INDUSTRY: How to Woo New Businesses

Many a state in the Union wanted to land the big new plant. It would cost $25 million to $35 million, employ 1,500, be the first in the U.S. to produce a Dacron-like fiber called Teron. This week the site was announced by its joint builders—Britain’s Imperial Chemical Industries and the Celanese Corp. of America. Their choice was Shelby, N.C. One major reason for choosing North Carolina, said Celanese, was the “wholehearted cooperation” of Governor Luther Hartwell Hodges.

Energetic, engaging Luther Hodges, 60, ranks as the South’s No. i salesman. He is constantly traveling (63,000 miles last year) and speechifying (150 last year) to extol North Carolina’s attractions for industry. Among them, as listed by Celanese: “An adequate supply of skilled and semiskilled personnel, attractive residential areas, an excellent public school system, a good network of state and county highways.” The state also has a right-to-work law and the lowest rate of unionization in the nation (only 8.3% of North Carolina’s nonfarm workers are organized). Since Hodges became Governor in 1954, industrial investments in North Carolina have almost doubled, this year will top $225 million;,

Business in Politics. Ex-Businessman Luther Hodges is a businessman’s Governor who likes to say: “I’m one of the few Governors who didn’t have any training in politics—except for my general understanding of public relations.”

The eighth of nine children of a poor tenant tobacco farmer, Hodges started working as a twelve-year-old hand in Marshall Field & Co.’s Fieldcrest mill at Spray, N.C., worked his way through the University of North Carolina (’19), then went back to the Spray mill. He rose rapidly, became vice president of Marshall Field in 1943, and in 1950 he retired, at 52, to devote the rest of his life to public service. He served a year as industrial chief of the U.S. Economic Cooperation Administration in Germany. In 1952, unwanted and unsupported by the state’s Democratic organization, Hodges ran for Lieutenant Governor, traveled 11,000 miles through the state, glad-handed so many voters that he won handily. Two years later Hodges moved up to Governor when Governor William Umstead died, and in 1956 he was easily reelected.

Problems in Manufacturing. Few businessmen would want the kind of headaches that Hodges inherited as Governor. Though rich in scenery and resources, North Carolina is basically a maze of stamp-sized, undermechanized, undercapitalized farms. Its top crop is tobacco (more than half the U.S. output), which exhausts the soil, brings small profits to the farmer. North Carolina’s manufacturing is largely in textiles, a low-wage, boom-or-bust industry. Among the states, North Carolina stood No. i in the number of farm residents (1.4 million), No. 48 in the average weekly earnings of manufacturing workers ($47.88). It was clear to Hodges what North Carolina needed. “We had to get our farmers to diversify, to go into other businesses. But where were they to get the capital?”

To make small loans, Hodges’ administration established a Business Development Corp. Hodges stumped the state, selling stock in the corporation at $10 a share and raising $1,000,000; he later got an $8,000,000 line of credit from banks, insurance companies, savings and loan associations. To date, the corporation has lent about $4,000,000 to 70 homegrown small businesses and industries in lumps from $2,000 to $300,000.

Even more important was the job of encouraging major industries to expand and recruiting new ones from outstate. They had long been scared off by an outdated and complicated patchwork of tax laws. Hodges called for a major tax reform to help business. Though opponents howled that he wanted to hand businessmen a $7,000,000-a-year tax windfall, Hodges got his bill passed in 1957. While it trimmed state revenues by $2,000,000 the first year, it also brought in new companies. The day the tax bill passed, Allied-Kennecott Titanium Corp. announced a new $40 million, soo-man plant for Wilmington. Fortnight later R. J. Reynolds Tobacco Co. (Camel, Winston, Salem) announced a $35 million, 1,800-man plant at Winston-Salem.

Hodges scouted for plants that would buy and process North Carolina agri-ultural products. The deal that he made with Gerber Products was typical: if jerber would come in, the state’s agricultural extension service would send out agents to teach farmers how to grow7 the foods that Gerber wanted. Result: a Gerber plant is abuilding near Asheville, will buy $10 million worth of North Caro-ina fruits and vegetables yearly. Furthermore, Swift & Co., following the opening of an Armour & Co. plant at Charlotte, in a few months will complete a $17 million plant at Wilson, will spur the state’s production of meat.

From almost nothing when Hodges became Governor, investment in electronics in North Carolina has grown beyond $100 million. By next spring, electronics firms will employ 25,500, boost the state’s payrolls by $75.5 million a year.

Progress in Integration. There is another reason for North Carolina’s popularity among Northern-based industries: it has kept integration troubles at a minimum. A strong Stevensonite in ’52 and ’56, Hodges is an avowed segregationist, but he has pledged that North Carolina will not defy any federal court rulings. The state legislature adopted legislation that provides for token integration now, more later; five schools in three cities now have a total of eleven Negro pupils.

But school integration may well be hastened by industrial integration. In Winston-Salem, Western Electric has hired Negro machinists. In Charlotte, Douglas Aircraft employs Negro engineers and draftsmen. In Greensboro, where Burlington Industries (textiles) recently took on a Negro chemist, a survey of 402 firms showed that 53 intend to hire strictly on the basis of merit, regardless of race; another 114 said they will hire on merit alone for some jobs. For the Deep South this represents progress. Said one industrialist: “No, I do not have an integrated plant. But check me in a year—the answer may be different then.”