Struggling Great Lakes region pinning economic hopes on water

May 23, 2013: A view of downtown Milwaukee from the Kinnickinnic River, not far from where it connects with Lake Michigan. (AP)

A century ago, the seven-story brick building a few blocks from downtown was a factory -- a symbol of an era when Milwaukee and other cities ringing the Great Lakes were industrial powerhouses churning out steel, automobiles and appliances. Eventually the region's manufacturing core crumbled, and the structure became an all-but-forgotten warehouse.

Now it's getting a makeover and a new mission. It will reopen this summer as a hive of business experimentation swarming with scientists, engineers and entrepreneurs. They'll share a lab where new technologies can be tested. Office suites will host startup companies, including one devising a system for cultivating algae as biofuel, another producing a type of pavement that lets rainwater seep into the ground instead of flooding sewers.

The center is part of a broader effort unfolding across the Great Lakes region to regain lost prosperity by developing a "blue economy" -- a network of industries that develop products and services related to water, from pump and valve manufacturers to resorts offering vacations along redeveloped lakeshores.

As growing water scarcity casts a shadow over the economic boom in warmer states, many in the long-scorned northlands are hoping they can finally make their abundance of freshwater a magnet for businesses and jobs that are now going elsewhere. The idea is either a perfect nexus of opportunity and timing, or-- as some in the Sun Belt believe-- just another longshot attempt by a cold and downtrodden region to reverse history.

In the eight Great Lakes states, organizations devoted to the venture are springing up, with headquarters, government grants and binders full of Power Points and five-year plans. Universities are establishing freshwater science and engineering programs. Businesses are developing products such as advanced filtration systems for sale in countries where water isn't just scarce, but also polluted. Milwaukee has taken a pivotal role from its perch beside Lake Michigan, with $83.5 million in public and private money budgeted over the next year to support water-related businesses and research.

"We all recognize that water has become more and more of a precious commodity," said Tom Barrett, mayor of Milwaukee. "We have to do a much better job of promoting it."

The Great Lakes -- Superior, Huron, Michigan, Erie and Ontario -- hold nearly one-fifth of the freshwater on the Earth's surface. But in one of the nation's most vivid anomalies, some of the saddest, most bedraggled urban wastelands sit on the shores of the vast inland seas. After the collapse of heavy manufacturing unleashed an exodus of jobs to the South and West, one proposal after another for turning things around fell short.

But drought has gripped the Sun Belt in recent years, and federal scientists predict recurrent periods similar to the 1930s Dust Bowl if climate change models prove accurate. Worried leaders there are floating increasingly radical proposals, from billion-dollar pipelines traversing hundreds of miles to creating artificial lakes.

"I don't like to get into an us-versus-them situation, but the drought in these other locations is going to get worse and worse and what we have to offer is going to get more and more attractive," said David Ullrich, executive director of an organization representing the Great Lakes region's mayors.

Sun Belt leaders, while acknowledging the problem, scoff at the idea of companies choosing the Midwest instead. They say they're already working on solutions. Texas voters in 2011 authorized a $6 billion bond issue for water infrastructure, including building more than two dozen reservoirs in coming decades.

Besides just warm weather, "We provide economic opportunity," said Tom Hayden, mayor of the Flower Mound, Texas, a Dallas suburb of 70,000 where the population has tripled in the past two decades. "We help businesses grow instead of seeing how much we can squeeze them with taxes."

Water availability is just one factor that influences where businesses locate, said Jason Morrison of the Pacific Institute, author of a report on likely economic fallout from a drier climate. Still, he acknowledged, the outlook is disconcerting.

"It's pretty certain that water-related risk for business will increase over the long haul in more places," he said.

Al Henes, who runs a brewery and pub in Flagstaff, Ariz., has waterless urinals and reuses water in his beer-making operation, but worries about the future as housing developments and golf courses keep springing up. Even so, he said, he's not ready to forsake his beloved canyon country's stunning scenery and outdoorsy lifestyle.

"You guys get a little colder up there," Henes said dryly. Recalling childhood winter visits with his grandmother in Michigan, he added: "Some of my words would just freeze in my mouth and fall on the ground and shatter."

Milwaukee reflects the grandeur of the lake region's past as well as its decline and the quest to rebuild. A downtown statue of "The Fonz" evokes wistful memories of "Happy Days" prosperity, when more than half of the adult workforce had factory jobs with manufacturers like Allis-Chalmers, now defunct. Some warehouses and storefronts still sit empty, and the remnants of beer giants Schlitz, Pabst and Blatz have been turned to other uses.

Though brewing is a shadow of its former self here, local leaders are newly mindful that the industry, which used huge volumes of water, attracted other businesses that still remain vibrant. Worldwide, water technology-- pumps, valves and more-- generates $500 billion a year and is growing rapidly, said John Austin, director of the Brookings Institution's Great Lakes Economic Initiative.

The Milwaukee-based Water Council, a research and networking organization, now has more than 100 members, including the brewer MillerCoors. The technology center is expected to host a half-dozen startups at a time, with frequent turnover as companies grow and move to bigger locations.

John Gurda, a local historian, said it's about time Milwaukee gave up chasing the same high tech medicine and computer software companies sought by every other city.

"The strength of this (water-oriented) strategy is that it's playing to Milwaukee's natural and historical strengths."

But Austin, the Brookings analyst, said economic revival also depends on doing more to make the region's 10,000 miles of Great Lakes shoreline and many rivers and inland lakes a draw for tourists and for service companies that want a beautiful setting.

During the first half of the 20th century, the steel plants, paper mills and auto factories that employed millions along the lakes also left behind blight. The Lake Michigan city of Gary, Ind., is riddled with the hulks of abandoned buildings and the Grand Calumet River bottom is caked with a 20-foot-deep layer of gunk including toxic PCBs.

An Obama administration initiative has pumped more than $1 billion into Great Lakes environmental cleanup, and a regional partnership has raised hundreds of millions to beautify Gary's industrial waterfront.

"People will pay more for an office with a water view," Austin said. "But not if it's a cesspool."