The Capital of Water

ORIGINAL: Forbes

3/27/2013

This story appears in the April 15, 2013 issue of Forbes. 

Badger Meter CEO Rich Meeusen knows how to handle water 

A BRUTAL JANUARY DAY in Milwaukee: wind chill at 18-below, the city shivering beneath a thin blanket of crunchy snow. The landscape is lifeless, except for a narrow cut of the Menomonee River carving through the vacant Reed Street Yards just south of downtown. Circles of steam make it look like a natural hot spring, but it’s just warm water being discharged from a nearby power plant on its way to Lake Michigan, a mile away. It’s a reminder that even in its bleakest days, Milwaukee always has water. Lots of water. 

Nestled on the western shore of Lake Michigan, at the confluence of three rivers–the Milwaukee, the Menomonee and the Kinnickinnic–this economically battered metro grew up on water-intensive industries like fur-trading, meatpacking, tanning and brewing. And while they are long gone or, in the case of brewing, smaller, the suppliers and skilled machinists that served them are still around, building useful things like water meters, pumps and plumbing fixtures–and the city’s future. 

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Implausible as it might sound, Milwaukee is transforming itself from a dying industrial center into a technology mecca–a water technology mecca. The region is home to more than 150 water-related companies, including giants like A.O. Smith (water heaters), Badger Meter (water meters), Kohler (faucets and toilets), Siemens (water filtration), Veolia (sewage filtration) and Pentair (flow management and filtration). 

Now a score of water-related startups are laying down roots here, too, spun off from local universities or encouraged by new state financing initiatives, the proximity of skilled labor and, above all, a booming business opportunity. The global water industry is estimated at $483 billion and growing several percentage points a year, according to Global Water Intelligence. One-fifth of the world’s population lacks access to clean water, and by 2025, 1.8 billion people will be living in areas where water is scarce. 

For Milwaukee that’s a big opportunity. “We know how to handle water,” says Richard Meeusen, chief executive of Badger Meter, who has led the redevelopment charge. Touring A.O. Smith’s research facilities with CEO Paul Jones in 2007, Meeusen was struck by the similarities of their work. They convened a meeting of 80 local businesses and civic leaders, which gave birth to the Water Council, a nonprofit organization that brings together the region’s water technology companies and universities. The goals are simple: support economic growth in the region, attract new talent and develop the technology to solve the world’s water problems. “We’re going to position Milwaukee as the Silicon Valley of water technology,” Meeusen says. 

He knew it wouldn’t work without building an entire ecosystem around the water industry. His favorite analogy involves Walt Disney. In 1955 the entertainment entrepreneur opened Disneyland on the site of an orange grove in Anaheim, Calif. For the next 20 years, however, the community did nothing to further position itself as a tourist destination. As Meeusen tells it, haphazard development around the park left Disneyland isolated in the middle of an urban area. 

In the early 1960s Disney sought to replicate Disneyland in Orlando, but on a much grander scale, as a regional resort. The company worked closely with local governments and universities to create an entire tourism industry in central Florida. Today the University of Central Florida is one of the nation’s top schools for travel and tourism. 

“I asked people in Milwaukee: Do we want to be like Anaheim or Orlando?” Meeusen says. 

The schools listened. The University of Wisconsin-Milwaukee created the School of Freshwater Sciences, the only graduate program of its kind in the country. Another UW campus, in Whitewater, introduced a minor concentration in water business. 

With help from a National Science Foundation grant, Milwaukee created a collaborative research center that links together the research from UW-Milwaukee, Marquette University and six area businesses. In one lab at UWM researchers discovered how to manipulate heat and light to speed up the growth of yellow perch, increasing the food yield by 12 times. An Indiana fish-farming company, Bell Aquaculture, invested $50 million on applying the technology. 

This summer a 100-year-old box factory will reopen as the new International Water Technology Center, a seven-story research hub and business accelerator for water-related companies and promising startups. The state-funded program will provide grants of $50,000 each to six water-tech startups. Here, grad students and entrepreneurs will share facilities, like a state-of-the-art water flow lab, with 30-year industry veterans. The expectation is that as the first startups get up and running, new ones will take their place, generating one company after another. 

In an era where many municipalities are struggling financially, Milwaukee’s success is obviously attracting interest. Data are hard to come by, but so far there’s been an $80 million investment in buildings and infrastructure from a variety of sources, including $22 million in private money for the business accelerator. Harvard is preparing a case study on the city’s efforts. 

“The Milwaukee example was particularly striking because it wasn’t high tech. It was in a different arena,” said Harvard professor Rosabeth Moss Kanter. “It required a lot of imagination. It meant reframing people who are making pipes and valves to being in the water business.” 

All agree that it worked because business leaders didn’t let the effort get bogged down by government-run initiatives or rigid master plans. Mayor Tom Barrett couldn’t be happier. “It is first and foremost a private initiative,” he said. “If it had started at the public end, we would be hustling to get private sector involvement.” 

Focus, says Meeusen, is the key. “If you’re in the country music business, you don’t belong in Milwaukee. But if you’re an expert in water technology, you belong in Milwaukee.”