The Changing South: Changing Corporate Control Points in the U.S. South, 1960-1990

Southeastern Geographer Vol. ?????, No. 1, May 1992, pp. 68-73 THE CHANGING SOUTH CHANGING CORPORATE CONTROL POINTS IN THE U.S. SOUTH, 1960-1990 James O. Wheeler The early history of the economic base of the U.S. South was of course agriculture, which reigned for many decades. Although manufacturing always had a small foothold in the South, it was not until the 1920s that the South, rebounding from the climax of cotton planting, began to turn toward manufacturing to sustain itself. Progress was slow. Although some indigenous industry developed, the South became increasingly known as a "branch plant" economy (Erickson, 1981; Park and Wheeler, 1983), with firms outside the region owning and operating a sizeable share ofthe South's productivity. The South traded its low-cost labor and available natural resources for its secondary role in the national economy . Southern manufacturing was based heavily upon textiles and apparel, activities located in rural areas (Fisher, 1979; Lonsdale and Browning, 1971), in striking contrast to the metropolitan-based heavy industry of the Northeast and Middle West. Thus, when the massive economic transformation began occurring during the 1970s and continuing into the 1990s, it was the Northeast and Middle West that suffered the greatest losses in manufacturing. Many ofthese large industrial centers relied so heavily on manufacturing for their economic base that they found it extremely difficult to make a smooth transition to the new service-based economy (Noyelle and Stanback, 1984). In the U.S. South, however, metropolitan areas that never developed as powerful industrial centers, such as Atlanta, Dallas-Ft. Worth, and Miami, found themselves poised to take advantage of the rapid growth in the service sector. As a result of the general boom in the service economy, manufacturing began to grow in many parts of the South at the same time as it was declining in the North. Dr. Wheeler is the Merle Prunty, Jr., Professor of Geography at the University of Georgia in Athens, GA 30602. Vol. XXXII, No. 1 69 One important measure of the changing importance of the economy of the U.S. South is the degree to which it functions in high-level administrative decision making. Borchert (1978) has showed how the South lagged far behind the rest ofthe country as a location for headquarters for major corporations. Following Semple and Phipps (1982), Wheeler and Brown (1985) found no essential change between 1960 and 1970 in the number ofFortune 500 corporations located in the South. Holloway and Wheeler (1991), however, found considerable spatial change in metropolitan corporate dominance between 1980 and 1987 based on shifts in headquarters, especially due to merger and acquisition activities. THE CHANGING CORPORATE SOUTH. In 1960, only 7.6% of the Fortune 500 industrial corporations were located in the U.S. South, using the U.S. Bureau of the Census definition (Table 1). Adding the Fortune 250 service firms listed in 1960 for these 16 states and District of Columbia, the percentage ofthe industrial and service firms came to just over 11% of the national total. The South was conspicuously lagging in commercial banking, with only four ofthe largest 50 banks in the United States. The South was best represented in utilities, having 30% ofdie 50 largest in the country. By 1970, virtually no change had occurred, and in fact the percentage of the 750 Fortune corporations had dropped just below 11%. This was TABLE 1 NUMBER OF FIRMS HEADQUARTERED IN THE SOUTH BY COMPANY TYPE, 1960-1989 Firm Types1960197019801990 Industrial (500 firms)3840 69105 Utilities (50 firms)1514 1619 Life Insurance (50 firms)1110 8 6 Commercial Banks (50 firms)4 5 8 31a Transportation (50 firms)119 1518 Retail (50 firms)5 4 1214 Diversified Finance (50 firms)NANA 5 9 Diversified Service (100 firms)NANA NA28 Saving Institutions (50 firms)NANA NA6 Total in South8482133236 Total Firms7507508001000 Percent of U.S. Total11.210.9 16.623.6 Source: Compiled by author from Fortune magazine a Based on 100 firms in 1990. 70Southeastern Geographer just before the economic transformation from manufacturing to services, and particularly the growth of producer or advanced services in association with the location of major corporate headquarters. Advanced services include such activities as accounting, advertising...