Changes in World Economy on Raw Materials May Doom Many Towns
Published by MAC on 2002-02-16
Changes in World Economy on Raw Materials May Doom Many Towns
Forwarded c/o radtimes
By Peter T. Kilborn
New York Times, February 16, 2002
BRADY, Texas - All along the nation's back roads, hundreds of towns like this one are teetering in the recession, and some worry that they may never recover. Uranium mining has stopped in Falls City, Texas. In Loving County, Texas, oil exploration has stalled.
For farmers in Pima, Arizona., and Bartow, Georgia., cotton prices have sunk to 30-year lows. Here in Brady, the ranchers who raise goats for angora wool are victims of low prices and competition from New Zealand and Argentina.
Stretched across the southern tier, from Arizona and New Mexico through Texas and Georgia and into Virginia, these small rural communities form the base of the national supply chain. They produce most of the oil and much of the ore, fiber and food. In past recessions, even if they did not bounce back entirely, at least they survived.
But this time around, as the overall economy begins to show some signs of healing, things are ominously different in many of these towns.
Since the last recession, in the early 1990's, China, Russia and the former Soviet republics have charged into the world's commodity markets. At the same time, new trade agreements have erased quotas and tariffs that long insulated United States industries from foreign competition.
While freer trade benefits American consumers and industries that can now buy cheaper imported commodities, it has been rough on the places whose livelihoods depend on raw goods. For these already-struggling communities, the first post- globalization recession may break the old sequence of boom-bust-boom, and erase any hopes of long-term survival.
Foreign potash and uranium are now cheaper than New Mexico's, and Australian wool is cheaper than that produced here in Brady, a ranching town of about 6,000 people in the Texas Hill Country. In part because of competition from Latin America, the copper mining that has stalled in Arizona and New Mexico might never return.
"All the rural parts of New Mexico are dependent on mining," said Terry Fletcher, chairman of the state's mining commission, "and almost all hard-rock mining is going offshore."
Certainly, there are communities along these back roads that have found ways to rebound. Some are part of the expanding orbit of sprawling cities.
Heirs of the beleaguered peanut farmers of Floresville, Texas, are selling out to subdivision developers from San Antonio. Brady's game-stocked woods bring in money from hunters. With museums and antique shops, other towns, like Silver City, New Mexico, hope to get along by selling their past.
But for many rural communities, industries that have been declining for
years may be dying out.
"We're just constantly losing without anybody filling in the blanks," said Joyce Patrick, a real estate office assistant in Halifax, Virginia., where the economic pillar was once tobacco and then became textiles, which are now in decline.
One place that is losing is Silver City, population 10,545, in southwest New Mexico. Contrary to what its name implies, Silver City depends on copper, as the silver ran out a century ago, and it has been the plunge in demand for copper that is hurting the town and surrounding Grant County.
The Phelps Dodge Corporation operates New Mexico's two biggest copper mines here and it is the county's largest private employer. It employed 2,400 workers in Grant County and neighboring Hidalgo County three years ago.
All but about 700 have been laid off. Businesses that served the mines are letting another 400 workers go, said Jose Maestas, director of the local office of the New Mexico Department of Labor.
Mr. Maestas said that unemployment in Grant County had gone to about 14 percent from 9 percent last fall. Stores are closing fast.
"A couple of years ago, every building downtown was full," he said.
Behind Silver City's latest travails is a plunge in world demand for copper. Prices have dropped by half, according to the United States Geological Survey, to just under 70 cents a pound in the spot market from $1.40 a pound in early 1995.
"We've got huge inventories of unsold copper, which are not selling," said Richard Peterson, Phelps Dodge's spokesman in Silver City.
Once customers need copper again, Phelps Dodge mines in Chile and Peru as well as foreign-owned mines in South America will benefit more than those in Silver City, Mr. Peterson said, because the ore mined abroad is richer in copper.
About 330 miles east of Silver City is Loving, New Mexico, population 1,326. It has ranches, oil wells and, nearby, the nation's largest deposits of potash, a basic ingredient of fertilizer.
A few years ago, seven 850-foot- deep potash mines operated in Eddy County, which includes Loving. Now there are three. Mining jobs in the county have fallen to 850 from 1,800 in 1993. Mining companies say most of those jobs may be gone for good.
Part of the reason is the depressed agricultural economy. But even if that economy revives, and farmers start using more fertilizer, the Loving area will be hard put to respond. Canadian potash is increasingly competitive, and the potash reserves here are old and run down. What remains is harder and more expensive to get.
"You just run out of mineable ore," said Melinda Hood, spokeswoman for the Mississippi Chemical Corporation, a potash mine operator in Eddy County.
In Loving's little downtown, just two cars were parked at the branch of Western Commercial Bank on a summery day in the middle of winter. The only person in sight was a woman in curlers smoking outside the town's other remaining business, a hair salon.
The storefront marked City Hall was shuttered. After a fire in June, the
town government moved to two rooms in what was once the elementary school.
"We used to have two pool halls, two bars and two cafes, a barber shop," said Manuel Garza, the city clerk. "People just moved out."
From Loving, N.M., Highway 285 winds east to a county in West Texas also called Loving, which is the nation's least populous county, with 67 people. Mentone, the county seat, has two businesses, a cafe and a gas station. Children are bused 36 miles to school in the town of Wink.
In the 1980's oil boom, with so much oil and so few people, Loving was a very rich county. But with the oil bust of the late 80's, the West Texas economy plunged. It has not helped that the county's oil, which was easy to retrieve, is harder and more costly to get.
"The oil field just went poof," said Barbara Creager, whose husband, Royce, services oil wells. There is more oil out there, but further exploration is costly and the industry faces competition not just from Saudi Arabia but from Kazakhstan, Tajikistan and Uzbekistan.
This has been rough on Loving County, which gets 98 percent of its tax revenues from oil, said Mr. Creager, who is also a county commissioner.
About 250 miles from Mentone as the crow flies is Brady. Here, the recession and globalization have hit mohair and wool.
Tommy A. Quick, 68, and his wife, Wanda, 54, pulled into a McDonald's one Sunday morning, a black and white Nubian nanny goat nibbling straw in the back of their pickup.
The Hill Country was the "angora wool capital of the world," said Mr. Quick, who owns 125 goats, but now raises them for their meat instead of their hair. "The whole wool business is shot," he said. "Every Japanese man wanted a mohair suit. It comes from angora goats."
With the global recession, he said, no one wants the suits anymore.
"I worked at this wool plant, Roddie Wool Scouring, for 27 years," Mr. Quick said. "We washed two million pounds a week. It was the steadiest job ever in this town. Now it's shut down to three days a week."
Four years ago, Sherri Tally, the office manager at the Roddie plant, wrote weekly paychecks for 105 workers. "I do 23 now," she said.
In Bartow, Ga., the culprit is cotton. High production in countries like China has led to an oversupply and plunging prices. Raw cotton today sells for about 55 cents a pound, about 30 percent below the price five years ago.
As the American farms have gotten bigger and automated, the small- farm families that sustained Bartow have given up and moved.
Even the federal government's subsidies for cotton have not been enough to allow any but the biggest farmers to eke out profits. Though Georgia is one of the fastest-growing states, Bartow's population dropped to 223 in 2000 from 292 in 1990.
"I just gave it up," said T. Murray Dukes, 72, who raised 300 acres of
cotton near Bartow for 40 years. "Cotton used to be your money crop. But you don't know what you're going to get for it now."