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It may be a while before any mining jobs are created in Wisconsin.
It may be a while before any mining jobs are created in Wisconsin. (Photo: shutterstock.com)

Commodity glut takes toll on mining industry

The mining bill was the first and top priority of the Wisconsin Legislature in 2013, but it may take years before any mining-related jobs are created in the state.

That’s because the global demand for mining and mining equipment is at a standstill. 

The slowdown is taking a toll on Milwaukee-based Joy Global Inc., which manufactures mining equipment. In the company’s most recent quarterly report, Joy Global CEO Mike Sutherlin said prices for industrial metals and bulk commodities have declined by 20 to 40 percent over the last 18 months. Seaborne coal prices have declined 17 percent since the beginning of the year, and China’s domestic coal prices have fallen nearly 20 percent.

Lower pricing is making higher-cost mines uneconomical and will result in closures that will rebalance the market, Sutherlin said. Until that happens, there is little incentive to invest in new mining capacity, he said.

"For the first time in over a decade, global capacity has caught up with demand and most mine commodities are in surplus," Sutherlin told a recent conference call with analysts.

The surplus is primarily the result of the post-recession economic recovery falling short of expectations, he said. The Eurozone is just starting to recover from a multi-year recession, China’s growth has slowed and growth in the United States remains sluggish, Sutherlin said.

"The market has become even more challenging, with declines in order rates for both original equipment and aftermarket. The supply surplus that was centered in the U.S. coal market last year has migrated to the international markets, and they are now going through similar aftermarket corrections to that in the U.S.," Sutherlin said.

"Based on the U.S. experience, we expect this to create headwinds for most of the next year. Although original equipment orders have always been lumpy, the uncertainty around their timing has increased. A select number of projects are continuing to move forward, but at a…

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Rebecca Blank talks about how to keep Bucky and his school No. 1.
Rebecca Blank talks about how to keep Bucky and his school No. 1.

Blank's slate is full

On the day I met and interviewed Rebecca Blank, the newly appointed chancellor at the University of Wisconsin, one of the headlines of the day out of Madison was that a journalist had been arrested because he was reporting that people were being arrested for gathering and singing in the capitol building without a permit.

So, my first question to Blank was one of natural curiosity: With the political freak show that is Wisconsin these days, why in the world would anyone with such an impressive resume want to throw themselves into the middle of our cheesehead circus?

"The attraction of this job is the institution I am leading," Blank said. "The University of Wisconsin is a world-class institution. Has been for decades. There are challenges there, but there are enormous opportunities."

Make no mistake. The chancellor’s office is where politics and education intersect. The financial model of the American public university is broken. It used to be that the university was funded largely with state government funding, tuition and private donations.

Today, state governments are broke. In Wisconsin, the state’s share of the funding for the university system has fallen to just 15 percent. That is a driving reason that the tuition costs have skyrocketed.

The average UW-Madison student this fall will pay $9,273 in tuition, $1,130 in fees and $8,287 for room and board. That’s $18,690 per year. Now multiply that by four years, and you’re looking at total costs for a bachelor’s degree of $74,760.

The UW Board of Regents recently approved a two-year freeze in the system’s tuition rates. That will help students and their parents, but Blank is worried that state budget cuts and flat tuitions will make it even more difficult for the UW-Madison to recruit and retain the top academic staff and faculty that a world-class institution needs.

"It’s a real competitive disadvantage for us," Blank said. "Our faculty are in a national market. Their colleague…

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