Great Lakes neighbors bet on wet

By Rod Kackley Crain’s Detroit Business October 8 2012 

Michigan’s more than 3,000 miles of Great Lakes shoreline — combined with all of its rivers, streams and inland lakes — hold the potential to wash the rust off the state. 

In neighboring Wisconsin and Ontario, that potential is starting to be realized for this “blue economy,” where water is the fuel for economic development. 

For now, Michigan trails both.

Leading the initial efforts in the state are Muskegon County on the west side and Macomb County on the east — without much help from Washington or Lansing and relatively little coordination between the counties, which are separated by a three-hour trip on I-96. 

“However, by raising the level of what we are doing, we are hoping the state agencies as well as the coordinating federal agencies will start to take notice,” said Gerry Santoro, program manager at the Macomb County Department of Planning & Economic Development.

Both Santoro and Cindy Larson, president of the Muskegon Lakeshore Chamber of Commerce, hope to realize the promise of what a 2012Brookings Institution report on the Great Lakes described as a “$500 billion-and-growing global water technology business sector.” 

This new economic model includes everything from the controversial notion of selling water to thirsty states and even overseas, to repairing aging water and sewer systems, to finding new sources of energy in the water and algae of lakes and rivers, to building new tourism and recreation centers — along with the research needed to tap these revenue streams. 

While Macomb County’s efforts focus on recreation and tourism, Muskegon offers, among other things, the only major commercial port on the east side of Lake Michigan. 

No one is predicting how many jobs the blue economy could create, because it is still so fractionalized. But it appears poised to take on greater importance, given U.S. government predictions that 36 states could suffer water shortages next year, following this year’s drought. 

“Water scarcity is a huge driver, and it is not getting better,” said Chris Webb, co-director of theEngineering Society of Detroit. “Major companies making semiconductors in Spain, India and Asia are now facing community competition for potable water.”

Said Santoro: “The rest of the nation still refers to us as the Rust Belt. But 10 years from now, when they have no water supply because they have built out so much there is no water table left, who are they going to come crying to?” 

On the east side of the state, the Michigan Economic Development Corp. is involved in developing water technologies, pumping $4 million each into a project in Flint to develop biogas from municipal wastewater and another project in Alpena that involves the biorefinery conversion of industrial wastewater from a hardwood processing plant into ethanol and other chemicals that can be reused.

An additional $1 million in MEDC money has gone to H2Opportunities in Oakland County. Another key facilitator in the state is Sustainable Water Works, a water technology incubator in Wayne State University’s TechTown.

But the MEDC’s director of water technologies, Gil Pezza, admits that “many technologies never reach the market (in Michigan) for lack of financing for demonstration projects.” 

In Ontario, in contrast, the provincial government has invested more than $49 million in more than 100 water-related projects over the past several years. The province claims more than 900 businesses and 22,000 employees in its water industry. 

Ontario also has invested $8.9 million in four projects, including one involving new water treatment technologies that are less expensive and time-consuming than current cleanup procedures. 

And the Wisconsin Economic Development Corp. has committed $750,000 over three years to help startups pay their rent in the Milwaukee Water Council’s Water Technology Research and Business Accelerator, scheduled to open along Lake Michigan in early 2013.

Milwaukee economic developers saw the opportunity several years ago, said Dean Amhaus, executive director of the water council. 

Milwaukee, Amhaus said, had two things going for it: lots of heavy manufacturing and plenty of companies making beer. That meant they already had manufacturers making the meters, valves and devices that are part of the water-related industries. 

Along with heavy manufacturers came pollution, so another industry was spawned to “help those companies clean up their act,” he said. 

“It is only in the last six years that we turned the picture 90 degrees and saw it differently,” Amhaus said. “We saw that there was a connection between these companies, all around water.” 

The Milwaukee Water Council has blended that private-sector commitment with the Great Lakes Water Institute — the largest freshwater research institute on the Great Lakes. It includes theUniversity of Wisconsin-Milwaukee School of Freshwater Sciences

Ontario’s minister of economic development and innovation, Brad Duguid, said the move toward a blue economy in his province followed a similar path. 

“Over the course of time, we had developed a great deal of domestic expertise on clean-water technology,” Duguid said. “So we took that strength, recognized that this is a $400 billion global technology market and decided that Ontario needed to be a player.” 

Is the strategy to launch businesses, grow second-stage companies or attract businesses from outside Ontario? 

“It is all of the above,” Duguid said. 

The MEDC’s Pezza said his agency is working “directly and indirectly with numerous companies” including Miya, an Israeli-based company that recently opened an office in Michigan through its Canadian company, Veritec.

Washington’s response 

Democratic Sen. Carl Levin and his Republican colleague from Illinois, Mark Kirk, cited the importance of the Great Lakes to the region’s economy when, just before Congress recessed for the November elections, they introduced legislation that would formally authorize the Great Lakes Restoration Initiative, which includes a federal inter-agency program designed to address the most significant problems in the Great Lakes ecosystem, 

The bill also would reauthorize the Great Lakes Legacy program, which supports the removal of contaminated sediments, and the Great Lakes National Program Office, which handles Great Lakes matters for the U.S. Environmental Protection Agency. 

Macomb and Muskegon county officials are pushing forward — with or without Lansing and Washington. 

Muskegon officials are focusing efforts on Lake Michigan and Muskegon Lake research, in addition to recruiting manufacturers that depend on a ready source of clean water. Food processing is at the top of that list, but every manufacturer depends on clean water. 

“Classic auto assembly plants use the equivalent of two Detroit Zoo water towers or over 2 million gallons of water each day,” said the Engineering Society’s Webb.

Because so many manufacturers need so much water, Webb thinks they are going to be drawn to Michigan.

“Water,” he said, “is the next oil.” 

Over in Muskegon, Larsen said, “We have started to rebrand our community so that every time you hear the name “Muskegon,’ you will associate it with water.” 

They are also looking at erecting wind turbine farms on Lake Michigan as well as doing more to publicize Muskegon’s deep-water port, which can handle oceangoing vessels. 

Another facet of Muskegon County’s blue economy effort is the Grand Valley State University Annis Water Resources Institute. It is involved in a number of research programs, including the possible use of algae to create biofuels. The institute is one of eight university-based water research facilities in Michigan.

In Macomb County, Santoro is focused on enhancing recreation, tourism and all the business opportunities that are part of Macomb’s blue economy initiative. His team works with the governments of six communities that are on the main branch of the Clinton River — Sterling Heights; Shelby, Clinton and Harrison townships; Mt. Clemens; and Utica — to clean debris out of the main branch of the Clinton River. 

“We want to open up the river completely for recreational paddleboarding, one of the fastest-growing recreational sports in the U.S.,” Santoro said. “Our local outfitters can’t keep kayaks and stand-up paddleboards in stock.” 

Utica officials have put in a river walk and boat launch in Heritage Park. Several more boat launches could be opened soon in that city and Sterling Heights, Santoro said. 

He also said Mt. Clemens officials are reopening the old downtown boathouse at the city’s public marina and could contract with a canoe livery for day trips out of the city’s downtown district. 

New Baltimore, with its two public beaches along Lake St. Clair and historic downtown district, could see the addition of art galleries, specialty shops, bed-and-breakfasts or small hotels, along with a marina now under construction. 

Santoro’s team is also looking at creating a walkable marina district — “maybe not on the scale ofNavy Pier, but something of significance where there could be other recreational activities, restaurants, maybe a small museum or an aquarium,” he said. “We are also looking to land a major hotel on the shoreline of Lake St. Clair.”

In addition, Macomb Community College and Wayne State University have been talking about creating a research laboratory and education center on Lake St. Clair. The center remains in exploratory talks as the two schools and Macomb County clarify its function. 

Macomb County Executive Mark Hackel has said he envisions the center as part of a regional economic development strategy for Lake St. Clair. 

Movement in Michigan 

John Austin, a member of the Michigan State Board of Education and a co-author of a Brookings Institution study of the Great Lakes region, said even more could be accomplished with an increase in state government support. Last month, Austin was appointed to head the new Michigan Economic Center, part of the nonprofit Prima Civitas Foundation, an economic development organization with ties to Michigan State University.

He is working to form a statewide coalition to prompt the Snyder administration “to see the blue economy opportunity and put some additional energy into support for communities that are trying to grow their blue economy footprint.” 

Austin thinks Michigan has to find communities such as Muskegon and Macomb counties, Traverse City and Detroit, all with significant waterfronts, and then “clean up the water and the waterfronts. Redevelop them and conserve them.” 

“This is expensive work,” Austin said. “Local communities usually can’t do it alone. It helps to have some sources of state and federal infrastructure support.” 

While public sector support has been important to Ontario’s effort to foster more water-centric innovation, Duguid said, government officials have not led the effort. That has been up to the private sector, while the government is there “to stimulate growth in the sector and provide some incentive.” 

Duguid holds out the possibility of partnering with Michigan to bring more water-technology-related businesses to the Great Lakes region. History has shown the benefits of that cross-border partnership, Duguid argued, pointing to the auto industry. 

“It is almost like there is no border between us, from a business perspective,” he said. “I think the world sees us as a cluster and one of the most desirable clusters for business, commerce and industry.”