Michael Jamison
Billings Gazett
January 30, 2010

TROY — Tami Steiger still cannot forget that quick twist of panic when she heard her job was on the block.

“It was bad,” she said. “It was the scariest day of my life. No one in the room said a word, I guess because everyone was just as scared as me.”

That was more than a year ago, when managers gathered crews at Troy Mine to hear the news.

The economy was bad, the bosses said. Production costs were rising. Metal prices were tanking.

“We’d always taken these jobs for granted,” Steiger said. “Until we thought we might lose it, we didn’t realize what we had.”

What they had were 180 of the highest-paying jobs in Lincoln County. They also had mortgages, truck payments, kids in college.

“It was a nightmare,” Steiger said.

But somehow, the crews at Troy Mine have emerged stronger than ever. No one lost a job, and it looks like no one will. Pay cuts are being paid back, “and we’re like a completely different company coming out,” Steiger said.

“We’re definitely going to be tighter, as a company and as a community. Personally, I give a lot of the credit to the way management handled it.”

By management, Steiger mostly means John Shanahan, CEO of Revett Minerals.

He’s a Wall Street guy, with an office in New York City, whose skills have more to do with leveraging stocks than leveraging rocks — not the sort of man one would expect a bunch of Montana miners to embrace.

“What this is,” Shanahan said, “is a fantastic story about the little mine that could. The guys up there are tremendous, and what they’ve accomplished is nothing short of amazing.”

Bottom fell out

When Shanahan took over at Revett, the mine was running strong and getting stronger. By the middle of 2008, copper was selling at $4 a pound and silver at $20 an ounce.

“But it was amazing how fast it went bad,” said Earlene Jellesed, who is in charge of accounts payable at the mine. “In a matter of about a week, the bottom just fell out.”

Copper plunged to $1.25, and silver collapsed to just $8.

Shanahan thought he knew about job losses. He worked on Wall Street, and had seen many offices go dark amid a global recession.

“For me, not being from that area, it was a real eye opener how important those 180 jobs really were,” he said. “That’s a huge hole, 180 jobs out of Lincoln County. It hits families, schools, the whole tax base. I quickly realized that it wasn’t about the company, or even the individual workers. It was about the whole community.”

Shanahan was pushed hard by Tim Lindsey, the relatively new chair of Revett’s board. Lindsey is an astute businessman, with a long and successful resume, but he is also a native of Troy and now calls the area home again.

So, as manufacturing and industrial jobs were shed by the hundreds throughout northwest Montana, and mine after mine closed down nationwide, “we crunched the numbers hard,” Shanahan said. “It was tight, but we thought maybe we could do it, if everyone bent their backs and worked a lot harder and a lot smarter.”

The first order of business was to issue employees a WARN notice, required whenever a large employer thinks it might fold. The second order to business was to make it clear that management had no intention of folding.

The workers agreed to take a 10 percent wage cut. Management took a 20 percent hit. Shanahan’s pay reduction was deepest of all.

Crews also agreed to work harder and to eliminate every ounce of waste. Steiger, who works at the underground crusher, said she often saw slightly used drill bits — expensive pieces of equipment — coming through the crusher. “Now, we sorted them all out, and they’d come down and pick out the best of the worst and use them again, until they were spent.”

Maintenance fine-tuned all the machines to avoid the usual costly breakdowns. No one tarried — it was 100 percent, from clock-in to clock-out.

Hiring locals

When the mine reopened in late 2004, management decided to spend extra time and money training locals rather than hiring the usual “tramp miners” who tend to float from job to job.

The idea was to create an established work force for Revett’s planned Rock Creek Mine, which the company hopes to open nearby.

Jellesed’s husband works with her at the mine. So do her two sons-in-law, and a couple of nephews. Steiger has a couple of brothers with her at the mine, and a son and a daughter.

“This place isn’t about a job,” Jellesed said. “It’s about families. No one wanted to walk away and move out of state.”

This hardest year saw the lowest rate of turnover since the mine reopened. The crews, Shanahan said, made less and produced more. Shifts competed to outdo each other, and slowly the mine emerged from a sea of red into the black.

Meanwhile, the company restructured millions in debt, even traded shares to buy down the balance sheet. It settled safety violations with federal regulators, hired new safety staffers and resolved a lawsuit related to the 2007 death of a miner in an underground collapse.

“We really have a fresh start in 2010,” Shanahan said, and although management hasn’t bounced back up from its 20 percent pay cut, worker wages will be fully re-established as of Feb. 1.

Shanahan also locked in metals prices with his buyers, hedging against future downturns. He said he now has 50 percent of his copper production hedged for 2010, and 25 percent of his silver. Those price guarantees will cover 75 percent of the mine’s operating costs, while still allowing him to play the rising market with about 65 percent of total production.

Today, prices are back up to about $3 copper and $17 silver, and Shanahan could have bet it all on continued price improvement, “but after what these guys did for us over the last year, we were duty-bound to make sure we stayed open and healthy through 2010.”

But the real benefit, Shanahan said, is the new relationship between management and workers, and between company and community.

Shanahan has initiated an employee stock program, to make all the miners owners, and he is looking for ways to invest in community projects.

“He actually showed up, in person, and talked straight to us,” Steiger said. “If they’d just handed us a note, or posted a notice, then I think it would’ve been a lot different reaction. I don’t think I’d be working today.”

“This is a story of perseverance and ingenuity during one of the toughest economic times this county’s ever seen,” Shanahan said. “To me, it’s really remarkable what a band of 180 people can do when they come together and have some faith in each other.”