When automakers like BMW and Mercedes started putting up plants across the South, it was a very public confirmation that the region was coming into its own as a manufacturing center. What has not been so public is the stream of plastics processors that have pushed growth in the South well above that of the rest of the country.
The plastics industry in 12 Southern states — an arc from Virginia to Texas — grew 71 percent between 1991 and 1996, compared with 59 percent growth in the rest of the United States. That's growth measured by the value of shipments.
Much of that comes from plastics companies following customers such as automakers and computer companies. The growth also has come from other factors: lower labor costs, cheaper electricity, perceptions that the quality of life is better and state governments that emphasized economic development.
But whether the next 10 years will be as promising depends on the region's ability to beef up its education and transportation infrastructure, according to plastics industry officials and economic development experts. The region also finds itself under pressure from North America's new low-cost manufacturing center — Mexico.
Plastics processors following original equipment manufacturers has been the key to the growth in the South.
``There are probably some cost advantages in labor content, but it was more just trying to shorten the distance between us and our potential customers,'' said Jere Ferguson, director of manufacturing for the southern division of Mack Molding Co., based in Arlington, Vt. ``I still think there are advantages to this area — I do not think our growth has plateaued.''
Mack bought two injection molding plants in the Carolinas — one in Statesville, N.C., and the other in Inman, S.C. — in the early 1990s. Mack does custom molding and contract manufacturing for the fleet-truck market, consumer products and electronics.
Lacks Enterprises Inc. built an injection molding plant 1995 in Fountain Inn, S.C., in the booming Greenville-Spartanburg area, mainly to build pickup-truck bed parts for Ford.
``Our major customers were building assembly plants down there,'' said Roger Andrzejewski, director of human resources for Grand Rapids, Mich.-based Lacks. ``BMW opened a plant in the Greenville-Spartanburg area. ... [Business] hasn't materialized with BMW, but we are there if it does.''
Lacks said it pays skilled workers in South Carolina the same rates as those in Michigan. But it did find cheaper land and electricity costs. And the South Carolina government offered attractive incentives and met its commitments, Andrzejewski said.
``I believe that Southern strategy has caused Northern states like Michigan to be more competitive and place a higher priority on taking care of their existing business base,'' he said. ``When we made that decision back in 1993 [to build a plant in the South], Michigan would not have been competitive at all, but they are today.''
Mexico and the North American Free Trade Agreement are beginning to turn the tables on the South as the go-to destination for low-cost manufacturing.
``The South benefited from that change when all these big automakers moved from the Northeast to the South,'' said Mark Sweeney, a principal with Fluor Daniel Con-sulting's Greenville, S.C., office.
Sweeney did an analysis of the plastics industry's competitiveness in North and South Carolina. The September 1998 report was coordinated by the Society of the Plastics Industry Inc. in Washington and paid for by North and South Carolina.
``Now it's the beginning of a wave moving further South,'' Sweeney said. ``Mexico is putting pressure on the South in ways there hasn't been.''
Richard Sturgis, southern regional manager for SPI's office in Greenville, said the region's growth was fueled by cheap electricity, lower labor costs, lack of unionization, aggressive state governments with favorable taxes, and quality of life.
But as the industry gets more complex, the South will need to improve its training programs, he said.
``From what I'm hearing at the grass-roots level, in order for that growth to continue, a training infrastructure will have to be put in place,'' Sturgis said. ``What makes the South different — we don't have the training infrastructure and we don't have the skilled mold makers nor the mold-making training centers.
``We trail other regions in that,'' he said.
Sweeney's study said the Carolinas are favorable spots for plastics processing. But it said the industry will require better labor training and better transportation infrastructure to maintain its growth.
One Southern state that seems primed to benefit from the shift of manufacturing to Mexico is Florida, said Peter Blyth, chairman of the Florida Plastics Industry Council and president of Resin Management Corp., a post-industrial plastics recycler in Tampa.
Florida is a short two- or three-hour flight to Central and South America, and its strong Spanish-speaking population makes it an easy transition for businesses, he said.
Florida does have challenges: Its government has not recognized plastics as an industry worthy of government incentives, and electricity costs remain high, he said.
But for trade, Florida is poised.
``I don't think people are as afraid of importing and exporting as you might find elsewhere in the country,'' Blyth said. ``I haven't seen any negatives for Florida and Mexico — I see only positives.''