Layoffs challenge miners, economy in North Fork Valley

Elk Creek Mine near Somerset pared about half of its workforce after having to abandon its longwall mining equipment because of dangerous spontaneous combustion. Fewer railroad cars are being loaded with coal at the facility above.

Within two weeks after nearly 150 workers lost their jobs at the Elk Creek Mine near Somerset at the start of the month, as many as a third of them had filed into the Delta Workforce Center.

There, they considered options that are likely to prove difficult not only for them, but the economy of the North Fork Valley.

They can try to stay in the area, but very possibly would have to settle for lower-paying work even with new training, or they can leave in pursuit of mining jobs elsewhere.

Either way, a lot of lucrative mining jobs, and the dollars they bring in locally, are gone, in a reminder that the very kind of industry that can so enrich a community also can leave it in a pinch when that industry takes a hit.

“It’s like textile mills in small southern towns. Everything’s peachy until the mill closes,” said Joe Winter, a senior economist with the Colorado Department of Labor and Employment.

Oxbow Mining’s Elk Creek Mine isn’t closing altogether — it pared about half of its workforce after having to abandon its longwall mining equipment in part of the mine that had become too dangerous because of spontaneous combustion. And many hundreds of miners continue to work at two other North Fork Valley mines, the Bowie No. 2 Mine and Arch Coal’s West Elk Mine.

Such a high concentration of mining brings significant revenue into the area from the sale of coal elsewhere and is important to an area’s economic structure, Winter said. That structure is rocked when some of that mining work and the associated outside money goes away.

“It’s going to have an effect. You have an effect on spending levels, you have an effect on tax base. There’s no good news here,” he said.

Delta County Administrator Robbie LeValley has called the layoffs “a significant reduction” that will affect everything from sales tax to severance tax and federal mineral lease revenue.

One of the most noticeable impacts may be from laid-off workers choosing to leave the area altogether.

The layoffs come as the Delta County School District already has had falling enrollment because of what Superintendent Caryn Gibson considers a tough local economy in general, and not just in the mining sector. At last count, the enrollment for traditional students is down about 100 from last year, with significant additional losses in areas such as a charter school’s numbers. Those losses will mean eventual funding reductions based on the state’s per-pupil formula.

“It will affect us this year, and we are going to have to over time make some cuts,” Gibson said.

Oxbow Mining’s troubles began early this year, forcing some temporary furloughs at that time, and Gibson wonders if some families acted in advance of the final layoff decision, anticipating what was to come.

“From the school perspective and my perspective it’s very sad. It’s sad for the families. Some families are looking for relocation. We do believe it’s affecting our student attendance in Delta County. It’s not good,” she said.

Delta County’s August unemployment rate — the latest available, and not adjusted for seasonal fluctuations — was 7.1 percent, Winter said. That’s a marked improvement from 8.4 percent a year earlier.

But Winter notes that the labor force on which that rate is based was 15,627, down almost 800 from a year earlier. The number of employed is down more than 500, to 14,524 — bolstering Gibson’s assessment about the area’s struggling economy.

Mining alone in the county in 2012 accounted for an average of 713 jobs, and mining also is a big part of adjacent Gunnison County’s economy.

By contrast, Winter said that nationally, mining jobs make up just 0.7 percent of the workforce.

Delta’s mining sector paid an average weekly wage of $1,324 a week last year, compared to a countywide average of $622 for all industries, Winter said.

Bill Thoennes, a spokesman for the state Department of Labor and Employment, said many of the laid-off miners were making more than $5,000 a month.

He said the Delta Workforce Center offers training through Colorado Mesa University and the Delta-Montrose Technical College, and can help workers who need to obtain a GED to improve their chances of getting hired.

But he said many miners who have visited the center were undecided about their future “in part because the jobs they have lost pay so well that it is difficult to find jobs — even those that require new skills — that pay anywhere close to what they were making.”

As a result, some miners were seriously considering moving elsewhere in Colorado, or even out of state, to stay in mining, he said.

Jenny Beck, a tax preparer in Delta, said she’s worked with miners who come and go depending on work availability.

“Over the years they bounce between Utah and Colorado. We only have so many coal mines in our area,” she said.

She said some miners have talked of going to Canada, Mexico or even Australia to find work.

The domestic coal industry has faced recent challenges including increasing competition from natural gas as a power generation source following the boom in shale gas development.

Winter, the economist, said there can be a lag time for layoffs like the ones at the Elk Creek Mine to have ripple effects on other parts of an area’s economy.

“But barring the unforeseen, I would be on the alert for them. It’s going to affect other sectors in turn,” he said.

“You always feel the effect of the mines, good and bad,” said an owner of The Diner restaurant in Paonia, who asked not to be named. “… There’s always an impact on the community.”

As for the impacts of this month’s layoffs on the restaurant, “It’s hard to tell right now because we have a lot of hunters in. Once the hunters leave is when we’ll feel the impact.”

Oxbow’s mine problems affect the amount of coal shipped by Union Pacific Railroad.

But railroad spokesman Mark Davis said employment levels for local crews out of Grand Junction shouldn’t be affected because of other train traffic that also moves through the area.


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