All right, all you people driving around in Hondas and Toyotas. Look what you've done to Leadville.
First it was Detroit--then Pittsburgh and Birmingham. Now Leadville is suffering from the ripples of the deepening recession.
A small mining town on a mountain near the Continental Divide, Leadville has been hard hit by the slump in the molybdenum industry ("moly" is the nickname geologists and others use to avoid the tongue-twister derived from the Greek for lead-like). Molybdenum is an alloy used to strengthen steel and make it more temperature-resistant. In good times, extracting the alloy employs nearly half of Colorado's mineworkers.
Just as worsening depression in the U.S. automobile industry has reduced the need for steel, the steel industry's steep decline, has reduced the need for molybdenum. Since steel uses approximately 80 percent of all the molybdenum produced, that means disaster.
"When the steel industry gets a cold, we get pneumonia here," said Colorado Gov. Richard Lamm.
At the beginning of July, Amax Inc. shut down its molybdenum mine in Climax for five weeks, idling billions of dollars worth of land and equipment, raising questions about the future of the area and writing one of the latest chapters in Colorado's repeated history of boom and bust. It was the first production shutdown at the mine since a brief hiatus in 1971. A second Amax mine in Henderson is shut down for the same period of time.
The shutdowns followed deep cuts that had already been made in the workforce at the company's two mines. Of 10,500 metal miners in the state of Colorado, 5,000 worked at either the mine in Climax or another molybdenum mine in Henderson, Colo., until the cutbacks began.
At the end of 1980, all hiring ceased and, earlier this year, layoffs began. Now, Henderson employs only 1,200 miners and only 1,500 workers toil at Climax, which is anticlimatically quiet and still.
"The business community has always survived off of mining and had not really addressed what would happen if mining went away," said Dick Rogers, president of the Leadville Chamber of Commerce and of the Commercial Bank of Leadville. But now, Amax's 80 precent contribution to the tax base of Lake County is expected to be reduced by one-quarter, unemployment in Leadville stands at 17 percent, 150 houses in this town of 5,000 are on the market, and Leadville is trying to diversify. So far most of the town's efforts have been aimed at attracting tourists and haven't progressed much beyond installing new sidewalks.
"We're a one industry town and have been for pretty much the whole history of Leadville," said Dave Jones president of the Oil, Chemical and Atomic Workers local union in Leadville. With little in the way of alternative employment available, most of the laid off workers are spending their idle time gathering wood to heat their houses in the winter ahead, Jones said.
Molybdenum was discovered at Climax in 1879, but it wasn't until Americans began taking apart recovered German Big Bertha molybdenum guns in World War I that the United States understood that it had a valuable mineral resource. The Climax mine opened in February, 1918.
The second largest underground mine in North America, Climax normally mines 100,000 tons of dirt and rock a day, extracting approximately 50,000 ore tons of molybdenum. "We've been involved in a depression for two years," said Nelson Fugate, public relations officer for Amax Inc. The parent company reported a loss of $5.8 million in the first quarter of 1982, said Pat Wadsworth, a Climax mine official.
The price quoted by molybdenum traders has dropped from a high of $32.50 per pound in January, 1979 to $3.50 last December. The price at Climax has dropped from a high of $9.70 in January, 1981 to an unpublished price. "What that means is call us and we'll deal," said Fugate.
Recession in Europe has also negatively effected Amax's operations. Molybdenum is the only metal in which the United States is a net exporter, but steel production is faring no better there. Nor are the other industries, principally manufacturing, that use the metal. "It doesn't matter what you use moly for. All the industries are depressed," said Fugate.
At the same time, Amax has been confronted by rising costs for equipment and maintenance. The giant tires on its trucks at Climax cost about $7,500 each.
The slump has apparently had one beneficial effect on Amax. As depressed as its assets are, firms that had eyed Amax as a takeover target are less interested.
There is a one-year inventory of molybdenum sitting in warehouses piling up high carrying costs.
The union believes management will reopen the mine in August. While it stays closed, there is no joy in Leadville. CAPTION: Picture 1, Billions of dollars worth of land and equipment sit idle at the Climax molybdenum mine, a victim of the widening recession.; Picture 2, Each of these gigantic tires costs approximately $7,500, adding to Amax's costs. Photos by Martha M. Hamilton -- The Washington Post