From the Washington Post: Manufacturing Is Thriving In The South:
The Rust Belt’s manufacturing decline isn’t primarily about jobs going to Mexico or China. It’s about jobs going to Alabama, South Carolina, Georgia and Tennessee.
In 1970, the Rust Belt was responsible for nearly half of all manufacturing exports while the South produced less than a quarter. Today, the roles are reversed, it is the Rust Belt that hosts less than one-fourth of all manufactured exports and the South that exports twice what the Rust Belt does.
This migration didn’t happen by accident. It was driven by specific policy choices. States such as Tennessee, Alabama, South Carolina and Texas have aggressively courted manufacturers by promising business-friendly policy environments.
Economic research suggests that labor conflict drove much of the decline of the Rust Belt. Right-to-work laws in the South, by contrast, created more operational flexibility and attracted capital. The average unionization rate in the Rust Belt is 13.3 percent; in the South, it’s 4.3 percent. Southern states’ political leaders are quite open about how they see right-to-work as foundational to their competitiveness.
The South offers cheaper electricity, a critical input for energy-intensive manufacturing. Ten states in the South have industrial electricity rates under 8 cents per kilowatt-hour; zero states in the Rust Belt do. Ohio has some of the country’s most restrictive wind-energy setback regulations. You know who doesn’t? Texas.
Southern states have built so much housing that they kept costs from becoming unaffordable. Last year, both North Carolina and South Carolina each built more than four times as much new housing per capita as Massachusetts, according to U.S. census data. Florida, Georgia, Texas, Tennessee, South Carolina and North Carolina, all built more housing per capita than all of Illinois, Ohio, Michigan, Pennsylvania, California, New York and Massachusetts. That is not just a 2024 dynamic. That is true for every single year going all the way back to 1993. Comparatively low-cost housing makes it easier to attract and retain workers, which further attracts capital, which adds yet more investment and jobs, and the virtuous cycle spins upward.
Taxes and permitting contribute, too. With the exceptions of Arkansas and Kentucky, the other 10 states that host an SEC football school are all in the top 15 in terms of low state-level taxes. Permitting processes move faster, too. To give just one example, Georgia has a certified-site program that can fast-track construction projects. With regard to land, as one industry analyst put it: “For big projects that are going to employ three, four, five thousand people, you can find free land — zero cost land.” Immigration helps a lot, as well. More immigrants live in the South than any other region of the country. The region with the fewest immigrants? The Midwest. Immigrants promote growth, makes the workforce more robust, and create the goods and services that support manufacturing.
In 1992, there was not a single auto plant in Alabama. Today, Alabama is the No. 1 auto-exporting state, producing more than 1 million vehicles a year. That’s brought more than 50,000 jobs and billions of dollars in investment. Instead of a Big Three, it has a Big Five (Honda, Toyota, Hyundai, Mercedes-Benz and Mazda) along with an ever-expanding web of suppliers.
Even when companies do reshore operations, they are overwhelmingly choosing Southern states, not the Rust Belt. That hyper-automated Black & Decker factory went to North Carolina, not Pennsylvania. Manufacturing doesn’t chase nostalgia; it follows the bottom line.
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