Iron ore from Michigan and Minnesota, coal from Pennsylvania and surrounding states, and limestone from Indiana and the Ohio Valley could all be brought to Great Lakes ports inexpensively. Areas near Chicago, Cleveland, and Detroit thus became the center of supply for steel, the primary component of both automobiles and appliances. (For Pittsburgh, proximity to coking coal outweighed the distance iron ore had to be brought.) Secondary elements such as hardwood and glass were also available nearby, while the multiple rail lines through Ohio and Indiana converging on Chicago offered competitive transport for components and finished products. As a result, a crescent around Detroit became the center of the automotive industry. Appliance factories were a bit more scattered, but seldom more than 300 miles from the rolling mills that supplied sheet steel. As new sectors, such as electronics, grew, they took advantage of the technical skills, machine tool industry, and supply networks already present in the region. A famous 1943 classification study by urban geographer Chauncey Harris showed a striking geographic pattern for American cities dominated by manufacturing. Only after World War II did big industrial companies begin to establish branch operations in Sunbelt locations, once large-scale air conditioning made conditions for assembly workers (and delicate components) more tolerable.

It was the decline of the steel-related industries near the Great Lakes and Northeast in the 1980s that gave us the term "Rust Belt." The textile industry of the South had its own story of agglomeration near cotton suppliers and decline when faced with low-wage offshore competition, but that took place two decades earlier.

The answer(s) to this question, like all major historical questions, is very complicated and multifaceted, and I am by no means an expert, but I'll try to offer at least part of an explanation and some useful historical context.

Prior to the American Civil War, the Southern states were incredibly wealthy, and needless to say, the basis for this wealth was slavery. However - and this is an important point - most of the wealth (the land and the slaves who toiled on said land) was concentrated in a relatively small number of enormously wealthy and consequently, hegemonically powerful plantation owners who had little incentive to invest in any sort local industrialization (arguably, quite the opposite; the slave-owning elite not enjoyed social dominance due to the institution of chattel slavery, but their economic status itself came from what was very much an agrarian enterprise.)

Furthermore (and related to the above) much of the white population in the antebellum South consisted of poor, unskilled laborers. Those who managed to “rise above their station” almost inevitably reached any degree of material affluence and social status from self-sufficient land ownership (the Jeffersonian dream) - self-sufficiency, that is, that owed itself to owning at least some slaves. Indeed, on the eve of the Civil War, as many as 30-35 percent of white households in the South had at least one slave. Slavery was the Southern economy, and much more, immediately prior to the Civil War.

Now, fast forward to Reconstruction. The “peculiar institution” has all but been eviscerated, and thus, the amount of wealth held by white Southerners has declined dramatically. And this unsurprisingly had far-reaching effects throughout all classes of white Southerners, since the very basis of the Southern economy is now gone. So you’d think they’d want to rebuild their economy on different lines, right?

Well, not exactly, or rather: “It’s complicated.” The socially repressive agrarian institution of sharecropping eventually replaced the socially repressive agrarian institution of chattel slavery in the American South, post-Reconstruction. While there certainly was some industrialization occurring in the post-war South (a particularly notable example being the textile industry in North Carolina) it was nowhere near as extensive as the North, which continued to industrialize and urbanize, and had plenty of laborers (skilled and unskilled) on account of not just a growing native-born population (both white and black) but an immigrant population that throughout the Gilded Age and the Industrial Revolution, continued to swell the North - especially the increasingly industrial cities.

That’s the other thing: in terms of industrialization, the North had a massive head-start going back to its increased urbanization, the growing scarcity of land (which needless to say, reduced the number of people living on the land and being able to make a living from agriculture in the North), and the massive amounts of immigrant labor that could be utilized by industrialists.

I’d also argue that there were some significant ideological dimensions to all of this - remember, the Northern states (especially the Northeast) had valued investing in some form of mass education for years, going back to colonial Puritan days. That, combined with the full-throated embrace of industrialization and mercantile interests by figures like Alexander Hamilton (is it any coincidence that what we refer to as “Wall Street “ is in New York City, or how heavily and densely populated the Northeast is - and has been, for a long time?) left a major ideological imprint on the Northern population that thought positively of industrialization, and the labor market skills and scientific, technological, and above all economic progress and prosperity that it brought to the population (though clearly there were - and are - massive amounts of inequality and concentration of power and resources that went along with all of this). The South (and the Western frontier), by contrast, was very much of the Jeffersonian and Jacksonian persuasion in terms of the importance of economic self-sufficiency (for white people, at least) in a way that was particularly important to agrarian interests - slavery above all, prior to the Civil War. That deeply ingrained imprint of ideology, politics, economics, society, and culture didn’t die overnight - and why would it? The South, after all, is not generally known for being a region that is quick to change its ways…

Anyway, I hope that some of this might be useful to you (and others with the same question).

Sources:

Bensel, R. F. (2000). The political economy of American industrialization, 1877-1900. Cambridge University Press.

Post, C. (1982). The American road to capitalism. New Left Review, (133), 30.

Wright, G. (1987). The economic revolution in the American South. The Journal of Economic Perspectives, 1(1), 161-178.