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

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.