Evening star., 1949-08-21
Reasons for
Dixie Plant
BOOnLiSted
Other Factors Ahead
of Cheap Labor in,
Development
By Francis P. DouaIos

The idea that the postwar in
dustrial expansion in the South is
due primarily to cheap" labor is
exploded by . study Of why 88
plants were established in that
region since the war.
The South attracted the plants
because it offers an expanding
market and because 1t is . source
If raw materials and power. The
factor Of cheap" labor ran 4 poor
third, despite the fact most peo-
pie believe that is the chief at
traction the South has to offer.
/ This is the most striking con-
clusion in the study made by the
National Planning Association S
Committee on the South. which
has Just recently been published
in book form under the title,
why Industry Moves South"
Move Near Consumers
According to the report OF the
survey, IS per cent Of the plants
were Influenced by the rising i'm
portance Of the South as market
for industrial and consumer goods.
There was q desire or need to
get production near the consum-
erS.
Another 80 per cent were estab-
lished In the South to be near
the raw materials or the sources
of energy-natural gas and cleo
tricity.
Labor conditions attracted Is
per cent, and they were interested
chiefly in an adequate supply OF
labor rather than cheap" labor.
Furthermore, those plants To-
Gated in the, South because OF the
market and raw materials factors
were larger than those established
there because of labor conditions.
No manufacturing unit OF those
attracted by labor>supply consid-
erations is estimated to employ
more than 1000 workers. On the
other hand, Is per cent OF the
plants located in the South to be
close to their markets and Is per
cent seeking proximity to their
raw materials are to employ more
than 1000 persons.
The book is the third report OF
the NPA's committe of the South,
which is composed Of more than
so leading Southerners in various
fields. The authors are DR.. Glenn
Mclaughlin, now chief economist
Of the National Security Resources
Board, and DR.. Stefan Robock,
now with the Justice Department.
Anti trust Division In Boston.
Some Fallacious Ideas
Their report may throw into the
discard a number Of preconceived
ideas. One is that the South is
being industrialized at the expense
of New England and other Of the
older industrial areas. According
to the authors, only three Of the
SO plants were relocations Of exist
ing industries and two Of these
were not clear examples OF reloca-
tions, because they involved an
expansion In total capacity AID q
shift in markets.
Examples Of industries estab-
lished in the South to be near
their markets both for consumer
and industrial goods are q big
candy plant in Dallas. an Inter-
national Harvester Co. plant in
Memphis, automobile assembly
plants in Atlanta, producers Of
textile fbers, makers of cardboard
containers and bags, paints, bat
teries and a variety Of other
products.
Those seeking to be near their
raw materials produce neWsprint,
cheese and other dairy products,
phosphorus and other items.
Plants which were located In
the South chiefly because Of la
Dor considerations are chiefly
those producing shoes and tex
tiles. And 1t is these plants
where the South and New Eng
land actually compete. Only two
or three Of the new Southern
units for which location was de-
termined by raw materials could
have been placed in New Eng
land. Those are plants handling
forest products.
While the South may congratu-
late itself on the steps toward in
dustrialization these plants rep
resent. they carry with them the
factor of absentee ownership.
"The home Offices of the COM
panies responsible for most Of the
large-scale expansion in the South
are in New York, Chicago. Boston,
Detroit, st. Louis, the Philadel-
phia- Wilmington area and the
Cleveland-Akron area" the au-
thors report. "The expansion
into the South is thus largely q
| matter OF the establishment Of
branch plants Of Northern COM
panies. Capital and manage
ment functions are centered in
the older industrial areas"
The survey did not analyze the
North South wage differential.
The authors state. however. that
it frequently is confused with the
differentials between large and
small towns. Wage differences for
communities of similar size In
both North and South have been
narrowing steadily since the war,
they state.
Labor Surplus
The general conclusion is that
| it is no longer necessary for those
trying to attract industries to
the South to base their appeal
on low wages as many have done.
There is a labor surplus In the
South and It has been main