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[10 comments]

Walmart continues 'Made in the USA' push

January 24, 2014

Walmart doesn't want Americans to forget that it is pushing to bring manufacturing jobs back to the U.S. Last year the company pledged to buy $50 billion more in American-made goods over the next decade than it does now. Yesterday, before an audience at the U.S. Conference of Mayors Meeting in the nation's capital, the company announced it was creating a new $10 million fund to encourage innovation in American manufacturing. Walmart and the Walmart Foundation will fund the five-year program.

"If we want to grow manufacturing and help rebuild America's middle class, we need the brightest minds in our universities, in our think tanks, and in our towns to tackle obstacles to U.S. manufacturing," said Bill Simon, president and CEO of Walmart U.S. "The $10 million fund will identify and award leaders in manufacturing innovation and help us all work together to create opportunity."

Walmart, citing Boston Consulting as a source, said its added investments in buying goods produced in the U.S. will create one million new jobs in manufacturing and related services.

The retailer also announced one early success of its efforts with a current supplier, Kent Bicycles, moving production from overseas to a facility in Clarendon, SC. Once it has reached full capacity, estimated to be in 2016, the company will have added 175 jobs. The company, based in Parsippany, NJ, expects to start production in the fall.

"Our company moved all manufacturing overseas in 1990 because it was so much more cost effective. When Walmart made its commitment to U.S. manufacturing last year, it opened our eyes to restarting some manufacturing here," said Arnold Kamler, owner of Kent Bicycles. "We attended Walmart's August manufacturing summit and were able to focus our efforts quickly and make things happen with South Carolina."

"Those that have already taken the risk to move or expand manufacturing in the U.S. tell us they are experiencing a first-mover advantage — a significant leg-up in terms of market-share and momentum," said Mr. Simon.

Walmart plans to hold a second manufacturing summit this August in Denver. One of the major goals of this year's event will be to connect manufacturers with factories.

"Many factories aren't operating at full capacity. By working together, we have an opportunity to repurpose or help add production to some of these communities," said Mr. Simon. "This will help rebuild the American supply chain to support U.S. manufacturing and create more jobs."

Walmart said its research has found that 72 percent of its suppliers believe producing goods in the U.S. will become cost favorable within four years. The retailer said 40 if its departments are in discussions with suppliers to bring manufacturing jobs to the U.S.

FINANCIALS:     [NYSE:WMT] [ ]

Discussion Questions:

How effective has Walmart been in promoting itself as a champion of American jobs? Why do you think other large retailers haven't been more public in their own efforts to encourage job creation in the U.S.?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

How effective has Walmart been in promoting itself as a champion of American jobs?

Comments:

Actions speak louder than words, and Walmart continues to source products as cost-efficiently as possible, wherever in the world it takes them. I suspect that the dollars allocated to "buy American" are a relatively small percentage of the company's total cost purchases, especially stretched over a ten-year period. But it's a smart PR move that might actually continue the move back toward U.S.-based manufacturing, even in a small way.

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Dick Seesel, Principal, Retailing In Focus LLC

Walmart has been very effective in promoting itself. Plus, they really don't have to do anything above and beyond to make their claims come true. Pledging to buy $50 billion more in American-made goods over the next decade should come easy, just with the increase in store growth plus inflation. That's only $5 billion per year and for a company that does a half a trillion or more, they could actually purchase fewer American made products and with inflation, still meet the $5 billion per year/$50 billion over-a-decade goal.

The reason other large retailers haven been more public in their own efforts to encourage job creation is 1) it's a fact of life, you must import cheap goods, 2) competitors don't have the size and scope of Walmart to make multi-billion dollar claims that can easily be achieved through normal growth and inflation, and 3) retailers are not going to get bullied by Walmart into doing something they can't afford. In my opinion on this issue, Walmart is all hat and no cattle.

David Livingston, Principal, DJL Research

 
14

Dick has it exactly right. Walter Loeb pointed out that with all those promises, there hasn't been a dime spent.

Walmart does what's good for Walmart and what's NOT good for its competitors. While I would LOVE to see manufacturing here...the way it would fall out on Walmart's agenda would be in its favor only.

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Paula Rosenblum, Managing Partner, RSR Research

For a company with a popular nickname Chinamart, Walmart hasn't been successful at all in doing this. You have to go back 20+ years when Sam Walton was still in charge to find Walmart with a perception of caring about American jobs. The current push is simply a PR gimmick--what's 10 million dollars in a company the size of Walmart? And the $50 billion increase in purchases over 10 years comes out to $5 billion per year--and for most of this purchases will increase simply because Walmart sales will increase. [Note Walmart worldwide sales are $466 billion/year.]

Past Tense, Owner, Past Tense Books

Give me a break. Walmart and China built the largest cargo ships in the world to get goods from China faster than ever before, and they go back to China empty. How's that for progress? Talk is cheap, and price wins every time, for cheap goods to sell in their stores.

I actually have a plan to bring jobs back (I really do), but it would take cooperation from the local communities and government to even make this work.

Just a pipe dream for now, but who knows if the time will be right for anything to change. I don't know if we hit rock bottom yet, but until that time, things will remain the same....

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Tony Orlando, Owner, Tony O's Supermarket & Catering

I think the conglomerate doth protest too much.

Walmart has created a lot of jobs in America and a lot of jobs in China as well.

Promoting yourself as a champion of American industry only works when the majority of products you sell are actually made in the United States from component parts sourced in the United States.

I'm willing to bet that many of Walmart's "Made in America" products are -- in fact -- assembled in America from parts manufactured offshore.

You can fool some of the people all of the time ....

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Ryan Mathews, Founder, ceo, Black Monk Consulting

Encouraging innovation in manufacturing to stimulate more manufacturing in the US is a great PR claim. There is no guarantee that there will be a link between this project and Walmart actually selling more goods made in America. Innovation in manufacturing is likely to be linked with manufacturing jobs requiring sophisticated skills. That means we need an improvement in education to develop qualified employees.

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Camille P. Schuster, Ph.D., President, Global Collaborations, Inc.

Ten mill is more like a rounding error in the PR budget, I'm sorry to observe.

It seems to me that the cost differential between third world factory labor and domestic labor is narrowing due in large part to the down-scaling of America. No wonder many WM suppliers believe they can bring more manufacturing back onshore.

Putting my cynicism aside, I do agree that Walmart bears a responsibility to wield its influence in this arena. It stands to benefit from a shorter supply chain, a reliable and diverse set of local sources, and a higher rate of domestic employment (= more customers).

Maybe if Walmart put aside the grandstanding about "job creation" and focused more transparently on its legitimate interest in re-shaping its supplier community, I could be more enthused about this announcement.

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James Tenser, Principal, VSN Strategies

Walmart will always be about price. Price and a competitive advantage in most categories for them, is the primary objective. It is admirable that they are increasing percentages of goods made in the USA. Maybe they should publish the percentage of SKUs as such? On the other hand, the dollar store chains are awfully quiet on this subject; if the dollar stores had to rely on "Made in the USA" goods, they'd be out of business in a heartbeat. Check the labels.

Some industries, such as consumer electronics, don't have much of a choice until and unless significant capital is invested into high tech manufacturing plants. Archaic forced unionization laws still inhibit many states in this regard.

Alan Cooper, Contract Trainer/Training Consultant, Independent/Freelance

I think some have, such as Menards and Fleet Farm. Walmart is simply taking note that this strategy is resonating with customers and doesn't want to be left behind. Now as to whether or not they are sincere in this effort...I am somewhat suspect based on their past purchasing behavior.

'kellyr'

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