A recent article identified “5 Great Cities for Growing Your Manufacturing Business.” In order, they are: Reno, NV; Chattanooga, TN; Detroit, MI; “Any City,” South Carolina; and Milwaukee, WI. What do these cities have in common? With the exception of Reno, each are located in geographic areas that the U.S. Drought Monitor identifies as being relatively unaffected by drought. (The U.S. Drought Monitor’s map depicts small tinges of “abnormally dry” areas, the first stage in the drought index, in South Carolina and near Chattanooga).
In describing the cities, the article makes no mention of water resources, although Milwaukee’s water economy is identified as providing diversity but not as a factor of production. As Will Sarni and I discussed in Session 10 of The Water Values Podcast, businesses are more and more taking into account water as a risk factor and including water risk in their decision-making process. Water may still not be the end-all, be-all factor when businesses make decisions and perhaps that explains its absence as a factor when identifying the cities in which to grow a manufacturing business. (The article is relatively short, so the author probably did not want to spend time identifying all the factors that went into formulating the list).
As to how water might impact manufacturing in the identified cities, let’s start with Detroit and Milwaukee. These two cities are located on the Great Lakes and have significant fresh water resources. Milwaukee boasts a vibrant water business cluster known and The Water Council (how’s that for branding?), and water-related companies like Badger Meter call Milwaukee home. For manufacturers in these cities, having the right quality of water in the amounts needed is not as significant an issue as it is in other areas of the country. Accordingly, manufacturers dependent upon water resources likely feel relatively safe about their water supplies in these cities.
In Chattanooga, Tennessee, a small abnormally dry area lies nearby according to the U.S. Drought Monitor map. Chattanooga, however, finds itself situated in an area largely unaffected by drought. While the article praises Chattanooga’s telecommunications infrastructure, no mention is made of water resources.
Likewise, for “Any City,” South Carolina, only small tinges of abnormally dry areas are located in the state. And the identified areas are not proximate to the main cities in South Carolina the article identifies: Charleston, Columbia, Greenville, Spartanburg, and Summerville. As with Chattanooga, no mention is made of water resources. As with Detroit and Milwaukee, manufacturers dependent upon water likely deem the water risk low in Chattanooga and South Carolina.
That brings us to the top city in which to grow a manufacturing business: Reno, Nevada, which is all the way at the other end of the spectrum in the worst category of drought, Exceptional Drought. Ironically, I just got off a call with a colleague from my firm’s Reno office about a water provider we’re representing, and I asked him about Reno’s recent successes in attracting business. He indicated that it was part lower cost of living than California, part proximity to California (with Tesla, the executives could still live in California and be at the facility in 3 hours or less), part tax structure and economic development incentives, which he’s helped some companies navigate. Water is certainly an issue, but these companies apparently have deemed that the water risk is manageable.
And that’s perhaps the lesson with Reno topping the list. Water is a significant business risk, but that risk is manageable. We can implement pricing models that encourage conservation. We can reduce, reuse and recycle water to become significantly more efficient in our usage. Those efficiency gains can allow us to do more with less. Water risk won’t be going away any time soon, and we can learn to adapt to this new normal we’re experiencing with water resources.
One other note. I found it interesting that for 4 of the 5 cities identified as great cities in which to grow a manufacturing business, automobiles were the predominant industry cited: Tesla (Reno), the Big Three (Detroit), BMW (Spartanburg), and Volkswagen (Chattanooga). And the other city, Milwaukee, is home to Harley-Davidson, the maker of iconic motorcycles. I don’t know what the article’s underlying emphasis on the auto sector means – probably that the U.S. auto sector is booming – but it would be interesting to know what factors went into identifying these cities as great locations to grow a manufacturing business and whether and how water factored into the ultimate determination.