Corporate Dominance of Manufacturing in Appalachia

Abstract

EOGRAPHERS and planners have become increasingly aware that the location of a manufacturing operation in a rural area does not necessarily result in long-term economic growth in the area.1 Community leaders of small towns and rural places, however, expect increases in manufacturing to create economic advancement in places close to the new manufacturing plants.2 They panticipate that new manufacturing operations will bring additional revenue to the town coffers, will increase business in the retail and service sectors, will provide employment for local people, and will encourage other manufacturing plants to locate nearby. Support for the conventional notion that manufacturing means growth comes from traditional theories in regional economics, which purport that a new industrial enterprise will entice other factories to locate nearby for the exchange of inputs and outputs and will employ people who, in turn, will spend their wages in local retail outlets.3 Although this sequence of events is supposed to establish an advanced economic environment, the character of manufacturing activity in certain rural places works against long-lasting economic advancement.4 Manufacturing in rural areas often generates little intraregional exchange of revenue and resources because plants are attached to other places throughout the nation.6 A case study of one rural area in Appalachia shows that the corporate and input-output linkages of forty-nine establishments extend beyond the rural area and regional centers to the detriment of the area. In this rural study area, most manufacturing operations obtain inputs largely from the core of the nation and from the Piedmont of the South. Marketing of retail and industrial outputs is largely linked to the core. The core in this study consists of the Northeast and Midwest, as defined by the Census Bureau.6 As this study further shows, geographical linkages to the core are strongly influenced by small consumer-industrial markets and by few complementary industries in the rural area, coupled with corporate affiliation. Partly because of the dominance of national corporations over their branch plants, manufacturing operations never stay long enqugh to establish intraregional linkages. As a result of the external character of industry in the rural area, long-lasting economic gains through an intraregional exchange of manufactured products are minimized. The rural area of Appalachia therefore maintains its low income levels under this form of corporate dominance.7