Can Milwaukee Build Its Future on Water?

Inside the city's ambitious plans to become a hub of water-related technology and innovation.

View of Lake Michigan--the third largest lake in the U.S.--from Milwaukee. (National Journal)

This article is part of a weeklong America 360 series on Milwaukee.

MILWAUKEE"“Inside a former warehouse, just south of where the Menomonee River joins the Milwaukee River, construction workers are busy exposing beams and laying carpets. A century-old building on E. Pittsburgh Avenue is about to take on a flashy new identity: the Global Water Center, an incubator for innovation and a showcase for the Milwaukee region's ambitious plan to become a global leader in water technology.

Milwaukee's setting on the shore of Lake Michigan — the third-largest lake in the United States — has attracted commerce and communities ever since the Potawatomi and other Native American tribes first settled here. The lake provides approximately 1 billion gallons of fresh drinking water each day, and has a shoreline more than 1,600 miles long. That asset alone is one of the reasons the Milwaukee Water Council believes southeast Wisconsin has what it takes to become the "Silicon Valley" of fresh water. The eleven-county area is already home to 194 water-related companies that work on everything from aquaponics — a method for farming fish year-round on land — to innovative ways of managing storm-water runoff.

If companies start relocating to Milwaukee to take advantage of the water-technology resources here, the Water Council won't just have fulfilled its economic-development goals. It will also become a case study on how to develop a nascent industry cluster — a lesson that could help struggling cities nationwide.

In an era of increasing water scarcity, those with expertise in cleaning, delivering, and protecting fresh water will be in high demand, and many of those experts already live and work in Milwaukee. "There's nobody in the United States that has this high concentration of industry and academic," says Dean Amhaus, the president and CEO of the Water Council. "And most importantly, we work in the full cycle of water." That means Milwaukee's water-related companies span the full range of water use. There are businesses here that manufacture components for delivering water, those that deal with water-purification problems, and others that address issues of sewage and wastewater treatment, as well as water reuse.

Yet until recently, many of these water-related businesses didn't think of themselves as part of the same sector, let alone realize that they faced many of the same technical challenges in working with water. In 2007, Rich Meeusen, CEO of water-meter maker Badger Meter, and Paul Jones, CEO of water-heater manufacturer A.O. Smith, developed the Water Council to draw the area's water-related activities closer together. The Water Council currently has 120 dues-paying members that include universities, nonprofits, and businesses from appliance maker Kohler to Aero-Stream LLC, a company that helps clean septic tanks.

The Water Council has also worked to align industry with academia. The group has found a ready partner in the University of Wisconsin-Milwaukee, a cash-strapped institution with research ambitions. "If you look at any part of the country that's showing economic success, there is a research university that's helping drive that," Chancellor Michael Lovell says. Several years ago, the Water Council convinced the state to establish a School of Freshwater Sciences at UWM. The school opened in 2009 and currently enrolls 50 students.

As the buzz around water grew here, so did partnerships. Institutions from the Milwaukee Area Technical College to Marquette University Law School expanded existing water-related curricula, such as Marquette's international water-law program. Support for the Water Council is one of the rare areas that have united Milwaukee's Democratic Mayor Tom Barrett and Wisconsin's Republican Gov. Scott Walker. And in 2009, the United Nations designated Milwaukee a Global Compact City, in recognition of the Water Council's promise to develop and share expertise in addressing water challenges.

But while Milwaukee has attracted international attention, it isn't yet a true industry cluster. In a typical successful cluster, such as technology-focused Silicon Valley or entertainment-centered Hollywood, a set of related industries compete, collaborate, and create a critical mass that boosts productivity and attracts talent. "That creates jobs, and often very high-paying jobs, locally," says Christian Ketels of Harvard University's Institute for Strategy and Competitiveness.

Sometimes, clusters emerge around an anchor tenant: one wildly successful company that draws related companies, suppliers, spinoffs, and smart people toward it. Microsoft's effect on Seattle is a classic example. But Ketels and other cluster theorists haven't yet figured out whether clusters have to grow organically, or whether an organization like the Water Council can effectively will one into being.

UWM professor Marc Levine has serious doubts that the Water Council will succeed. "We probably have 1,000 dentist offices here. Does that make us the Silicon Valley of dentistry?" he asks. Less than 2 percent of patents issued in the Milwaukee metro area relate to water technology and only about 1 percent of employees in the region work in the water sector, Levine says.

Milwaukee doesn't struggle with water scarcity, like Fresno, Calif., another city seeking to become a water technology hub. It doesn't have the strict storm-water drainage regulations that have spurred water-infrastructure innovation in the Chesapeake Bay. And southeast Wisconsin has nowhere near the concentration of water-related expertise and investment that small, water-stressed regions such as Israel and Singapore have cultivated.

Nonetheless, when it opens later this summer, the Global Water Center will push the nascent cluster a step forward by putting key players under one roof, including Badger Meter, A.O. Smith, UWM, and the state economic-development agency. "What you'll have is a really unique ecosystem that is all geared towards new product development," Amhaus says. The Global Water Center will also host a state-subsidized accelerator program for entrepreneurs.

Entrepreneurs are hoping that the Global Water Center will have the power to connect them with clients from all over the world. "Kind of a speed-dating thing, is what I envision is going to end up happening," says Doug Buch, president of PaveDrain. Buch has patented a paving slab that effectively drains storm water, but it can take him three years to convince civil engineers to use his product instead of asphalt. Attaching his business to an organization with clout and credibility could make closing sales much easier.

The Water Council's ambitious plans have caught the post-industrial city's imagination, and brought national — if not global — attention here for the first time in years. But the real test of its success will be in the number of companies it attracts, and whether Milwaukee can harnass its wide range of water-related activities into a specific competitive advantage.

"The reason the Midwest grew as a manufacturing powerhouse a hundred years ago was because of the lakes, and the water," says Eric Leaf, director of development at the UWM School of Freshwater Sciences. As drought becomes a more pressing problem in the Sunbelt states, he believes, industries that moved south and west will start moving north again. In an era when companies can locate anywhere, location still matters.