AS HE gesticulates on the rooftop terrace of the new Kimpton Hotel, Dennis Klein, a retired property developer, is visibly proud. One of his sons developed the hotel in Milwaukee’s third ward, a project that attracted scepticism from local grandees, who doubted anyone wanted it. Another son developed some of the buildings that are visible below. The third ward was once a dreary part of town filled with warehouses. In 1984 it had only 28 residents, says Mr Klein. Today it has boutiques, cafés, bars and many thousands of oat milk-drinking hipsters.
The Midwest is not monolithic but rather a tale of at least two rustbelts, says John Austin of the Michigan Economic Centre, a think-tank. Bigger old industrial cities such as Minneapolis, which used to live off flour-milling, Pittsburgh, which made steel for the whole country, and Indianapolis, once home to dozens of carmakers, have turned a corner. Not long ago Milwaukee was in decline, like many old industrial cities in the rustbelt. Some of these cities are now thriving; others are sinking.
Wisconsin’s biggest city was prosperous before, thanks to German brewers such as Schlitz, Pabst and Miller, a thriving tannery industry and a bustling port on the shores of Lake Michigan. Nearly half of its workforce was employed in manufacturing in the couple of decades after 1945. As African-Americans fled the South to work in its factories, Milwaukee became deeply segregated. This pattern has endured: Milwaukee came top of a recent ranking of America’s most segregated cities. Unskilled workers were hit hard when, under pressure from globalisation and automation, employers downsized, moved or simply shut down.
Over the past five years, however, around 2,500 hotel rooms have been added to its downtown. Northwestern Mutual Life Insurance spent an estimated $450m to build the Tower and Commons 32-storey skyscraper, which was completed last year and provides office space for 2,400 employees. The state of Wisconsin and the owners of the Milwaukee Bucks, the local basketball team, forked out $250m each for a socking new arena that will open soon. It is hard to find plumbers or carpenters in the area, as they are in such high demand. About $5bn has been invested in downtown property in the past 15 years, says Tim Sheehy of the Metro Milwaukee Association of Commerce.
Milwaukee makes small engines, water heaters, fan blades for jet engines and generators. The share of the workforce employed in manufacturing (14%) is the second-highest of any American city, according to Milwaukee’s business lobby. But there is plenty more going on, too. Northwestern Mutual, a life insurer, Kohl’s, a chain of department stores, Manpower, a staffing firm, and Harley Davidson picked Milwaukee for their headquarters. The city has majestic architecture, leafy parks, a fine site at the confluence of three rivers on the shores of Lake Michigan and craft beer-fuelled summer festivals. It recently managed to bag America’s largest-ever foreign investment. Incentivised by $3bn in tax breaks and subsidies from the state, Taiwan’s Foxconn, the world’s biggest contract manufacturer, promised to create up to 13,000 jobs with a $10bn investment in Racine, one of Milwaukee’s suburbs.
While many of the Midwest’s bigger cities are thriving, tier-two cities are finding life much harder. Gary, Indiana, and Flint, Michigan are two extreme examples of former company towns that have not yet recovered from the loss of their anchor employer. Alan Berube and Cecile Murray of Brookings, a think-tank, have looked at 185 counties with a population of 50,000 or more where manufacturing once accounted for a fifth of jobs. Of the 63 such places in the Midwest, more than half have seen net job outflows since 1970. Mr Berube is pessimistic about the fortunes of smaller cities. Unless they have a close connection to a bigger metropolis, are home to a first-class university or manage to find a niche, he says, they will struggle.
College towns such as Ann Arbor in Michigan, home of the University of Michigan; Champaign-Urbana, which has the University of Illinois; Iowa City (University of Iowa) and West Lafayette (Purdue University) are flourishing. Add in the bigger cities—Chicago is home to two of the world’s leading universities (the University of Chicago and Northwestern), while Pittsburgh has the University of Pittsburgh and Carnegie Mellon—and the Midwest has 20 of the world’s top 200 universities.
Not every town can have a prestigious university, though. Some, such as Kalamazoo, Michigan (population 75,000) and Warsaw, Indiana (population 15,000), have managed well without. Kalamazoo suffered a painful blow when Pfizer and Upjohn, two pharma giants, closed their factories, but it managed to keep some of the talented scientists and help them to start new biotech firms. To the envy of other cities, it is offering all graduates of its high schools the “Kalamazoo Promise”, a free college education. This is possible only thanks to a fabulously munificent philanthropist, but it has played a big part in reversing the city’s exodus of people. Warsaw found its niche as the nation’s chief maker of prosthetic limbs. Jasper (population 15,000) in Indiana, a city proud of its Germanic roots in Pfaffenweiler in the foothills of the Black Forest, is doing well with advanced manufacturing industries.
As the successful parts pull away from the rest, the Midwest will become a little less midwestern. The region has long been more equal than the rest of the country: that is likely to change. It is often said to be either in decline or to be experiencing a renaissance. In fact the Midwest is doing both at the same time.