,000 people. A 2013 report stated:

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‘Elliot Lake is rapidly losing its entrepreneurial esprit de corps. The reasons for this are plenty, however, demographics play a huge and obvious role. With fewer than 2,825 or 25% of its population under the age of 35, Elliot Lake simply lacks the critical mass of young would-be entrepreneurs needed to help create jobs. Without entrepreneurs, without risk takers, investment, construction and job growth simply will not happen in Elliot Lake’ (Elliot Lake Economic Development Advisory Authority 2013: 42).

At the same time, there is the realization that while retirees helped fill the demographic void left by departing miners and their families, they do not spend a lot of money and as they age, they require additional services. In 2006, the census reported that employment income only accounted for 46.3 percent of total household income in Elliot Lake, down from 59.3 percent in 1996. This dependency on retirement income provides further evidence of the community’s need to diversify, while at the same time it recognizes that the competition from other communities for retirees has also increased. The community’s future economic development will depend upon its existing resources of human capital, but this too presents challenges. Many high school students profess a desire to leave the community, they do not view it ‘as a place to earn a decent living, nor did they see it as an environment conducive to success, be it business, artistic or the realization of other long-term career aspirations’ (Economic Development Advisory Committee

2013: 42). The report concluded that the biggest challenge for Elliot Lake’ is the need to rebuild its entrepreneurial base.

Lessons learned A 2016 study involving interviews with key informants and an online survey identified eight key factors behind Elliot Lake’s re-invention (Table 24). A single community champion was considered critical, ‘This person needs to have the conviction and drive to save the community and must be a respected leader’ (Bamford 2016: 49). For Elliot Lake, this person was

Claire Dimock, the Vice-President of Housing for one of the mine companies and city council

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member. The community needs to have a strong will to exist beyond the life of the industry that brought it into existence. Local businesses need to show commitment to the community over the long-term, as they are ‘likely to inspire confidence among residents that the community will persevere’ (Bamford 2016: 54).

Table 24

Lessons Learned from Economic Diversification Efforts in Elliot Lake 1 Community champions dedicated to its cause 2 Community’s will to have a future 3 Confidence from the business community 4 Identify assets and future opportunities 5 Prepare for success and its challenges 6 Leverage governmental resources 7 Communicate effectively with all parties 8 Courageously make tough decisions and bold statements Source: Bamford 2016. On a practical level, a community must identify its assets (e.g. for Elliot Lake this meant its plentiful supply of low-cost modern housing and access to outdoor recreation opportunities) and identify future opportunities based upon those assets. A community also needs to prepare for success, for Elliot Lake the recruitment of retirees brought unforeseen consequences (at the time), such as an increased demand for senior-related services. A sixth factor identified is leveraging government grants to assist in the community’s transformation, as well as working with the legislature to provide regulatory relief. This was particularly critical for allowing Elliot

Lake Retirement Living to become involved in developing lakefront cottages. Essential to all the diversification efforts is clear and effective communication with all interested parties including local residents, council members, community economic development officials, as well as elected government officials (federal, state/provincial). Finally, leadership requires the courage to make tough decisions. For Elliot Lake, this meant recognizing that the mines were not going to reopen;

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they needed a new direction in order to survive as a community and, for some laid off miners, it would mean moving to find work elsewhere. c. New Dawn Enterprises: A Community Development Corporation

The second example of a community dealing with the economic development challenges brought about by mine closures is Sydney, Nova Scotia, Canada. Sydney’s selection is the result of it sharing some economic and cultural similarities with Marquette County, but more importantly, it is home to one of North America’s most successful community-based economic development enterprises. The people who live in this area of Nova Scotia have a very strong sense of regional identity; they view themselves as Cape Bretoners with a distinct culture. Like

Marquette County, Cape Breton is located on the ‘periphery,’ away from major metropolitan centers where most jobs are created. The island, and specifically the Sydney region, have been dealing with the problems of industrial decline since the 1960s. Government efforts to help diversify the economy away from mining largely failed, despite spending billions of dollars over a 35-year period. In the early 1970s, a small group of citizens formed an organization to address the area’s shortage of affordable housing. Several years later, the organization changed its structure to address other social and economic problems with the creation of a non-profit community development corporation, New Dawn Enterprises. Today, New Dawn employs over

175 people with a diverse portfolio of business enterprises. Prior to explaining New Dawn’s origins, organizational structure and business portfolio, a brief introduction to the region is provided.

The Regional Context

Cape Breton Island lies at the eastern tip of Nova Scotia, facing the Atlantic Ocean. It is renowned as a tourist destination, and branded as ‘Nova Scotia’s masterpiece.’ Away from its

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tourist sites in the northeast corner of the island, memories and local museums are the only reminders of a once dominant coal mining and steel industry. Coal mining began on the island in the 1700s. By the 1960s, the industry was on the verge of collapse due to high production costs, foreign competition and coal’s replacement by oil as a fuel source. The federal government set up a commission in 1966 to explore a way forward for the coal industry and region. The commission recommended the take-over of the privately owned mines by a government entity, the Cape Breton Development Corporation (DEVCO). In a separate arrangement, the provincial government agreed to take over the steel plant operations from the coalmine company. DEVCO was established following the commission’s recommendations and tasked with the gradual and orderly closure of the coal mines, diversifying the local economy, developing alternative employment for the soon to be laid off miners and establishing education and training programs to develop local human resources (Wray and Stephenson 2012). The oil crisis of the early 1970s brought a brief respite for the coal industry and three new mines opened. Despite government intervention and the expenditure of billions of dollars, the region continued to decline, as it proved difficult to attract permanent jobs to replace those lost in mining. DEVCO encouraged outside firms to locate in the region with various grants, companies took the money and when the subsidies ceased, they left the island (MacIntyre 2003). In 2001, the last mine closed and the steel mill shut down. Population for the local municipality (that includes Sydney and the surrounding mining areas) peaked in 1961 at 131,507, and has dropped in every census since then. In 2016, the population was 94,285, a drop of 28 percent from 1961. Young people leave, and the elderly are left. Between 1996 and 2016, the percent of the population aged 65 and over increased from 15 to 24, while the percent of the population under the age of 14 fell from 19.5 to

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13. (Statistics Canada n.d.). From the perspective of many local people, the private sector and government has failed the community.

Origins of New Dawn

In the early 1970s, with Cape Breton’s industrial decline fully apparent, Greg MacLeod, a coal miner’s son, priest and professor of philosophy at the University College of Cape Breton, together with some other faculty and community volunteers founded the Cape Breton

Association for Co-op Development. The purpose of the Association was ‘to improve the economy and social well-being of the Cape Breton community’ (Hanratty 1978), and it initially targeted the issue of affordable housing. It began with the volunteers borrowing $20,000, buying a rundown building on the edge of Sydney’s downtown and fixing it up with grant money and volunteer labor (MacLeod 1997). On the ground floor, a store occupied part of the commercial space, while the Cape Breton School of Crafts had the remainder. On the second floor, five small apartments were developed and rented out to pay the mortgage and taxes and provide the school with free rent for five years (Perry 1987). As Greg MacLeod acknowledged, the intention behind the organization was to ‘make money,’ but as ‘a means and not an end. When profit was made on one project, the money was used to expand into new commercial areas’ (MacLeod 1997:115).

Over the next several years, the Association acquired five other properties; all of this accomplished without any full-time staff, apart from the people involved in renovating the properties (Hanratty 1981). By 1976, the Association’s members concluded they needed a different structure that would provide them with more flexibility to engage in a wider range of business activity that would be rooted in the community and work for the community. The result was New Dawn Enterprises; a community development corporation operated by and for local residents. Community development corporations originated in the 1960s in the United States, and

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presently exist in all 50 states. One of the largest is New Community Corporation in Newark,

New Jersey employing more than 600 people and providing a host of services including healthcare, job training, social services, education and arts programs (Community-Wealth n.d.).

The premise behind community development corporations is that community residents have the greatest interest in promoting their own development and are more knowledgeable about their own unique circumstances and development possibilities (Perry 1987).

New Dawn’s primary purpose is promoting and establishing business ventures that contribute to the creation of a self-supporting community. Under its articles of incorporation, it includes clauses ensuring that any benefits of doing business accrue to the community and not to any individuals associated with the organization. New Dawn reinvests any profits it creates in the organization, to help build its capacity to meet its social purpose (Lionais 2015). Its vision is ‘a self-reliant people in a vibrant community.’ Its mission is to ‘engage the community to create and support the development of a culture of self-reliance.’

Faculty and staff at Cape Breton University (formerly University College of Cape

Breton) played a critical role in New Dawn’s early operations. They provided administrative support, leadership, technical expertise, advocacy skills, resources, as well as access to funding.

They helped found the Centre for Community Economic Development in Sydney in 1988 to provide support for local ventures (MacIntyre 1999). After federal funding for the Centre ended, the university reestablished its function and it is now a part of the university’s business school with a new name the Community Economic Development Institute. The university offers a

Masters of Business Administration degree in Community Economic Development and a

Bachelor of Arts degree in Community Studies.

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New Dawn’s Organizational Structure

As an organization, New Dawn consists of four different groups: the board of directors, management, employees and volunteers. There are no shareholders. The board of directors’ mandate is to run the corporation in the interests of the community. Board members are volunteers, recruited from across the community with a wide range of technical expertise, their primary responsibilities are to represent the community and oversee the management of New

Dawn’s resources. New Dawn’s management consists of a CEO who is in charge of the umbrella organization, as well as managers of the different divisions. Employees are encouraged to see themselves as engaged in the common purpose of managing local economic resources for the good of the community. Volunteers with expertise in project development are critical to the organization as they help determine what enterprises New Dawn engages in and they help deliver some services (Reed 1999; MacSween 1998).

New Dawn contributes both directly and indirectly to local community development. The most direct method is the establishment of enterprises that serve the community and employ local residents. From time-to-time, the board considers business proposals from local community members that address economic, social and cultural issues. In order for a new proposal to be accepted, it must be economically feasible and self-financing within three years, and make a profit. When, for example, New Dawn launched a diaper service and lost $150,000, it closed

(Macintyre 1998). In other instances, ideas for new/expanded businesses and projects are generated inside the organization, by staff and board members. Indirectly, New Dawn requires that its enterprises have a significant impact on the community. Supplies, for example, are purchased from local businesses (if there is not a price difference of more than 5 percent), while

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all its mortgage business goes to local credit unions (Reed 1999). Along with employing 175 people, New Dawn operated on a budget of approximately $7 million in 2015 (Lionais 2015).

New Dawn’s Businesses

Currently, there are seven separate divisions within New Dawn, serving different functions (Table 25). New Dawn began by refurbishing old properties for affordable housing, today it has real estate holdings valued at $12 million (Lionais 2015), including 11 residential apartment/duplex complexes, four commercial buildings and 27 units of supported housing for individuals with mental illness.

Table 25

New Dawn Enterprises’ Divisions

New Dawn Rental Properties New Dawn Centre for Social Innovation New Dawn Community Engagement and Education New Dawn Investments New Dawn Meals on Wheels New Dawn Health Care Cape Breton Island Centre for Immigration

In 2013, New Dawn acquired an old high school and convent in Sydney’s historic North

End. Within months of its acquisition it was renamed the New Dawn Centre for Social

Innovation, and was fully leased with a mix of commercial and non-profit tenants including an internet video-streaming company, drama school, marketing firm, music school, stage company, dance studio and art studio. The vision for the building is based on the central role that artists and art have played in revitalizing a host of Canadian and U.S. communities including Paducah,

Kentucky, Ashville, North Carolina, and Lanesboro, Minnesota. Artists have led these revitalization efforts and increased the sense of cultural and collective identity, community cohesion and vibrancy, opportunities for youth, tourism and business activity, as well as the

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restoration of downtown/core districts (Borrup 2006). See Appendix 1 for further details for applying this model in the west end.

In the past, New Dawn’s Education and Training division has offered a variety of vocational programs where there is a need in the community and the programs are not offered by the provincial community college or other private career colleges. The Community Engagement division’s function is to ‘build a critical mass of people thinking, acting and learning together to create the future we want for Cape Breton Island’ (New Dawn n.d.). In support of this objective, the division convenes community conversations, supports community-based research and offers workshops to build local leadership capacity.

Since 2004, New Dawn’s investment division has administered an annual Community

Economic Development Investment Fund (CEDIF). The Nova Scotia government established

CEDIFs in 1998 as a way of encouraging citizens to invest in their communities (Community

Economic Development Investment Funds n.d.). Under the program, residents of the province investing in a CEDIF receive a 35 percent provincial income tax credit and any dividends paid on their investment. The minimum investment requirement is $1,000, and the maximum is

$15,000, with an investment period of five years. Since its involvement in the program, New

Dawn has raised more than $13 million for direct investment in Cape Breton businesses

(including New Dawn) from about 600, mostly local, investors and paid $1.9 million in dividends. Its primary investment focus is on local high-tech firms with export potential such as

Protocase, a Sydney firm that received nearly $1.5 million in funding from New Dawn in 2011-

2012. The firm makes custom enclosures and rackmounts for electronics; 95 percent of its business is with the US and it employs about 100 people. Another recipient of New Dawn’s investment is Marcato, a small company based in downtown Sydney that specializes in the

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creation and development of software to manage live music events. Among its customers are the

Country Music Association Awards and Iceland Airwaves. Other recipients of investment funding include Advanced Glazings and MediaSpark, a software developer and gamification company.

In keeping with its commitment to creating a vibrant community, New Dawn took over the operation of the Sydney and area Meals on Wheels over 30 years ago and serves approximately 9,000 meals annually through a network of volunteers. With its acquisition of the old high school in the North End, the program now prepares its own meals in a community kitchen. Its Health Care division is comprised of New Dawn Homecare, New Dawn Healthcare and New Dawn Guest Home, which is a residential care facility for people with a variety of disabilities. The Homecare division offers services that help people of all ages who have assessed unmet needs. The care provided enables clients to maintain maximum independence while continuing to live at home in their own community, and includes services such as housekeeping, meal preparation, and personal care. Finally, its latest service is the Cape Breton

Island Centre for Immigration, this office works to orient, support and advocate for newcomers to assure their successful settlement on Cape Breton Island. Immigrants and refugees are viewed as vitally important to the future of the island, given the current rate of population decline, so ensuring that they are welcomed is essential.

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Part IV Conclusions & Next Steps Elliot Lake and New Dawn Enterprises are successful examples of community adaptations to the economic challenges brought about by mine closures. The principal lessons drawn from their experiences are:

1. Both communities had leaders who acted to improve the community’s economic well-

being and enjoyed a high degree of trust among the community.

2. The leaders were visionaries. Claire Dimock, a mining executive, essentially saved Elliot

Lake with her vision of transforming the city into a retirement community. Greg

MacLeod, in establishing New Dawn Enterprises, wanted to form a new kind of business

entity, an organization that would channel the benefits of its operation back to the whole

community. Forty years later the enterprise continues to expand into new areas to benefit

the community.

3. The leaders were able to engage community members in the economic development

process. Elliot Lake’s economic development diversification strategy was the result of a

community-wide effort of volunteers that produced six goals. Volunteers and community

input are central to New Dawn’s operations; any business they start is the result of

community input and evaluation.

4. Elliot Lake’s success in diversifying its economy is attributable to some degree to their

ability to leverage one-time government grants, but even more critical were the

volunteers committed to saving the community. Similarly, volunteers dedicated to

improving economic and social conditions in the Sydney area are at the core of New

Dawn’s success.

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5. Faculty from the local university played an important role in the establishment of New

Dawn. They continue to assist its ongoing operations by serving on its Board and

volunteering in other capacities. One of Elliot Lake’s challenges is that it is difficult for

them to leverage the assets that a university possesses, since their nearest university is

located about a two-hour drive away in the city of Sudbury. NMU is already engaged in

promoting economic development through Invent@NMU and other activities, but as

Appendix 1 and 2 illustrates, there is the potential for more cooperation between the

university and community.

6. Economic development is a long and complex process that takes time. New Dawn’s

operations have expanded over 40 years, and like most successful businesses, they have

changed with the times by developing new businesses and dropping old ones. Elliot Lake

was able to save itself by becoming a retirement community, but now realizes it needs to

diversify its economy again.

Next Steps

The report’s second section makes clear that there are two major challenges confronting the Marquette County economy and specifically its west end. The next steps involve beginning a discussion about the future of the local economy, one grounded on the following:

1. Since 2011, there has been a small incremental increase in overall employment, but it

remains well below its recent peak in 2006, and there are potential further disruptions to

the local economy on the horizon (the Lundin Mine, Presque Isle Power Plant closures).

2. There is a need to diversify the regional economy away from its dependence upon

mining, health care and higher education since they are all shedding jobs.

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3. To address these issues requires the community to take the lead in its own economic

development. However, the vast majority of west end residents work outside their

respective city’s boundaries, so there needs to be a broader focus on the economic future

of the region and specifically how to address the issue of economic diversification and

job creation.

4. It is acknowledged that local jurisdictions will have their own perspectives with respect

to economic development, with city managers focusing on their own tax base to ensure

the continued delivery of city services. Nevertheless, the reality is there needs to be a

regional approach to Marquette County’s economic development.

5. In an effort to engage the community in thinking about the economic future, the

authors will present the summary findings of this report to the Ishpeming and Negaunee

City Councils, as well as several local community forums.

6. Given that this is a community-driven process, it would be premature to predict any

outcome. Nevertheless, there is a clear need to devise a job creation strategy that

identifies specific sectors for expansion, whether it be community-based (the New Dawn

model), institutionally based (Elliot Lake) or both.

7. The challenge will lie in getting all the interested parties to work together for the

common goal of improving the local economy and providing a future for young people

and the next set of displaced workers so that they will not have to leave the area to find

work.

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Appendix 1: The University, The Arts and Downtown Revitalization Many North American communities have benefited from the Arts community’s investments in old, dilapidated structures in downtowns and neighborhoods. There are numerous studies demonstrating how individual artists, artistic businesses and artistic spaces (small galleries, theaters, music venues and art studios) have been the catalyst behind neighborhood and downtown revitalization (Cameron and Coaffee, 2005; Deutsche and Ryan, 1984; Ley, 2003;

Lloyd, 2010; Mathews, 2010; Zukin, 1982). Using their sweat equity, artists revalue spaces by transforming neglected areas into places filled with art studios, galleries, bars, coffee shops, and restaurants (Lloyd, 2010; Silver and Clark, 2013; Zukin, 2010). By renovating blighted places into attractive destinations, artists pave the way for future property reinvestment by real estate developers and higher income groups. Local artists and art groups also generate economic gain through the export of their work, by supplying skills that improve the productivity of nonartistic industries, and attracting visitors (Markusen and Schrock, 2006; Markusen and Gadwa, 2010).

Much of the research on the role of the arts in promoting economic development has focused on large cities, but small communities have also benefited from investments by artists.

Paducah, Kentucky (2015 population 25,145) is frequently cited as an exemplar of how a community used art and artists to revitalize a downtown and surrounding neighborhood. In the late 1990s, LowerTown, one of the city’s oldest residential neighborhoods was in serious decline, with high poverty and unemployment, dilapidated buildings, a low homeownership rate, and high crime. In 2000, a local artist, and city planner set out to revitalize the neighborhood by creating the (award winning) Paducah Artist Relocation Program to attract artists to live and work in the neighborhood.

As part of the program, the city bought 55 vacant or foreclosed buildings that it then sold to artists for as little as $1. The city gives buyers up to $2,500 for professional design services, as well as business and marketing support. The

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artists in turn promise to renovate the building for use as their home, studio, or retail space. Paducah Bank agreed to offer mortgage loans at well above the properties’ appraised values so new owners could afford renovations, which was critical to the program’s success. In the first five years of the program, the city spent about $3 million, while the artists invested approximately $35 million. More than 100 artists eventually moved to live and work in the neighborhood, which is filled with galleries, shops, and restaurants that attract visitors and residents (EPA 2015).

An even smaller community, New York Mills, Minnesota (2016 estimated population

1,227) located 167 miles northwest of Minneapolis, created the New York Mills Regional

Cultural Center in 1992. The center hosts an artist-in-residency program, art exhibits, theater productions and musical performances, including international caliber events. More significantly, the center set off a wave of new business creation. In the first six years that the cultural center was open, 17 new businesses opened in town, creating 350 jobs (Davis 2008), and for a small isolated Midwestern town it has a unique feature, a growing population.

So what does any of this have to with Marquette County? Northern Michigan University is home to one of the largest Art & Design programs in Michigan. Every year, between 60 and

80 freshmen enroll in the School’s various programs. They come from all over the Midwest, attracted by the School’s outstanding academic reputation and the beauty of the Upper Peninsula.

After 4 or 5 years at NMU, they graduate and leave. This represents a significant loss of human capital for the region and a missed opportunity to attract a young well-educated population to live and stay in Marquette County. Many students who graduate with a degree in art want to continue working in their field, but when they move elsewhere, they experience higher living costs associated with metropolitan areas. It is ‘normal’ for young artists to work two or even three jobs, the first to meet their living expenses while the other is their freelance art. So one possible development opportunity is to capitalize upon the human capital that exists at NMU and the development potential that exists in the downtown areas of Negaunee and Ishpeming for

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artist spaces (Figures 10 and 11). The Nardi building in downtown Ishpeming is one structure that is currently undergoing some restoration that fits the artists downtown revitalization model

(Figure 12), and similar structures exist in downtown Negaunee (Figure 13).

Figure 10: City of Negaunee Downtown Building Use

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Figure 11: City of Ishpeming Downtown Building Use

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Figure 12: Nardi Building, City of Ishpeming.

Figure 13: Kirkwood Building, City of Negaunee.

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Appendix 2: From Coal (Iron) Miners to Coders

The challenge of dealing with mine closures is not unique to the Upper Peninsula. In

Appalachia, coal mining is in decline and laid off workers are confronted with the familiar choice of moving to find employment or trying to find work locally. In recent years, there have been a number of well-publicized news stories of transforming coal miners into computer coders.

Coding represents another potential opportunity for west end workers in an industry that is short of workers.

Eastern Kentucky used to be coal-mining country, but since 2008 more than 10,000 coal workers have lost their jobs. Many workers have left to look for work elsewhere; but for some who remain, a new opportunity has arisen, writing computer code. Bit Source is a start-up company in Pikeville, Kentucky, that describes itself as an agile software and website development house. The firm started with the intention tapping into the region’s workforce of laid-off coal miners and teaching them a new skill. Over 900 people applied for the first jobs in

2015, 11 were selected based on a coding aptitude test. All of them used to work in the coal industry. After 22 weeks of company-provided training, they became coders. Two years later, all except one person remain employed at the company. The founders of the company wanted to create a business that would pay people what they had been making before the mines closed. In

2014, they discovered coding. Each year many hi-tech jobs go unfilled and end up shipped offshore. Their goal is to meet this need but one of their biggest constraints is the lack of access to broadband in Eastern Kentucky (Rosenblum 2017).

Southwestern Pennsylvania is another region ravaged by coalmine closures. Mined

Minds, based in Waynesburg, is a software developer offering free coding training to laid-off miners. It has a non-profit Foundation with the mission of growing tech hubs in areas of

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economic need within West Virginia and southwest Pennsylvania (D’Souza 2017). The possibility of providing similar training exists in Marquette County.

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