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As Commodity Prices Sink, Mining Equipment Makers Suffer

DAVID GREENE, HOST:

Car makers and other manufacturers have been getting a boost. This is because the price of minerals they use, like copper and iron ore, are getting lower. Not good news, though, for the companies that make the huge equipment used to dig for these minerals. There have already been layoffs and more could be coming, as Chuck Quirmbach from Wisconsin Public Radio reports.

CHUCK QUIRMBACH, BYLINE: Two years ago this month, mineral commodity prices were already down and Wisconsin Governor Scott Walker wanted to give mining companies, mining equipment makers and their suppliers a boost. Walker signed a controversial bill that makes it easier to develop a new mine in Wisconsin.

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GOVERNOR SCOTT WALKER: This is going to be a job creator. It is a generational job creator. It's not going to all happen tomorrow. It's going to happen day after day, week after week, then year after year.

QUIRMBACH: But only a few months later, Caterpillar, which in 2010 bought longtime mining equipment maker Bucyrus in South Milwaukee, began to lay off workers in Wisconsin and elsewhere. Outside the huge South Milwaukee plant, there are fewer cars now in the Caterpillar company parking lot as hundreds of workers, basically half the factory, have lost their jobs. Down the block at the United Steelworkers Hall, Marc Hollers says he's been laid off twice by Caterpillar just in the last year.

MARC HOLLERS: We expected the first round. I wasn't expected to be called back. And then I got the call back and I was like, oh, wow, you know, my life's going to go back to the way it was; it didn't. It kind of, like, crushed a lot of people.

QUIRMBACH: Hollers has taken a lower-paying manufacturing job, and his family is now down to owning one car. While Caterpillar officials won't comment for this story, during an earnings call last week, Joy Global, a large Milwaukee-based mining equipment maker, said lower commodity prices are leading to job cuts. Joy Global president and CEO Ted Doheny says the outlook isn't rosy.

TED DOHENY: Accordingly, we're accelerating our global facility optimization plans and further reducing staffing.

QUIRMBACH: Marquette University finance professor David Krause says part of the problem for mining is slower economic growth in huge markets like China. Krause says when growth slowed a half decade ago, there was an oversupply of minerals and prices tumbled.

DAVID KRAUSE: We stabilized in the last several years, but the prices of most base metals - aluminum, zinc, copper, etc. - are lower than they were 10 years ago.

QUIRMBACH: Mig Dobre is a financial analyst who follows the machinery sector and expects the rest of this year to be slow. But he says maybe within a couple of years, sales will pick up because the big shovels eventually break down.

MIG DOBRE: It's hard to see how miners can operate without eventually coming back and having to, at least at a replacement level, reinvest in their equipment.

QUIRMBACH: Nick Wendt, who was laid off by Caterpillar in January, also for the second time, isn't waiting for any mining comeback.

In a lab at the Milwaukee Area Technical College, computer-controlled metal lathes and other devices hum as Wendt works to upgrade his skills. He says other manufacturers are looking for workers.

NICK WENDT: I like making big things. That was more fun. But making anything, working with the hands, cutting metal, I really enjoy it.

QUIRMBACH: Meanwhile, it doesn't look like sales of mining equipment will grow much anytime soon. In fact, that mining company that demanded the special legislation that Governor Walker signed in 2013, it now says it may cancel its planned iron ore mine in northern Wisconsin. For NPR News, I'm Chuck Quirmbach in Milwaukee. Transcript provided by NPR, Copyright NPR.

Chuck Quirmbach is a Milwaukee-based reporter who covers developments and issues in Southeastern Wisconsin that are of statewide interest. He has numerous years of experience covering state government, elections, the environment, energy, racial diversity issues, clergy abuse claims and major baseball stadium doings. He enjoys covering all topics.