It's true the first mills were in the north because they had some good sites, but there are good mill sites throughout the South as well. More tellingly, when the first steam engines in the US were imported from Europe - they could have been just as easily installed in the South.

I think more importantly, steam mills solved for a problem the south did not have. If one was to tell a southerner, I have a technology that will save on labor costs, the southerner's response would have been "what are labor costs?"

Hmm, this doesn’t seem to be accurate. The missouri/mississipi rivers come to mind, as do many other river systems.