Restructuring Appalachian Manufacturing in 1963–1992: The Role of Branch Plants

Abstract

This paper uses the Longitudinal Research Database (LRD),a unique, detailed, plant-level database that covers the entire U.S. manufacturing sector in five-year intervals to examine how the manufacturing sector in Appalachia has evolved over the past thirty years (from 1963 to 1992). The research focuses on three questions:1) Is the Appalachian Region attracting new manufacturing plants at the same rate as the rest of the country? 2) Does Appalachian manufacturing employment exhibit low wage, low productivity characteristics, compared with the rest of the country? 3) Is Appalachia still heavily reliant on branch plants? The results show the manufacturing base of Appalachia in 1992 looks very much the same as it did in 1967. Compared to the rest of the country, Appalachian manufacturing is still more reliant on branch plants and is characterized by lower wage and lower productivity establishments. This result is not due to a lack of entry-manufacturing plant entry rates and manufacturing job formation associated with entrants in Appalachia are only slightly lower than for the U.S. as a whole. Job destruction rates caused by exits are actually lower than in the U.S. as a whole. Copyright 2001 Gatton College of Business and Economics, University of Kentucky.

Natural amenities and rural development in new urban‐rural spaces

“…2008b; Ward and Brown 2009). As agriculture has declined as an employment base, manufacturing became the employment base for many rural places (Jensen and Glasmeier 2001), often providing the best wages in the area. More recently, the service sector is the fastest growing (Drabenstott 2003a).…”

“…This indicates a relative lack of industrial diversity. Although some areas may have seen net industrialization over the past 50 years support a local workforce, Jensen and Glasmeier (2001) note that Appalachian wages are not low by global standards. The region is in danger of losing that very important manufacturing employment if current trends in global trade liberalization continue.…”

“…Remote rural places; that is, areas not proximate to urban cores, may suffer from 'brain drain' and out-migration because of a lack of access to opportunity (Partridge et al 2008b;Ward and Brown 2009). As agriculture has declined as an employment base, manufacturing became the employment base for many rural places (Jensen and Glasmeier 2001), often providing the best wages in the area. More recently, the service sector is the fastest growing (Drabenstott 2003a).…”

The Geography of Job Creation and Destruction in the U.S. Manufacturing Sector, 1967–1997

“…Otherwise, the relative importance of different plant types to job reallocation in the second period mimics the pattern in the first period. The capacity of branch plants to produce well-paid jobs in southern peripheral regions and the Appalachians and the longterm structural problem of branch plant economies caused by nonlocal ownership is discussed by Glasmeier and Leichenko (1996) and Jensen and Glasmeier (2001). Similarly, regional differences in job creation patterns mirror the patterns of the earlier period, although some important differences existed.…”

“…The high contribution of branch plants to aggregate employment change in the South and the Mountain region explains the weaker performance of the South Atlantic and West South Central regions during the second period. The capacity of branch plants to produce well-paid jobs in southern peripheral regions and the Appalachians and the longterm structural problem of branch plant economies caused by nonlocal ownership is discussed by Glasmeier and Leichenko (1996) and Jensen and Glasmeier (2001).…”