Minnesota has as and unique economy as any state in the Union or the southern part of the state's economy is driven by agriculture manufacturing high-technology various service Industries, the northeastern part of the state depends on taconite Timber tourism and transportation. Unfortunately several of these industries have undergone a severe recession during the last several years importance of these industries to the regional and state economy can be shown by the impact that they have on Gross State and Regional product. In 1984 example, Minnesota had a gross State product truly estimated at 43 billion dollars Northeast Minnesota contributed 3.4 billion dollars to this output. I'll just pack a knight production accounted for 1.3 billion timber for 430 million transportation for four hundred million thousand 100 million all other activities in the area, 1.2 billion dollars as a result of the 1981-82 recession Northeast. Minnesota is economy has declined by some 240 million dollars or more than 7% in real output. Amore human terms this 240 million dollar loss in Gross Regional product has resulted in the loss of 11,000 jobs for the state and region in 1980. The region employed 116476 people wear on 1.6 billion dollars in Gross wage and salary income by October 1982 employment Northeast Minnesota felt for yearly average a little over a hundred five thousand individuals the unemployment rate Rose as most of you know, it's over 20% of the regional labor force as terrifying as these economic statistics may appear the future at least if unchanged May hold even more frightening frosted prospects. Future recovery of Northeast Minnesota depends on the recovery of the US steel industry that recovery is by no means assured even if Minnesota even if mr. Heller's protective recovery of the US economy where to appear in 1983. I know the world steel demand has doubled during the past two decades domestic steel production has increased only 20% during the same period actual domestic capacity has been decreasing recently by comparison. The Japanese steel industry increased production Sevenfold in the common market production went up by 70% substantially increased Imports and constant level of exports also testified of a climbing role of the US steel industry. In a recent report by the Congressional office of technological assessment three scenarios were outline for possible steel industry growth over the next two decades the snow scenario most closely fitting government policy and in the industry investment strategy observed by this study was referred to as a liquidation scenario and is one which continues the declining role of the US steel industry in World steel steel markets. Such a scenario is particular concern to Northeast Minnesota, which currently supplies proximally 64% of the domestically mine iron ore in mining is one of the five major industries in Northeast, Minnesota and a 1980 directly provided 13955 jobs out of a total employment of 116476 individuals the mining industry generated in that you're 294 million dollars in gross wages and salary. Does taconite or production is directly dependent on steel production and demand the current projection of a declining steel industry is a vital concern to this region in the state of Minnesota. How are the potential of technological change in the production of raw steel May provide the impetus for significant industrial Redevelopment, which could dramatically alter the region and States future, the potential new technology refers to a number of processes that are alternatives to the current blast furnace and Coke oven method of production pig iron these processes typically may require the same raw materials, but operate with less Capital Equipment and at lower temperatures in Blast Furnace, then blast furnaces and convert iron work to iron without melting. In addition the product is comparable compatible with other new technological developments in the industry and can be used as a substitute for scrap. Find me the technology is particularly applicable to Northeast Minnesota since the process can be tied to the current taconite production facilities as a result Northeast Minnesota, maybe on the threshold of becoming a primary steel-producing area again such a development depends on many factors, including the technical and economic feasibility of different potential processes transportation and most importantly applied research. If no changes occur in the u.s. Steel technology, the prospects for taconite production are Bleak for Northeast, Minnesota. How can I tour demanded from firms mining in Northeast? Minnesota is derived from the demand for raw steel produced primarily in the lower Great Lakes area. Over the last 20 years us steel industry has faced increasingly stiff foreign competition both in Market at home and abroad in 1984 example raw steel demand was 101 million time with 84 million tons, / domestic producers and 17 million * provided by Foreign companies If U S steel industry continues to perform as in recent years, the raw steel demand in the future will be increasingly Satisfied by Foreign producers by the year 2000 total u.s. Steel demand is forecast to be 151 million tons with domestic ship shipment accounting for 106 million tons Imports 45 million times hands domestic demand for oil will grow only slowly from 1980 to 2000. Abiqua importance for Northeast Minnesota, the liquidation scenario suggests that domestic steel industry were using crease in Lemoore for indoors in the producing. This projection is based on the price competitive disadvantage. The domestic court's have relative to foreigners. The projection is based primarily. I'm looking at the price differences currently available with existing facilities and comparing them to prices projected for new facilities as a result importadores forecast to rise from 14 million tons in 1982, 35 million times by the year 2000 the recent development of Mines represents only one of a number of new sources of or more corn or reduces the demand for domestic or us mine production forecasts are for a decline and I'll quit from 49 million tons of contained iron in 1980 to 44 million tons of contained Iron by 2009. Minnesota's taconite shipments were declined from 50 million tons of pellets in 1982 46 million tons by 2000. Depressed economic conditions 1982 mayor of accelerated Vista crime and increased its magnitude magnitude not surprisingly. This forecast is particularly since iron mining has been this region single most important industry over half-a-century in addition to mining industry in directly provides employment first for a large segment of workers and transportation utilities Manufacturing in free the taconite sales are estimated for 1980 through 2004 cast for or demand get these forecast for demanded are accurate. The taconite mining sales are forecast to be around 1.17 billion dollars by the year two thousand years are measured in 1977 price. This represents a loss of 117 million dollars per annum in taconite production. In addition. The Region's rail transport system or experienced a similar to client. The loss of taconite production has a ripple effect in Northeast Minnesota reaching many different businesses less taconite production requires less electricity utilities gasoline vehicles and repairs and so forth. The total direct and indirect impacts the change and taconite Industry are estimated four years 1980 through 2004 cast of the total impact the liquidation scenario. I know what is Minnesota's Regional economy is for grocery turn product to decline from 3.4 billion to 3.1 billion by the year 2018 and escrow activities or Regional State national policies Northeast Minnesota Regional production is forecast to decline by 9.1% in layman's terms the forecast suggests fewer jobs less taxes economic Decay and depression. I suppose I'll be known as The Economist of Doom and Gloom On the other hand at the state of Minnesota coupled with labor industry and University where to embark on a new research Endeavor the forecast could be far different than new technology for production of Steel such as directly but proven feasible, Minnesota Craig and become a steel producing state of the magnitude. Never enjoy before this scenario suggests, the national steel industry continues to fall the liquidation scenario new investment occurs in a new technology in Northeast, Minnesota. The key ingredients in making this investment possible are the availability of a quality labor force, which is in place. They are which is their energy which is he there in the area or going through the area transportation and research Northeast Minnesota now has the necessary ingredients with one exception and that exception is an adequate research to transform the labor energy for into Steel. Forecast for northeast Minnesota taconite industry copper with a mini steel mill Alshon and slide 7 if steel were produced in this region industry is forecast to increase off work from 0 to 6 million tons by by the year 3000 the total sales Misty to 1.5 billion by the year 2009 the regional economy increasing Groceries on product from 47 million dollars in 1985 to 2.8 billion dollars by the year 2000. By the year two thousand total Mining and steel activity in the region could well be 4.8 billion dollars with gross Regional products reaching 7.6 billion dollars. Unfortunately this or any other Grove scenario is unlikely to occur without considerable amount of additional research research is the key ingredient that's currently missing in the state government can help at the present time need a private or public sector appears willing or able to carry out this research. Lowest rate the importance of research and establishing any new industrial technology Ivory cap, the research effort undertaken by government industry labor and the University of Minnesota who developed the current taconite industry over over a 45 year. Of time during this. Of time from 1955 tonight from 1910 to 1955 industry government and the university and rested on the average $70,000 per year in taconite research as all of you know, this research paid off in aggregate This research come in a commitment to 3.5 million dollars. 3.25 million dollars in 1982 dollars accounting for inflation This research represented an investment of state government and Industry resources of 19.3 million dollars. But what is the payoff in this research eventually resulted in the whole new industry being established in Northeast Minnesota, which currently produced or at least a 1984 1.3 billion dollars to the Gross State product each year the rate of return on this Cooperative Endeavor based on the original research investment is over 6,000 for truly estimated. By any standard research is a single most important highest yielding activity. The state can spend her whenever the last by comparison the steel industry the state of Minnesota in the University of spent less than half a million dollars and investigating the potential of a steel industry in Northeast, Minnesota today. This area is the one area where State legislatures can have an impact on the state of Minnesota may not be able to do much to reduce inflation or change World grain prices or alter the value of the dollar a few dollars wisely invested in Mineral and economic research and pay enormous dividends serious and careful consideration, and I thank you for your time.