Youngstown, Ohio, Dayton, Ohio, Chicopee Falls, Mass.
To the industrial unions these are tombstone names, marking the "death" of industrial plants and the loss of thousands of jobs as corporations move from "Frost Belt" states in the North to the Sun Belt and overseas.
Two Massachusetts economists, in a union-supported study released yesterday, warn that recent closings of steel, auto and rubber plants are evidence of an acceleration in a post-war trend.
They have called for laws to control plant closings and to provide better unemployment and health benefits for displaced workers. They also suggest the government should purchase selected factories in such key sectors of the economy as housing, transportation and steel.
The study by Barry Bluestone and Bennett Harrison is a detailed review, from organized labor's perspective, of the economics of plant closings and regional employment shifts. It was sponsored by the Progressive Alliance, a coalition of unions and liberal political groups formed last year by Douglas Fraser, president of the United Auto Workers, to promote progressive viewpoints.
Bluestone is director of the Social Welfare Research Institute at Boston College and Harrison is an associate professor of economics and urban studies at the Massachusetts Institute of Technology.
The authors said that while the movement of jobs from "Frost Belt" states to the South is partly a result of lower wages and ample supply of nonunion labor, the trend has been promoted by tax laws that encourage demise of old plants and construction of new ones.
Although Bluestone and Harrison clearly have taken sides in the war between the states for new jobs, siding with the center of organized labor strength in the industrial North, they say plant closings and employment shifts have hurt the entire economy, including the Sun Belt. Uncalculated social costs have been imposed on workers who cannot uproot their families and follow "runaway factories" to new locations, they said.
"Capital should never be frozen in place, constrained to remain forevermore in a particular use or location long after its need has vanished. [but] wasting labor or land or old but still useful buildings by consigning these factors to the dust heap while they are still potentially productive is just as economically inefficient as wasting capital."
A major part of the study seeks to document the movement of investment capital. Between 1960 and 1976, the manufacturing capital base in the South -- machinery, buildings and supplies -- grew almost twice as fast as that of the Northeast and 65 percent faster than in the north central region, they said.
Quoting numerous statements by company officials on plant migration, the authors assert that companies have been "running away from unions and the political environment which unions promote," rather than merely seeking lower wages and cost. Carried to extremes this trend can lead to closings of even profitable plants, they said.
U.S. tax policies encourage the shift of private capital out of older urban areas to suburbs and new, growing areas of the country. The tax code in effect lowers the costs of new commercial building construction and machinery purchases compared with reconstruction or rehabilitation of older buildings and machinery, they said.
Moreover, land is not considered a depreciable asset by the Internal Revenue Service. Thus the inability of companies to reduce taxes by depreciating land encourages and subsidizes development in areas where land values are low but rising. The tax code also favors new commercial and industrial buildings over used ones, the authors said.
Added to this are the tax incentives provided by communities seeking to attract new companies, like the $70 million property tax releif offered by New Stanton, Pa., to attract a new Volkswagen manufacturing plant.
The authors call for industrial policies closer to those of Japan and Western Europe to monitor and direct the flow of capital and to promote employment security.
As an example of improved employment security, they noted the recent agreement between Westinghouse Corp. and major electrical unions in which the company promises to give two years' warning of any partial or complete plant shutdown.
They also recommended government purchases of shutdown plants in selected situations to give the government better information about industrial costs. To finance such acquisitions, they recommended tougher corporate taxation and cuts in the defense budget, with the conversion of some military bases and shipyards into manufacturing plants for "socially useful" products such as solar enegy systems, rail and trolley vehicles and lower cost housing.