Foxconn's needs for water underscore an economic advantage for southeastern Wisconsin

Foxconn Technology Group’s interest in southeastern Wisconsin, where the Asian electronics manufacturer is considering building a multibillion-dollar industrial campus, underscores an often-overlooked economic advantage for a region burdened with a Rust Belt image:

It has abundant access to water, an increasingly scarce commodity that analysts say is used in prodigious amounts in making the flat-panel displays that the new plant would likely produce.

Racine County and Kenosha County are nestled up against the Lake Michigan shoreline and boast a nearly inexhaustible supply of fresh water, at a time when parts of California, Arizona and Nevada as well as China, India, Singapore and Brazil have been forced to resort to water-use restrictions.

While declining to discuss the Foxconn situation directly, Edward St. Peter, the general manager of the Kenosha Water Utility, says he never tires of boasting that the Great Lakes comprise 25% of the world's surface supply of fresh water. He can stare out of his office window at Lake Michigan.

"I brag all the time that we have an economic advantage," St. Peter said.

Many economists as well as Milwaukee-area civic leaders argue that regions with reliable water access stand to benefit as the world’s supplies become ever more polluted and scarce.

"The Great Lakes have the potential to be fit for the water-intensive industries of the 21st century," said Seth M. Siegel, an entrepreneur who advises global water organizations and is a senior fellow at the Center for Water Policy at the University of Wisconsin-Milwaukee.

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A long roster of industries that are in growth mode — microchip fabricators, pharmaceutical makers, internet data centers and makers of photo-voltaic solar-power panels, to name a few — require torrents of water to stay in business, Siegel said.

"There is no question we are facing a water scarcity crisis," Siegel said. "Every day or two, I tweet about another water scarcity crisis in the U.S. and around the world. This is not a fanciful idea."

The Milwaukee 7, an industrial recruitment consortium for the seven counties of southeastern Wisconsin, has begun using proximity to water as one of its selling points, said Kevin Shafer, executive director of the Milwaukee Metropolitan Sewerage District and one of the region's spokesmen for water-driven economic development.

But until a company like Foxconn makes a meaningful industrial investment, that debate remains more theoretical than tangible. And clearly the company has weighed that part of the equation as it has examined potential U.S. sites.

"Foxconn has been in contact with the water utility and wastewater utility authorities in Racine," inquiring about how much demand they can handle, said Racine Mayor Dennis Wiser.

Like nearly everyone with any involvement in the Foxconn deal, Keith Haas, general manager of the Racine Water Utility, declined to comment on any requests about water capacity from Foxconn.

But David Garman, chief technology officer at Milwaukee's Water Council trade group and vice chancellor of water technology research at UWM, said Racine's water purification plants operate at just 30% to 40% of their design capacity, meaning Racine has an immediate additional daily capacity of 5 million to 7 million gallons.

Next door in Kenosha County, the water utility pumps 13 million gallons a day but has the capacity to treat over 40 million gallons a day, St. Peter said.

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While Foxconn's main production base is on mainland China, its headquarters are in Taiwan. And the Taiwanese magazine Business Weekly recently reported that proximity to the Great Lakes is an important consideration for Foxconn.

Foxconn ranks as the world’s largest contract manufacturer of consumer electronics, producing products for brands including Apple, Dell, Hewlett-Packard, Sony and Toshiba.

Foxconn has other reasons to look at Wisconsin, but some of those are more politically controlled than economically based. The state is expected to offer a generous package of subsidies; Racine lies within the district of the U.S. House Speaker Paul Ryan, who supports the project; and amid an unusually strong anti-trade political environment, a U.S. investment could avert the threat of trade sanctions and protect Foxconn’s exports of made-in-China electronics.

Nearly all flat-panel displays are manufactured in Asia, and many American water engineers said they are unfamiliar with that industry's specific water needs. But Garman at UWM said water is essential for "clean room" operations — assembly areas that are common in producing micro-electrical components, where running water is used to help keep the environment free of dust and particles.

Many electrical component makers run water through additional filtering processes to create an ultra-pure supply of water, which is used to rinse components of even the most microscopic particles. 

For more than a century, water-intensive industries like beer breweries, leather tanneries and engine casters prospered in southeastern Wisconsin. In Kenosha, St. Peter recalls when American Motors Corp. guzzled massive volumes just to cool its huge welding operations. That plant closed in 2010.

Racine Mayor Wiser said he would welcome the recognition that water is an economic trump card in a region where residents have grown resigned to factory shutdowns, leaving "a feeling that there's something wrong."

The recognition that water supplies influence economics, however, is relatively new, even if it seems intuitive, said Will Sarni, founder of Water Foundry LLC, a Colorado-based water strategies consultant to multinational companies.

Many corporate relocation services only recently began to evaluate water availability and quality, Sarni said. 

"It's not quite acknowledged in the mainstream," he said.