ADDRESS BY GOVERNOR LUTHER H. HODGES

AT

WESTERN NORTH CAROLINA INDUSTRIAL DEVELOPMENT CONFERENCE

Battery Park Hotel Asheville, North Carolina Monday, June 20, 1960 — 12:00 noon

Having spent the better portion of the past week in the great coastal region of our State, it is good to come now to the West, to remind myself of the great variety and beauty that ranges through North Carolina from the seashore to the mountains. It is a thrilling and wonderful experience to travel, as I have just done, over the broad expanse of this State and to marvel at the tremendous activity, the enthusiasm of the people and the confidence in the future that is evident today and will be even more evident in the years ahead, if we handle our affairs properly.

In the East, in the Piedmont, and here in the West, things are on the move. Travel through the Coastal Plain today and you will see not only the rich green farm land yielding both new and traditional crops, but also new industries, new processing plants and new business activity on all sides. Visit the bustling industrial Piedmont and you find not complacency, but a progressive spirit determined to continue building on the comparative solid foundation that has been established. And here in the West, we find people working together as never before, and trying (as this meeting today proves) to improve the situation in their several counties and this great Western region.

This audience represents one-fourth of the counties in the State. Nearly three-quarters of a million North Carolinians are looking to you for the local and regional leadership that will enable them to take advantage of their opportunities,

to move forward along sound lines, and eventually realize and enjoy the higher standard of living to which they are entitled.

This imposes upon each of you a sizeable responsibility. And it is a responsibility that extends beyond the confines of your own primary interest, your own community or your own county. It is, first and foremost, a regional responsibility which by its very nature implies a State responsibility. You have made a good start toward meeting this responsibility through the establishment of area development associations. All but two of the counties represented at this meeting hold membership in these associations and I am confident that each of them has derived material benefit from such cooperative efforts. Your Northwestern North Carolina, Western North Carolina and Piedmont development organizations have certainly made contributions to the economic progress of this region and you are to be congratulated on the initiative and enthusiasm you have put into these undertakings. But, and I think most of you will agree with me on this, you have only begun to tap the vast resources available to you.

It is the purpose of this and the other three regional conferences that have been held across the State to encourage the continuation and expansion of your efforts and, as far as possible, to promote even greater cooperation -- not just within your individual counties or development associations or region—.but throughout all of North Carolina. No single community or county or section of this State has a monopoly on good ideas. Each of us can learn something from the other, and each has something to contribute. If this meeting serves no other purpose than to provide a forum for the exchange of ideas, then it will have been worthwhile.

I would like to commend the Commerce and Industry Division of our Department of Conservation and Development on its sponsorship of this event

and on the initiative it has shown in arranging an informative and comprehensive program. We are particularly indebted to the speakers who have come here to share with us their considerable knowledge and experience in the industrial development field. Tom Dana of the General Electric Company in Hickory has discussed with you the very important subject of "Business Climate Appraisal" as it affects industrial development, and I can assure you his observations and suggestions are most pertinent. You have also heard Mr. R. D. Warwick of Statesville discuss what his community has done to attract industry. I believe that we must all agree the Statesville story is a good example of what one community can do when it decides to make the best of its opportunities, and I congratulate them for their accomplishments.

This afternoon you will hear Joseph Claud of the American Commercial Bank of Charlotte discuss the increasingly important matter of financing an industrial development program. Later, Edd Perdue, Secretary-Treasurer of Clarendue Metal Products, Incorporated, of Lenoir, will use his firm to illustrate the benefits to be gained by organizing and developing industry at the local level. All of these speakers are discussing subjects that must be studied and explored in detail in every community and county that approaches the subject of industrial development in a progressive, business-like way. I do not say that you should adopt all the suggestions or procedures outlined for you today, but I do say that you should give them careful consideration to see if they are applicable to your local or area situation.

Let me say at this time that I have not come here today simply to lend the prestige of the Governor's office to this occasion. Nor have I come to talk to you in vague terms about the progress you have made, the problems you still face, or your hopes for the future. On the contrary, I have come here today

to discuss facts and to be as practical and helpful as possible. I would like, therefore, to lay the groundwork for most of my remarks by looking individually at the 25 counties represented here in the light of their per capita income and population changes from 1950 to 1960.

(See statistical sheet attached.)

Certainly it is obvious from these figures that you have your work cut out for you. The average per capita income for the counties represented here is a little over $1,000 ($1,003). Only two of your counties, Buncombe and Transylvania, have per capita income above the State average of $1, 384. Fifteen of your counties have per capita income averages of less than $1,000. During the period of 1950 to 1960 sixteen of the counties represented at this meeting lost population. While the State was gaining 467,000 new citizens in the past ten years, this 25-county area gained only 4,236. I cite these figures, not as criticism but because we have come here today to deal in facts, to recognize our problems and to seek out reasonable, workable solutions. And I am sure you would not be here today if you did not agree that greater industrialization is the key to solving many of our difficulties. Look at the counties and their income, then look at their industries and the type of industry. Don't lose any of them," get some more.

Most of you are, I am sure, aware of the fact that economic progress doesn't just happen. Industries that are planning to move their operations or expand do not simply draw a name out of the hat and say, "This is it." The community or county or region that sits back and waits for lightning to strike is

being extremely naive. Fortunately, we in North Carolina have come to realize that an industry locates where the cold, hard facts of good business practice dictate — and that is in an area that provides most of the basic essentials that are needed by that particular industry to reasonably insure a successful business operation. These essentials may differ somewhat with the individual industry, but the really basic requirements remain constant. One of the first pre requisites is, of course, an attractive community with clean streets and attractive buildings. Not infrequently, one of the first requests that an industry makes of a community in which it is considering an investment is for a picture of the main street. This has happened in North Carolina in the past and it will happen again in the future. It could very well happen to many of the communities represented here today. That is why it is important that you overlook no details in preparing your community for industrial development. Nothing is insignificant. Of course, it is not always easy to look at your own community objectively, but it is something you must do. You must ask yourself if your community measures up, if its business district is modern and progressive, if its facilities for cultural* religious, educational and recreational activities are adequate — and you must answer these questions frankly. You must not say that we are as good as some other community or that we have done everything that can be done. You will be fooling yourselves only.

If you find that your community is lacking in any respect, take it upon yourself to do something about it. Analyze your problems objectively, take the time needed to develop your plans intelligently, and then get on with the job.

Industry-community relationships are never so ideal that they cannot be improved. Cultured, educational and recreational facilities are never so

adequate that they cannot be expanded, A constant re-appraisal of all facets of the industry-community relationship is necessary if maximum benefit is to be derived at all times. Industry, itself, spurred on by mounting expenditures for research is an ever-changing economic factor. Practices and procedures that were the ultimate in efficiency ten years ago have become out-dated. New equipment has revolutionized some industries overnight, confronting management with problems that could not even have been imagined a short time ago. Economic pressures brought on by domestic or foreign competition can vitally affect the operation of your local industry without your even being aware of it.

All of these things present a challenge to the people of the community to maintain close liaison with their present industries and to stand ready at all times to strengthen and encourage those industries in their constant battle with the changing times. This is one of the responsibilities you accept when you invite an industry to locate in your community, and it is certainly a responsibility you owe to the older established industries in your area.

I have no desire to duplicate what has been said or will be said by the other speakers on your program here today. For this reason, I will not go into detail on many items that constitute the so-called "good business climate." I would like to point out, however, that the final job of selling a community or county or Region to a particular industry rests with the people at the local level. That is why this conference is so important. The State can do only so much. It can sell North Carolina, but it cannot sell a particular community or county. We can and have done much to build North Carolina's reputation as a State in which a good business climate exists. Our success or failure in exploiting this reputation can be determined only by those of you who, in the final analysis, are called upon to lay goods on the line. If you are prepared to do so, then you reap

the benefit of the total effort to sell North Carolina. If you are not prepared, then you let down not only the people of your own town and territory who depend upon you for leadership, but the State that expects you to hold up your end of the bargain. Never forget that in the eyes of the industrial prospect your town represents not just an isolated community, but a State that has acquired, and must maintain, a reputation for unique business opportunity.

The prospect that comes to your town has been told that the great strength of North Carolina is its people, that they are cooperative, industrious, honest, progressive and possessed of a pride that is justified by both historic tradition and the achievements of recent years. He has been assured that established industries in your area will testify to the cooperative spirit of your local government and the people of your community. He has been told that he can expect fair and equitable tax treatment and that his employees will be uniquely loyal and productive in return for fair wages and good treatment. He has been told that the various communities of North Carolina will make no unreasonable concession and that we, as a State, are simply not interested in the kind of industry that would require such concession. He has been told that your cities and counties will provide good public schools, housing, recreational and cultural facilities to insure the kind of community that produces a stable labor force.

These promises have been made to thousands of industrial prospects in this country and in Europe. They have been made in good faith, based on the conviction that the people of North Carolina are sufficiently dedicated to economic progress to continue living up to the excellent reputation they have built for themselves in recent years. It will require hard work, some sacrifice and considerable determination to realize full advantage from our

opportunities, I have never once, in the past five and one-half years, indicated to the people of this State that our ultimate goal, a higher standard of living, could be achieved with less than maximum effort. On the contrary, I have stated repeatedly, from one end of North Carolina to the other, that in the race for industrial development and economic stability, our State must run at top speed just to keep up.

The problem is even more difficult here in an area of our State that obviously faces the task of not keeping up, but catching up. Anl , while I do not offer this as consolation, I will point out that you are not alone in this respect. Other areas of the State, especially in the East, face a similar challenge. There is every indication that they are facing up to the challenge, just as you have been doing, and must continue to do, in this area. Your problem here, while perhaps magnified, is not unlike that faced by our State as a whole. Cur economy is undergoing a rather violent upheaval. States that are traditionally dependent upon agriculture as the mainstay of their economy have, in the past decade, seen mechanization, acreage allotments, consumer requirements, foreign competition and other factors knock the props from under the old concepts of economic stability. The ideal now is a balance between agricultural and non-agricultural employment. Simply stated, our rural areas can no longer support the large numbers of our people who formerly derived their income from farming. Unless we are to lose these valuable citizens permanently, we must, obviously, provide them new types of agricultural jobs or new industrial jobs.

I do not imply that we should forget about farming and concentrate all our energies on industrial development. We must seek the desirable balance.

In a newspaper article published several weeks ago. Professor Rupert B. Vance of the Sociology Department of the University of North Carolina pointed out that, "The coming of new industry has not injured our agricultural economy. It has helped the farmer* Not only in new jobs for much of the displaced farm labor, but in the increased demands for products of the farm. When cities grow, new markets are created for farm products. Push and pull forces causing out-migration and in-migration have been due to the following factors.

"Out-migration: Farm unemployment due to mechanization, better seed, better fertilizers, counsel to farmers and resultant promotion of larger yields, so that ten farmers today can produce what it took thirty farmers to produce three decades ago; less need for manual laborers in cities; the mobile population because of World War II and the continuation of the draft in the Cold War.

"In-migration: New service industries in addition to manufacturing plants. Growth in distributing industries.

"Five things that can be done to slow down the out-migration and speed up the in-migration," said Dr. Vance, are:

"1. More education at all levels, in colleges and in the high schools, with emphasis on technical education, vocational training in technical high schools.

"2. Diversification. We must get away from the one-crop industry just as the South got away from cotton.

"3. Strive for industrialization, selectively,

"4. Develop industries based on existing crops, such as vegetable crops, seafood, cucumbers, strawberries. Then when unemployment occurs

on the farms at the same time crop yields show abundance, the unemployed can go into nearby food-processing.

"6, Use of employment agencies, to fit round pegs into round holes. Both employers and employees could use employment agencies to better advantage, for jobs in this State and elsewhere.•

Dr. Vance says an economy is better off when industry and agriculture are in between. He says, "We have to face certain realities about both agriculture and industry, the climate and resources of our State and what we can do. North Carolina lacks two things that are essential to large-scale industrial development; these two things are: 1. Basic metals; coal, iron and steel. 2, Oil. We have no Birmingham, and we don't have what Louisiana and Texas have,

"To make up for these natural handicaps, North Carolina has had to exercise greater initiative in developing its resources, human and natural," said Professor Vance, "We have done what New England did," he said, "New Englanders, lacking basic metals and oil, stressed new skills — watch-making, lock-making, electronics, metals, manufacture of high cost and larger profit products,"

I think there is an even more striking example than New England to illustrate what can be accomplished, even under adverse conditions, when a people are dedicated to progress, I refer to the tiny country of Switzerland which is remarkably similar to our Appalachian area in many respects. Its terrain, its soil, its climate, its natural resources and even its people --independent and industrious — closely resemble those of our Appalachian region.

But here, for all practical purposes, the similarity ends. While the small, land-locked Alpine country, which is extremely limited in natural resources, prospers, the Appalachian region of this and other Appalachian States fights for economic survival. "While the Swiss gain steadily in population and readily accommodate a growing labor force, the Appalachians, as a whole, lose population and still cannot provide work for their people. In the past decade, while the Nation was gaining 17 per cent, this region registered a decline due to the out-migration of more than 1,5 million citizens. And according to a recent study by the Maryland Department of Economic Development, the people who left were mostly young men in their most productive years. This same study reveals that, even now, there are only three million jobs available to accommodate a labor force of 3.5 million. And it is estimated that another half million jobs will be needed if labor force participation rates are to rise to the point required to raise regional income levels to the national average.

How do we account for the fact that the Swiss achieve so much more on so much less? For one thing, there is little waste. Almost 80 per cent of the land is classified as productive. On land similar to that in the counties represented here, the Swiss produce agricultural products valued at more than $600,000,000 annually. Dairying is the major agricultural industry, but they also grow large quantities of wheat, potatoes, sugar-beets, vegetables and tobacco. Most of these items are processed where they are grown for domestic consumption. As a matter of fact,a vast amount of foodstuffs is imported, but much of it is processed within the country.

That Switzerland is a manufacturing country is evident in the fact that electric-power production exceeds 10 billion kilowatt-hours per year. Leading

manufactures, other than food, are clocks and watches, machinery, metalware, chemicals and dyes, textile knitted goods and embroidery. Their people are highly trained in basic education in technical and scientific subjects and in languages.

I think it is also significant that in Switzerland around 33 per cent of its people are employed in industry and handicrafts; whereas 64 per cent of the people in the Appalachian region are deriving a major portion of their income from the land. And while this represents six per cent of the Nation's farm employment, the region produces only three per cent of the total value of farm products. Obviously, there is a great need here for re-appraisal of the entire economic picture.

I think I should point out that the North Carolina portion of the Appalachian area is, in many ways, more fortunate than similar areas in some of the other Appalachian States involved — the coal mining sections of West Virginia, for example. The rather discouraging picture that can be applied, in a general way, to the entire Appalachian region, need not necessarily apply here in North Carolina. One reason is that we have a running start on most of the region in the development of the tourist trade. This is becoming an increasingly important factor in the economy of this region and our entire State. We registered a significant increase in income from the trav el industry in the past season and there is every indication that new records will be set this year. Small industries, including handicrafts, food processing, etc., have great possibilities.

The most important factor, however, is the attitude of the people here in this western section of North Carolina. In the study I mentioned earlier pertaining to the Appalachian region, it was suggested that one of the major obstacles

that would have to be overcome before the region could advance is the "psychological attitudes associated with prolonged economic difficulties." in other words, the people have become discouraged. I do not believe this has happened here in your area. I believe that the people here are well aware of their opportunities and that they have what it takes to make the best of those opportunities. This meeting today does not look to me like a gathering of crepe hangers.

Our entire State still has a long way to go before it begins to realize the benefits of its full potential, but I am convinced that we are on the right road.

We have, I believe, already fashioned the tools that will be needed to get the job done — and the major tool is industrial development. Another is diversification — both in agriculture and industry. Another is education. We must keep our schools open, and improve them steadily. Another is stable, honest government at both the local and State levels. And I hope each North Carolinian will make it his personal responsibility to take part in government and to vote at all elections — thereby helping maintain good government at all levels. And, finally, there is the spirit of cooperation, shown here today which is most essential.

May I conclude by saying that while your primary concern at this time is the development of a better life through greater wealth in this region, you must not for a moment forget that to build a better Piedmont, or East, or West, we must all work together to build a better North Carolina and not have jealousies or differences which divide us and retard our growth of education, better government and higher standards of citizenship.

I would like to thank each of you for coming here today to participate in this conference and for giving me the opportunity to speak to you. I wish you every success in your efforts.

Total Gain