Growth of Milwaukee Water Cluster Keeps Rust Belt City Afloat

Written by Kim Zeuli

Milwaukee, once known primarily for its manufacturing and brewing companies, has recently gained attention for its dominance in a different sector – the city has become one of the world’s most significant hubs for water research.

“Implausible as it might sound, Milwaukee is transforming itself from a dying industrial center into a technology mecca – a water technology mecca,” wrote Joann Muller in a 2013 Forbes article titled “The Capital of Water.”

Located on the shores of Lake Michigan, it was the city’s access to water that once drove an industrial economy rooted in fur-trading, meatpacking, tanning and brewing. While some cities virtually collapsed with the decline of industry, Milwaukee has found a way to leverage its existing assets to drive growth in a 21st century industry: the water industry.

The growth of a water cluster didn’t occur overnight. Back in 2006, the CEOs of Badger Meter (flow measurement and control technologies) and A.O. Smith (water heaters) had a meeting, where they came to the realization that there were 120 such water-related companies in Milwaukee. They hatched the idea that Milwaukee, if positioned correctly, could become a world leader in water technology. They took the concept further by convening a group of 80 stakeholders from business, government, academia and the community. This group later became known as The Water Council, and has since spearheaded efforts to establish Milwaukee as a global center for water research, economic development and education. Or in other words, “the Silicon Valley of water technology,” says Richard Meeusen, chief executive of Badger Meter.

Long-lasting growth within the industry, the Council understood, would require alignment across stakeholder groups. Businesses would only grow if seeded by new research and development at the universities, and they would need a specialized workforce. The University of Wisconsin (UW)-Milwaukee responded by opening the School of Freshwater Sciences, the only graduate program of its kind of the country. “There is nothing else like this in the United States at all,” Dean Amhaus, president and CEO of The Water Council told Governing magazine in 2013. The program would help grow “companies and entrepreneurs [focused on] developing ways to use water more efficiently and return it at a high quantity and quality,” he explained. UW-Whitewater followed suit by creating a track for students in water business.

State government has played a major role by funding many of the private-sector led initiatives. For instance, the program at UW-Milwaukee was backed by $50 million from the state. The government has also committed funding to a grant program rewarding promising water-tech companies coming out of the newly created Global Water Technology Center, a seven-story business incubator and R&D facility. But by and large, the government has allowed the private sector to take the lead. “If it had started at the public end, we would be hustling to get private-sector involvement,” Mayor Tom Barrett has said. Allowing the private sector to run with the effort has “allowed for much more flexibility.”

By all indications, the private-led strategy has worked.

Presenting at the 2015 Inner City Economic Summit last month in Detroit, Scott Mosley, Director of Investment Strategies for The Water Council, described Wisconsin water cluster’s growth: Today, there are over 200 companies working on technologies across the full water cycle. Over 35,000 people are employed by cluster companies. Export growth increased by 7.4 percent in 2014 alone, and The Water Council now has 19 academic partners supporting its efforts.

These efforts include: (1) Increasing research in water technology; (2) Commercializing water technology research; (3) Promoting water entrepreneurship; (4) Increasing access to capital; and (5) Developing a workforce skilled in water.

Combined, these efforts have transformed Milwaukee’s reputation from a flailing Rust Belt city to the “Fresh Coast” city. Cluster-based economic development approaches such as these are particularly important to struggling inner city economies, because strong clusters drive economic performance by sparking faster job growth, higher wages and greater new business formation, growth and survival.

Recent ICIC research found that leveraging competitive assets, engaging diverse stakeholders and developing strong public-private partnership organizations to lead cluster initiatives are critical for cluster growth. The Water Council is a great model of a successful cluster initiative—reviving the Milwaukee economy as a result.