by Barbara Miner
illustration by Stuart Bradford
It was three years ago that Richard Meeusen, president and CEO of Badger Meter, had what might be called his “eureka” moment. Meeusen was visiting a laboratory at A.O. Smith and was struck by the similarities it had with his own company in developing water technology. This presented an intriguing idea. Water was clearly a big business in Milwaukee, so why not cluster and reinforce these companies to turn this city into “the Silicon Valley of Water”?
Meeusen soon shared his brainstorm with Julia Taylor, head of the Greater Milwaukee Committee. “It turns out the idea had been kicked around, but nobody was interested in chasing it,” Meeusen recalls. “But she and I decided to grab and go.”
There were no studies, no consultants, no surveys. “Sometimes it’s better not to know what you can’t do. … We just started organizing it,” Meeusen said.
In the summer of 2007, the city’s first Water Summit was held at Discovery World, spearheaded by Meeusen and A.O. Smith CEO Paul Jones, who remain the key backers of a water hub. Media reports said the summit intended to rally the region “behind a modest cluster of businesses.”
Within a year, all modesty had been thrust aside: Milwaukee had a “unique opportunity” to become a world leader, proponents declared. By 2009, the small cluster was immodestly immense: “Milwaukee has a greater concentration of water technology companies than any other place on Earth,” Meeusen was now telling the media.
“We need a sign at the airport that says, ‘Welcome to Milwaukee – the world water hub,’ ” he declared.
Meeusen’s boldness was backed up by two key players. The Milwaukee 7, the regional economic council spearheaded by the Metropolitan Milwaukee Association of Commerce, had embraced the idea. The group had launched a Water Council co-chaired by Meeusen and Jones, and sponsored a second Water Summit in July 2008.
Central to this effort was a “Water Summit White Paper” written for the council by UW-Milwaukee professor of urban planning Sammis White. (And who better to write a White paper?) His report happily quantified Meeusen’s dream: White found there were 120 firms involved in water and declared Milwaukee had a golden opportunity to build a unique water cluster. All that was needed to make this dream a reality was to invest tens of millions of public and private dollars. In short, tax dollars would be needed – and quickly.
“The race is on” to be the Silicon Valley of Water, White warned. Other places were aggressively expanding their water industries, from Singapore to Cleveland to Michigan. Milwaukee could lose unless “the community steps on the accelerator hard and soon, placing a bet squarely on the expansion of this industry. … Place the bet; make it large, move quickly.”
“Carpe diem,” White advised in a literary flourish that was a tad ironic. Latin for “seize the day,” carpe diem is most often associated with hedonistic admonitions to live for the moment, perhaps not the best way for a city to launch a serious economic initiative. Carpe diem was made famous by 17th-century poets trying to woo hesitant virgins. Here, it was the media being wooed, and their uncritical response suggested they lacked experience analyzing the issues.
The Milwaukee Journal Sentinel editorial board liked White’s phrasemaking so well it ended a dramatic call to action on the water issue with the same admonition: “Carpe diem.” Not to be outdone in the literary allusions department, TheBusiness Journal’s feature on Meeusen had a headline calling him “The pied piper of Milwaukee.” This echoed a quote from Taylor, who declared of Meeusen, “He’s become a pied piper for us in the community.”
As anyone familiar with the fairy tale knows, the rat-catching Pied Piper of Hamelin was a villain, not a hero: He lured the town’s children to a mountain cave, never to be seen again, after city fathers refused to pay the piper.
The metaphor was at least apt in that political leaders were being asked to pay the piper for this water idea. But no one in government or the media or any position of leadership seemed to be questioning the contention that Milwaukee was a global leader in water technology. In fact, the evidence for this was rather thin.
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Two key numbers anchored White’s report: The 120 firms and 20,000 workers he claimed were engaged in water technology in the metro area. These were repeated so often, they became unquestioned facts, almost a mantra for the water hub proponents.
It turns out, however, that an actual list of 120 firms has never been publicly released. When asked by Milwaukee Magazine, White ultimately provided the list but noted it was unedited: Some companies have merged or closed, others are missing from the list. Nor does the list provide information on where the firms are located, what they produce, their number of employees or gross sales, or whether they’re subsidiaries of firms based elsewhere.
White’s paper, moreover, refers only to categories of companies, including plumbing fixtures/parts and water play. There’s no way to gauge whether they should even be considered part of a water technology hub. The water play category, for instance, includes makers of docks for boats, White reveals.
Meeusen first told Milwaukee Magazine the 120 firms were all related to water technology, but later admitted that some, such as the water play companies, might be better described as “outliers.”
As for the 20,000 employees, this includes all employees of a firm, whether or not they are involved in water technology. White, for instance, said that all the employees of Rockwell Automation were counted, even though this huge company provides services to a broad range of industries.
White admits his paper, funded by the Water Council, was never intended to be a full-fledged research effort. In short, it was more promotional than academic. Yet for more than a year, no one probed the report’s figures or assumptions, or the idea that Milwaukee could become a colossus of water technology. Until last September.
That’s when Marc Levine, head of UWM’s Center for Economic Development, issued a scathing report critiquing the push to turn UWM into an “entrepreneurial university” to drive economic development. Part of his research also took aim at the idea of knitting university and business forces to create an international water hub.
If White is the good cop, Levine is the bad; if White goes along to get along with civic leaders, Levine relishes challenging their leadership. White rose to become associate dean of UWM’s School of Continuing Education and has done many reports for the Wisconsin Policy Research Institute, the state’s leading conservative think tank. Levine is an unequivocally liberal critic of private sector priorities, from the Brewers’ taxpayer-subsidized stadium to what he considers unrelenting business and public divestment in the city.
Rocky Marcoux, commissioner of the Milwaukee Department of City Development and a bullish proponent of the water hub idea, describes Levine this way: “Sometimes people say the glass is half-empty, sometimes half-full. Marc doesn’t even have a glass.”
Perhaps, but his report was anything but empty. The 129-page paper was typical Levine: a no-holds-barred critique packed with 18 tables, 85 footnotes and 284 works cited. It stood in contrast to White’s 20-page paper with five tables, two footnotes, no works cited and a reliance on anonymous quotes.
“Of the 40 global water companies listed by a Goldman Sachs report as generating the highest revenues,” Levine’s report noted, “none have their U.S. headquarters in Milwaukee.” When all U.S. plants and offices of the global top 40 are considered, Milwaukee ranks seventh nationally, Levine found. Even worse, among major U.S. cities, Milwaukee ranks 19th in water technology patents issued and 21st in the employment of water hydrologists.
Levine also questioned White’s figures of 120 water companies, noting that the Water Council’s directory listed 76 companies. And his research placed the region’s number of water-related jobs at about 7,500, not 20,000.
As for A.O. Smith and Badger Meter, Levine blasted both companies for exporting water jobs out of this city, even as they were promoting the water hub idea. “Over the past decade Badger Meter has invested more in Mexico than it has in Milwaukee,” he wrote. A.O. Smith, meanwhile, announced in 2008 that it would build its R&D center for water heaters in Johnson City, Tenn.
Levine not only took on the city’s political and business power structure. He went after the media, large and small, from the Journal Sentinel to BizTimes Daily, chastising them for being “particularly vociferous and uncritical boosters.”
BizTimes, he noted, reported Milwaukee is home to more water-related companies “than any other city in the United States” – a claim that’s clearly untrue, but was pushed by the Water Council.
The premises behind Milwaukee as a global hub of water technology, Levine contended, are “exaggerated, oversimplified, misleading or simply spurious.” This certainly left room to debate his conclusions. But that’s not what happened. Instead, water proponents simply tried ignoring it. Claus Dunkelberg, a staff water industry specialist with the Water Council, says he’s only read excerpts. Marcoux says he read Levine’s paper “except for the appendices” – but there are no appendices. Even White says he hasn’t read the report.
As for the media, the Journal Sentinel never reported Levine’s research. In November, Mike Gousha oversaw a Marquette Law School forum: “Milwaukee 2015: Water, Jobs, and the Way Forward.” It included representatives of Water Council companies, UWM Chancellor Carlos Santiago and other water hub proponents, but not one critic (and no labor rep at a forum discussing economic development and jobs). Not invited to speak was Levine, not just the most prominent critic, but the leading local researcher on the topic.
Those who didn’t ignore Levine chose to vilify him. Business executive and former journalist John Torinus, who does a weekly column in the Journal Sentinel’s Sunday business section, called Levine’s report “criticism from the cheap seats.” Referring to Levine’s professorship in the history department, he wrote: “Leaders change reality. History professors argue about who won or lost.”
This reduction of Levine to a mere history professor was repeated in an interview JS reporter John Schmid did with Meeusen. Without mentioning Levine by name, Schmid asked Meeusen about a recent university study critical of the water hub idea, and Meeusen noted that the report, after all, was written by a history professor.
Meeusen repeated his criticism in an interview with Milwaukee Magazine: “So now we have two professors – Marc Levine, who says that university’s applied science and research does not drive economic development, and we have Carlos Santiago, who disagrees,” Meeusen said. “Carlos Santiago is an economist; Mark Levine is a history teacher.”
Except that Santiago hasn’t done any research on Milwaukee’s potential as a water hub. Dismissing Levine as a historian doesn’t answer his criticisms, it merely reduces the controversy to an ad hominem exchange. Asked if the Water Council might issue a written response refuting Levine’s criticisms, Meeusen says no. “Nobody wants to give it that much attention, to tell you the truth.”
But Meeusen, at least, has actually read the report. When pressed, he admits Levine is right that the largest water tech companies are not headquartered here. “I am not worried about the number of corporate headquarters,” Meeusen responds. “I am more interested in the number of jobs and the technologies being developed here.”
Nor does Meeusen quibble over the number of companies or employees in water industries. “I agree we could probably go back [to White’s report] and update it,” he says. “But whether you are talking about 10,000 or 20,000 jobs, there is a strong cluster that is here.”
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From the beginning, the proposition that Milwaukee could become the Silicon Valley of Water also made note of related academic research being done locally. But that, too, is hardly unique to this city.
Across the country, universities are bolstering their water-related curricula – from the University of Nebraska, to Case Western in Cleveland, to the University of Michigan, to the “WaterCAMPWS” at the University of Illinois and its groundbreaking research on desalination and water reclamation.
In Milwaukee, Marquette University has launched a water law curriculum, in what the school’s dean trumpeted as “another piece to the larger puzzle of positioning the Milwaukee region as the worldwide destination for water policy and research.”
But the key local academic player is expected to be UWM’s School of Freshwater Sciences, which will be the country’s first such graduate school. After getting the UW regents’ backing last year for a new $50 million facility, the school will begin its interdisciplinary program this fall.
The school builds on UWM’s Great Lakes WATER Institute, the largest academic freshwater research facility on the Great Lakes, its prestige belied by a ramshackle location. Housed at the eastern end of pothole-infested Greenfield Avenue, amid the coal piles and infrastructure of the inner harbor, for three decades the Institute has done groundbreaking research. The faculty is dominated by the academic equivalent of good-ol’ Wisconsin boys and gals who prefer to wear jeans and who are most happy when out in their 70-foot research boat on the lake. Perhaps they haven’t gotten the memo that the new Milwaukee economy may depend upon their efforts.
The institute currently has 12 faculty, with hopes to triple the size for the new graduate school. J. Val Klump, director of the institute, says a handful of students will begin the graduate program next fall, with a goal of about 25 graduate students in five years.
The WATER Institute’s core mission has been “studying the problem of freshwater and how systems operate,” Klump notes. The new graduate school will expand that focus to develop solutions “and take an active role in helping Mother Nature heal. … Some will be on the policy side, and some on the economic side.”
Whether the school can become the key academic driver for water technology businesses and jobs is hardly clear. Training graduate students can certainly be a plus and could provide a trained workforce for water-related companies. But Klump cautions against thinking the school will have a stream of patents and inventions.
“A lot of what we do is not necessarily patentable,” he cautions. One of the school’s goals is to prevent future problems, Klump explains, citing the billions of dollars that could have been saved if research had known in advance the problems of PCBs in the Great Lakes region. Such research is not necessarily a moneymaker, “but it’s a terribly important mission, and that’s one of the reasons the public supports us,” Klump says.
This sounds more like the old-fashioned idea of university research for research’s sake, the kind that predated the entrepreneurial university approach the Water Council desires and Levine has decried. You get the feeling Klump would rather face a Lake Michigan gale than get caught in this crossfire.
The need for a broader approach to such research is reinforced by John Austin, a senior fellow at the Brookings Institution in Washington, D.C., where he directs its Great Lakes Economic Initiative. He argues that any quest to become a water hub must include issues such as restoring the health of the Great Lakes – everything from making sure pollutants don’t get into the water to solving the issue of pharmaceuticals that are dumped down toilets, to using the latest technology to clean water that comes out of the lake.
Improving water quality not only serves the broader public good, but it’s a good investment, he notes, citing a 3-to-1 return for every dollar spent on initiatives like rebuilding sewers and preserving the watershed. What’s more, clean water attracts new businesses and residents. “There is clearly long-term economic benefit to public investment,” Austin says, “so that people can enjoy living and working in Milwaukee because your rivers and lakes are not a cesspool.”
It will be difficult for Milwaukee to market itself as a water technology expert if its own record on water treatment and conservation isn’t impeccable, says John Tonner, an international water consultant based in Mequon. Tonner, whose specialty is advanced water treatment technologies and desalination, says that Milwaukee’s notorious 1993 cryptosporidium crisis hasn’t quite faded from memory in the global marketplace.
“There is still that legacy,” he notes, and it could be used as a motivating force for Milwaukee to become a leader in cutting-edge water treatments that are needed to remove smaller and smaller contaminants. “Just because we’re sitting on a Great Lake and water-rich doesn’t mean our water is ready for use,” he says.
Asked if Milwaukee currently has an advantage in cutting-edge water technologies, Tonner responds, “Not that I am aware of.”
Toner’s assessment is echoed by William Holahan, chair of the economics department at UWM. “The market for water technology globally is incredibly competitive,” he cautions. Other competitors, he contends, “are decades ahead of us.”
A more measured response comes from Mark Partridge, an economist at Ohio State University specializing in regional economic development. Partridge, who spoke at a 2008 Federal Reserve Bank conference on the Great Lakes’ economic future, says there’s no easy answer as to whether Milwaukee can become a water hub.
“My response as an economist is, if it’s something private investors are willing to bet on, that means they have a reasonable belief it will succeed,” he says “But if it’s somebody asking for public monies to subsidize it, that’s when alarm bells should go off. Because that’s money that could go into schools or highways. And you always have to ask, could the money be better used elsewhere?”
However overheated the rhetoric of Meeusen and the Water Council, they have focused attention on what are undeniably assets in Milwaukee. For nearly three decades, the city and the entire state of Wisconsin have fretted about the decline of manufacturing companies and jobs, and talked about the need to remake their old economy and pursue more high-tech industries. The plentiful freshwater of Wisconsin, the academic research aimed at it and what water-related industries we have are certainly worth thinking about strategically.
A case in point is Mayor Tom Barrett’s catchy proposal to take advantage of Lake Michigan and provide reduced-price water to businesses that relocate here. There’s even a clever acronym for the idea: WAVE (water attracting valued employers) districts.
“We must think creatively and capitalize on Milwaukee’s unique competitive advantage,” Barrett and the ever-active Meeusen wrote in an opinion piece in August.
After all, Lake Michigan is part of the world’s largest supply of freshwater and the Milwaukee Water Works has underused capacity. Why not take advantage of that?
Because it’s short-term thinking, answer some critics.
Milwaukee’s water rates are already extremely low by national standards. By further reducing prices, the city not only deprives itself of income that could address other social and economic problems, but undercuts efforts to improve water and energy conservation.
“We need to do with water what we are now belatedly doing with carbon, which is putting a price on it so it drives efficiency,” notes the Brookings Institution’s Austin. “We don’t tax gas in our country very well, which is one reason we have all these gas-guzzlers on the road. That has led to this giant problem of massive greenhouse gases coming out of our tailpipes that we are now trying to figure out how to clean up. … Similarly, the way to help solve water pollution, water runoff and water-wasting is to make water more costly.”
Locally, reaction to Barrett’s idea doesn’t fall along predictable lines. Jim Rowen, a liberal blogger focusing on politics and the environment, believes it’s a good way to woo companies and “a wise use of water as long as there is a conservation element to it.”
But the more conservative Sammis White thinks higher water prices are a better strategy: “That would drive markets for [water conservation] technology, address some of the environmental concerns, and save money in terms of energy because if more people hold water more dear we will likely use less, and 60 percent of wastewater treatment costs are in energy.”
Holahan, who describes himself as a conservative, says reducing Milwaukee’s water prices runs counter to bedrock principles of supply and demand – the equivalent of OPEC countries cutting oil prices because they sit on plentiful fields of petroleum.
One can see the reverse of Milwaukee’s situation in the water-deprived country of Israel. Living in a desert region pushed Israel into becoming a world-recognized leader in desalination, recycling of wastewater and drip irrigation, all considered cutting-edge technologies, unlike the more conventional water heaters and meters produced by Milwaukee. Indeed, Milwaukee might be wise to give up the notion of becoming the Silicon Valley of Water, for Israel has already seized the title.
The most encouraging development for this city is a recently announced, five-year grant of $675,000 the Water Council helped secure from the National Science Foundation. The grant will help UWM and Marquette create a cooperative research center to explore water-related issues. (Badger Meter is one of two companies that will give $50,000 each to the effort.) As promising as this venture sounds, though, it doesn’t guarantee this city will become a nationally significant or even regional water hub. What remains lacking here is a hard-headed assessment of Milwaukee’s real water-related assets, and just how much potential there is to build on them.
For all the complaining that Levine is a history professor, it’s hard to plan for the future without understanding the past. Milwaukee’s recent history offers an instructive lesson about the dangers of unwisely using public money to help create an industrial cluster.
Almost three years ago, tax dollars provided $3 million to build a printing research and technology institute at Waukesha County Technical College. Supporters said it would “serve as the hub for a printing industry cluster.” The Business Journal, citing cluster proponents, said there were 1,000 printing companies with 337,000 employees within a 500-mile radius of the campus. The stat was pure puffery: 500 miles would include Chicago, Detroit, Minneapolis and St. Louis.
The more prosaic reality of the Milwaukee area, alas, had far smaller numbers. The institute ultimately fell far short of training the thousands of workers promised – only 102 employees attended seminars in 2009. The institute then fell behind in bond payments, leaving the technical college the unpleasant option of increasing taxes or cutting back on other projects to repay the taxpayer-backed bonds. In December, the college called the institute a bust and took over its building.
Proponents of the institute, like the water industry boosters, had a compelling name for their dream of a printing hub. They boasted that the institute would make Wisconsin “the Silicon Valley of Printing.”
Barbara Miner is a frequent contributor to Milwaukee Magazine.Write to her at letters@milwaukeemagazine.
