Moving around data turns out to demand a lot of Wisconsin-made metal
If data centers are supposed to wipe out everyone’s job, they’re making a pathetic go of it in Waukesha, where a manufacturer with a 120-year-old plant is hiring 500 people.
Analysts note that data centers — especially the “hyperscale” ones like those being built in Mount Pleasant, Port Washington and Beaver Dam, along with half the towns in America — are “capital intensive” rather than “labor intensive,” meaning they have more machinery than staff. The scoffing-critic version of this says that data center opportunities amount to a handful of janitors.
That scoffing overlooks key facts about both the centers themselves and the manufacturers who make the stuff inside.
The one local hyperscale center already operating, at Microsoft’s Mount Pleasant site, currently employs about 550 operating staff, a spokesman said Thursday, and managers “expect this number will continue to grow over time.” The company — so eager for technical help, it funded a “data center academy” at Gateway Technical College — had 16 job openings listed this week, the two most recent for engineers at six-figure salaries.
Pretty high-end janitorial work.
Since data centers are capital intensive — there has been $700 billion in capital spending nationwide to build and outfit them this year alone — Wisconsin, a state that manufactures capital goods, is benefiting immensely.
Take the expansion at Waukesha Engine. The venerable maker of big internal combustion engines that run on natural gas is thriving because of “rising demand for decentralized power solutions,” the company said — that is, places looking to generate their own electricity, a demand driven by data centers.
The plant on St. Paul Avenue had been shuffled from one owner to the next, but it’s been bought by Innio, a German firm that now calls Waukesha its “co-headquarters” and is bringing assembly back, adding a testing wing, and hiring engineers and machinists. “We are powering the AI revolution,” said Innio’s CEO in July after one especially large order related to data centers’ on-site power plants.
It’s not just them. A stroll through recent headlines finds the data center boom nationwide revving up the Milwaukee area.
Data centers use lots of electricity. Milwaukee-based Regal Rexnord makes equipment to manage electricity. By last February, it had sold more than $700 million in such apparatus to data centers.
Data centers require backup generators. Genesee-based Generac, which makes them, in July said it won another $700 million order from a data center operator, adding to a backlog of $1.6 billion in data center orders. It has added 800 employees to its industrial generator staff in two years and is buying up factory space.
Backup generators need fuel, which goes in tanks. Milwaukee-based Tramont makes those and is seeing business surging on the data center trade, so it, too, is buying more factory space.
All those computers have to sit on something. Allenton-based Maysteel, around since the Depression, turns metal into the racks that hold data centers’ servers and cabinets that contain them. It opened a new factory in Germantown to handle the surge. Then it was bought by South Milwaukee-based Steele Solutions, another metal-bender looking to help handle the surge.
Data centers need to be cooled. Racine-based Modine, which started making tractor radiators 110 years ago, in May won a $4 billion deal to sell industrial chillers to a data center developer. This means 300 new hires at a plant it bought in Franklin. In New Berlin, the 125-year-old Milwaukee Valve makes parts for cooling systems. It is thriving on data centers’ surging demand. “It’s a more intensive cooling with computer servers, but it’s not different than what we’ve done in commercial HVAC for 100 years,” its marketing director told the Milwaukee Business Journal.
On and on it goes, this revival of making stuff — traditionally a chief occupation of Wisconsinites. The demanders of moratoriums often say that, unlike proper manufacturing, data centers merely move around electrons and manipulate memes. There are arguments worth having about the uses of artificial intelligence, but the physical nodes of AI — not to mention the rest of the internet, from e-commerce to public records — are much more material than meme, no small part of that material being made in Wisconsin.
This surge of hiring, 50 or 500 at a time — no government planned it. For years the Midwest economy has been discussed as something needing a public policy solution: What shall we do about the Rust Belt? Now, large language models and their need for a place to reside are answering the question, so long as public policy doesn’t interfere too much.
The lesson is in how markets mean opportunity in ways that people can’t necessarily foresee. Remember how displaced manufacturing workers were told their best bet was to take up nursing? Nothing against nursing — it’s important, noble work — but it’s not to everyone’s taste. The free-market innovation that set off the data center tsunami also presented a sudden need for a lot more giant natural-gas engines and the guys who make them. Government commissions didn’t have to map that out; people in the business could figure it out faster anyhow.
Welcome to the boom, brought to you by economic freedom.
Patrick McIlheran is executive editor at the Badger Institute.
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