FLAW IN THE FORMULA

By Michael Kramer

EVEN BEFORE HIS UPSET WIN IN NEW HAMPSHIRE, Pat Buchanan was plotting his next vital conquest: South Carolina. "It's the key to the kingdom," Buchanan said of this Saturday's primary, the first one in the region. "It sets the tone in the area you need to win the nomination and the election. Lose there, and it can all dry up on you. It's gonna be tough, but they're natural rebels down there, and I'm a member of the Sons of Confederate Veterans. They like my red-meat stuff. They like exaggeration."

So there was Buchanan in South Carolina on the morning after New Hampshire, pushing protectionism. And exaggerating like crazy. "Get this!" he fairly screamed, ecstatic to have found a fresh example of the "Beltway betrayal" of America's workers by the "corporate killers who line their pockets as jobs flee the country. I just heard that another South Carolina textile mill has closed."

Well, yes, it had (or more precisely, it soon will). But the real story of the closing of the Lydia textile plant, about 60 miles west of Columbia, the state capital, is more nuanced than Buchanan would ever be willing to admit. "Foreign competition is always a factor," says Michael Hopp, vice president of C.M.I., Inc., the company that owns the Lydia plant. "But it's mostly about modernization and market shifts." C.M.I. runs four fabric-producing plants in South Carolina. The company has poured millions of dollars into upgrading three of the plants. The fourth, Lydia, is a victim of automation and increased worker productivity. "The closing would have happened without NAFTA," says Hopp, who will transfer about half of Lydia's 400 employees to the other plants. The rest will be let go. "Demand is down. People are spending more on things like electronics than on clothing. That's the key, not low-cost imports."

South Carolina's textile employment has declined from a high of about 160,000 in 1973 to fewer than 90,000 today. But overall employment and investment are at record levels, thanks largely to the state's successful wooing of foreign businesses like BMW and Fuji film. "You make money by joining the world," says Carroll Campbell, the popular former Governor who's leading Bob Dole's South Carolina effort. "Sober people realize that."

Indeed, this is a state where Buchanan's protectionism may bump against local history. South Carolina has long favored free trade. It seceded from the Union in part because of Washington's high tariff policy, which John Calhoun branded the "great instrument of our impoverishment." Bob Dole's embrace of a bill restricting textile imports in 1988 did him no good here--he lost that year's South Carolina primary to free-trader George Bush.

This time Dole has the big-name endorsements and the formidable grass-roots organization here. And a huge stake in the outcome. "We need to win South Carolina," says Scott Reed, the Dole campaign manager, who is normally averse to stakes raising. What the Dole camp fears most is losing the evangelical Christians, who could account for half the vote. "And Alexander could siphon off enough of the rest to give us real trouble," says Campbell. Not to worry, says David Beasley, the current Governor, who owes his office to the Christian Coalition. "We'll win it for Dole," he said last Wednesday, as his face contorted with desperate hope. "I mean, I guess we will. I think so."