Also, morale should have NO EFFECT whatsoever on the building time of units. If you seize new territory, new construction and repairs of buildings would conceivably take longer, but if you seize a working factory you could crank out cars and tanks the same as the day before you walked in.
The province morale is low because the population doesn't like you. Who's supposed to work at the factories and drive the armored cars if 75% of the population holds you in contempt?
The problem isn't whether the working factories work at speed, it's the amount of damage done to captured buildings during the capture. An empty level 3 fortress that disappears when captured just wastes everyone's time.