August 27, 2013
Will U.S. Manufacturing Boost Walmart?
Nearly 1,500 government officials, suppliers and retailers convened last week at Walmart’s first two-day U.S. Manufacturing Summit in Orlando to support a revival in U.S. manufacturing. In a column penned for The Huffington Post, Bill Simon, president and CEO of Walmart U.S., stated that the resurgence is critical to rebuilding the U.S’s middle class.
"While we have entry-level and high-end jobs, we have lost the jobs in the middle that helped each generation of Americans do better than the one before it," wrote Mr. Simon. "Some call this an ‘hourglass economy’; I tend to think of it as a canyon being hollowed out between the two ends of the job market."
He said while some are calling for higher minimum wages, that approach "doesn’t address the real issue — the lack of good jobs in the middle. And it fails to understand the role of entry-level jobs, including those in restaurants, hospitality and retail, as a starting point — a chance to build skills and begin taking on bigger jobs."
Rather, the solution, according to Mr. Simon, is "to fill the middle with more good jobs." And that’s why Walmart in January pledged to buy an additional $50 billion in U.S.-made products over the next 10 years and held the summit, co-hosted by the National Retail Federation, to rally support from industry leaders and lawmakers.
Pledges to infuse more than $70 million into factory growth and create more than 1,000 domestic jobs last week came from General Electric, Element Electronics, Renfro, Chobani and others.
Not surprisingly, critics saw the push as a PR move to counter the perception of Walmart as the company that led the migration of manufacturing jobs overseas in search of cheap labor. They also expect a minimal impact at best from the new efforts.
The Associated Press further noted that a Walmart made-in-America campaign in the mid nineties was short-lived because not enough low priced products could be found to suit shoppers.
But Walmart officials vowed this time to go well beyond a marketing campaign to explore adding U.S production across each of its 1,300 product categories, according to the AP report. With rising costs for Asian labor and overseas transportation, Walmart also said vendors had privately defined "tipping points" at which making goods overseas would no longer make sense.
"We can disagree on many things, but we all agree that Americans need good middle-class jobs and that we have a golden opportunity right now to revitalize our manufacturing industry," said Mr. Simon.
- Reviving U.S. Manufacturing Key to Rebuilding the Middle Class – Huffington Post
- Walmart, Suppliers and Government Officials Accelerate Job Growth and Production Opportunities at U.S. Manufacturing Summit – Walmart
- Wal-Mart attempts ‘made in America’ push – Associated Press
- Walmart to Boost Sourcing of U.S. Products by $50 Billion Over the Next 10 Years – Walmart
- NRF: Walmart Goes Big On Red, White and Blue – RetailWire
BrainTrust
Recent Discussions
Discussion Questions
Is reviving U.S. manufacturing good for the middle class and a positive for Walmart? Do you see a chance for a possible revival in U.S. manufacturing?
Poll
As usual, the Walmart critics call it a PR gig. They will never get it that Walmart is a core part of our culture and our business and retail network. Overall, if Walmart is putting a push on USA made product, then we will have more jobs and we will have more of their competitors doing the same thing.
Walmart is part of my America—make it a part of yours.
Tom…wavin’ the flag!
Boy, I sure hope so. And just like Walmart “made” China, it can re-make the US. Will it happen? I don’t know!
More important than its impact on Walmart, reviving the middle class is good for America. Like many things that are easy to say, it is not easy to do.
Price was always important, but now seems paramount in many retailers’ and consumers’ minds. Contributing factors certainly include the economy, but social phenomena such as the rise of mobile technology and showrooming have brought price even more to the forefront.
“Made in America” is making a comeback, not necessarily because we have all suddenly become more patriotic or because of a concern for the disappearing middle class, but because made elsewhere is getting more expensive. As the cost of foreign manufactured goods goes up, the companies are again rolling out their support for “Made in America” as a marketing slogan. Hopefully the trend will continue, but we will have to adapt what the phase means, as many foreign companies build parts in this country, assemble goods here, etc.
Since when did Walmart decide it is good to buy American made goods? When they shuttered factories all over the USA by getting cheaper goods from China? No one else could get away with this hypocrisy but Walmart, and it is a great marketing campaign for them, knowing that the pressure is on to buy OUR goods.
With sales stagnant, this initiative buys free press, and turns them into patriotic saints, which is good for their image, but when it comes down to the pricing of the goods made here, than we’ll see how much Walmart will start buying from the good old USA.
One can only hope, that Walmart will turn their backs on cheaper goods from overseas, and return to buying American made products. Let’s see if this is for real or another marketing campaign.
I really don’t see this really going anywhere and is more for show. The days of well paid jobs for “make-work” manufacturing jobs is long over. Workers must bring a marketable skill set that is in demand, and that makes profit for their employer. Someone has to pay the price for middle class wages and I doubt Walmart or their customers want to foot the bill to subsidize unskilled labor.
The “Canyon” Mr. Simon refers to was hollowed out by Walmart over the last 15 years. I watched many manufacturers go under when Walmart moved their buying overseas for short term gains on pricing. Now that Americans realize the importance of U.S. manufacturing jobs, Walmart is coming around to join the wave. Trust me, I am not complaining that Walmart is supporting the effort. The $50 billion (over 10 years), however, is a small shovel worth of dirt to fill the “Canyon” they dug. My hope is consumers will push even harder for MADE IN THE US items and Walmart will increase that amount 5 fold.
MADE IN THE US is something I have been pushing for years. Why?
1) Manufacturing is necessary to keep a healthy/balanced economy. We can’t survive/thrive as a service economy. We need to make stuff.
2) Safety. Over the last 10 years we have had more than one scar (recall) on toys, building supplies and food coming from overseas.
3) Productive society. Not every child is going to be a doctor, lawyer or work on Wall Street. Manufacturing jobs are great jobs and a fit for a lot of Americans. Again, it comes down to balance.
Walmart and Mr. Simon. Welcome to the MADE IN THE USA Renaissance. My hope is you will embrace the movement and become a major contributor. No question it will pay back 10 fold to your bottom line in the long run.
Walmart is very serious about this stuff, but what is more important is that they intend to make money doing it. Walmart is NOT a public enterprise or charity. When they went into the grocery business, a lot of critics thought they were nuts—what did they know about groceries?
When they went into the “green” business, a lot of people thought this was just a PR ploy. They made money doing it, where it made sense.
When they promote American manufacturing, in partnership with even smaller businesses, they will make money doing it.
Nefarious government is NOT a friend to Walmart, particularly when it proposes to further price low paid employees out of jobs. Whether in manufacturing or service, robots loom as major competitors to entry level jobs. American manufacturing will NOT thrive until voters understand the reality, not the rhetoric, of left-leaning government.
Walmart improved the Chinese economy when it abandoned its “Made in America” emphasis—and WM continued to prosper. Now we are sensing that there is a possible solution for revival of U.S. manufacturing via WM.
While optimism is high, negative forces remain and they will be tough to dislodge. It seems that this condition has taken foot in the nation. Nonetheless, more manufacturing jobs in the USA must be our goal.
Walmart is important to the future of U.S. manufacturing. Let’s hope this is really Walmart walking the walk as well as talking the talk. Additionally, this has to be a long-term commitment from Walmart.
We are ignoring the elephant in the room.
While U.S. manufacturers have cried foul over the rush to source from China, other foreign companies are making hay by manufacturing right here in the good old U.S. of A.
My Nissan Titan was built in Alabama. My VW Passat was built in a brand new factory in Chattanooga. But Ford builds their trucks in Canada and GM builds their cars in Canada. So how can that be?
The answer is simple—newer plants with more efficient technology help—but the answer is cheaper labor. Right to work states get these plants and nonunion labor gets these jobs. They pay well enough to make worker satisfaction scores high in these plants, but they don’t contribute anything to PAC’s or politicians.
The jobs in the middle can come back in America. And they will pay the workers well enough—though not what Detroit was paying. But they won’t support the other costs America laid on its manufacturing infrastructure over the years. That has been hard for a lot of folks who publicly bemoan the “loss of the middle class” to swallow.
If Walmart does bring jobs to the USA, I envision it to be like what we currently have with our meat packing plants—the wages are low and the labor is imported. Success in manufacturing depends on cheap labor. Just because the jobs would be in the USA does not mean they would be well-paying.
We need higher wage jobs to revitalize the middle class. Nothing shocking there. But coming from Walmart? Shocking. PR move or not, it’s the right thing to do, and hopefully other markets will follow in their footsteps. A resurgence in U.S. manufacturing is exactly what the nation needs to help propel job growth. As the industry leader, any of Walmart’s efforts are definitely appreciated and I know job seekers will agree. It will be interesting to see how the industry responds.
On this one RetailWire post, I am glad I feel I can answer this question with a resounding YES. This is not because of any push by Walmart or any other retail group, but because it is going to make economic sense.
With the utilization of automation and technology, US manufacturers are going to be able to not only compete, but actually win against foreign suppliers, just as we are seeing happen in the automotive industry.
The two caveats are:
1. It will take fewer people to produce those goods. So we are going to need to find more goods to produce.
2. We are going to have to change our educational system to make sure that the workers have the skills needed to do 21st Century jobs.
Reviving U.S. manufacturing would be good for all retailers. Of course it’s a PR effort, but Walmart should not be criticized for engaging in category leader behavior.
Definitely good for the middle class, and good for Walmart. Just by some of the requirements it’s put on its order blanks over the years, Walmart has done more to bring about progress in quality/safety/green-ness of goods than our bought-and-paid-for Congress. Walmart will certainly help with this move, but it is laughable to think it would be the key to a revival of U.S. manufacturing. Our manufacturing will get stronger as it gets cheaper to make things here, plain and simple. That’s coming, for a lot of reasons that aren’t entirely pleasant, for those who look below the veneer.
My first question is: If they build it; will they come? Meaning, if WM brings manufacturing back to the good ole USA, will Americans take the jobs?
My next question is: What makes a manufacturing job middle class? Those we would dub as middle class are coming out of today’s schools with very different skill sets and far more capability.
I’m gonna go out on a limb here and say that I think manufacturing (for the most part) should stay in third world countries where the need is.
Then let’s rethink where true value is in retail and hire and pay accordingly. With customer demand what it is today, I can’t help but believe there is more opportunity and a better career path from the store level. Hmmm, something to think about.
As we speak the price of oil is up almost $3.00 per barrel. Fuel prices cascade into the entire world market causing unending consumer price increases. Overseas imports are now paying for round trip tickets for one way travel of goods. The only logical answer is to reduce the travel distances of goods and seek to create a two way commerce in importing to now include exporting of goods.
As long as there is cheap labor flooding into the USA, the opportunities to build and grow manufacturing against rising oil prices will remain a good investment. The fun part of this story went untold. I am wondering how Walmart will address its goal to remain labor union free within its new manufacturing facilities. This promises to bring many an interesting topic for future discussions.
“Nearly 1,500 government officials….” Hard to get very enthusiastic about any plan that begins with these three words; not (necessarily) because government is incompetent, but rather because its usually involved when something doesn’t work in the marketplace…which means it probably can’t work, period. And after having read the piece, larded with words like “explore” and “pledge,” I’m firmly with the critics who “expect minimal impact at best.”
“Measurable” being the operative term. Some product areas can come back, like autos or maybe even toys, but other areas, like apparel, no way. The overseas set up that enables price through quantity in apparel could never be reproduced here, simply because of cost.
A key would be for Walmart (in terms of domestic production) to start to think about pricing a little differently. As in, not always the same margins. Also, buying product in smaller batches. But even if those two fundamentals of low-cost goods get reversed, there’s still the customer’s expectations to deal with. In any case, a very daunting task. Don’t look for ‘measurable’ results anytime soon…and you know what that means for Walmart (no margin, no mission).
“Mission creep” is not confined to our military. It can also be found in the bylaws, policies, and practices of both public and trade labor unions. Once self-tasked as the protectors and champions of middle class workers, today’s unions are corrupt political inventions set up to gouge, cheat, lie, and pressure employers for more, more, more—well beyond the capability of employers to satisfy their unreasonable demands. The only clarion call to which unions respond is, “If a little bit is good, then a lot more is better.” Instead of nurturing the middle class, labor unions are crushing it. Their unfettered and mismanaged mission creep has run smack-dab into the law of unintended consequences.
As Ben Ball astutely pointed out, non-union employers and right-to-work states can be the salvation of the middle class in our country. B-b-but, that will require the oft-promised but never delivered help from our governing bodies. Instead of enacting new and more restrictive laws designed to handcuff U.S. employers (especially Obamacare and onerous taxation on businesses), our legislators to need to control their own mission creep.
I’m thinking that as Doc Banks points out, the law of unintended consequences is becoming even glaringly clear to Walmart. That is, when your consumers don’t have jobs—good jobs—they can’t buy your goods.
The difference between Walmart and Henry Ford is this: Mr. Ford realized this on the front end of his company’s rise. Walmart is just now realizing it on the back slide of their rise to such monumental levels.
Mr. Ford realized that if he doubled his worker’s wages, they could actually afford to buy his product. In the quest for “Cheap” goods, Walmart drove jobs right out of the market place. Ironically, those that they claim as their demographic, hurt the most by what Walmart did to deliver cheap goods, are their best customers.
It is only when the combination of continued pressure on wages and the UAW, that Mr. Ford’s plan went out of control and now the pendulum has swung the other way. So to has Walmart. They’ve faced declining same store sales for a very long time.
In their intention to grow U.S. manufacturing, their major obstacle with be regulation forced upon anyone in manufacturing or business today. We cry for jobs, yet punish those that create them and regulate them to the extent that job creation becomes nearly impossible.
Good intentions. Good luck.
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As usual, the Walmart critics call it a PR gig. They will never get it that Walmart is a core part of our culture and our business and retail network. Overall, if Walmart is putting a push on USA made product, then we will have more jobs and we will have more of their competitors doing the same thing.
Walmart is part of my America—make it a part of yours.
Tom…wavin’ the flag!
Boy, I sure hope so. And just like Walmart “made” China, it can re-make the US. Will it happen? I don’t know!
More important than its impact on Walmart, reviving the middle class is good for America. Like many things that are easy to say, it is not easy to do.
Price was always important, but now seems paramount in many retailers’ and consumers’ minds. Contributing factors certainly include the economy, but social phenomena such as the rise of mobile technology and showrooming have brought price even more to the forefront.
“Made in America” is making a comeback, not necessarily because we have all suddenly become more patriotic or because of a concern for the disappearing middle class, but because made elsewhere is getting more expensive. As the cost of foreign manufactured goods goes up, the companies are again rolling out their support for “Made in America” as a marketing slogan. Hopefully the trend will continue, but we will have to adapt what the phase means, as many foreign companies build parts in this country, assemble goods here, etc.
Since when did Walmart decide it is good to buy American made goods? When they shuttered factories all over the USA by getting cheaper goods from China? No one else could get away with this hypocrisy but Walmart, and it is a great marketing campaign for them, knowing that the pressure is on to buy OUR goods.
With sales stagnant, this initiative buys free press, and turns them into patriotic saints, which is good for their image, but when it comes down to the pricing of the goods made here, than we’ll see how much Walmart will start buying from the good old USA.
One can only hope, that Walmart will turn their backs on cheaper goods from overseas, and return to buying American made products. Let’s see if this is for real or another marketing campaign.
I really don’t see this really going anywhere and is more for show. The days of well paid jobs for “make-work” manufacturing jobs is long over. Workers must bring a marketable skill set that is in demand, and that makes profit for their employer. Someone has to pay the price for middle class wages and I doubt Walmart or their customers want to foot the bill to subsidize unskilled labor.
The “Canyon” Mr. Simon refers to was hollowed out by Walmart over the last 15 years. I watched many manufacturers go under when Walmart moved their buying overseas for short term gains on pricing. Now that Americans realize the importance of U.S. manufacturing jobs, Walmart is coming around to join the wave. Trust me, I am not complaining that Walmart is supporting the effort. The $50 billion (over 10 years), however, is a small shovel worth of dirt to fill the “Canyon” they dug. My hope is consumers will push even harder for MADE IN THE US items and Walmart will increase that amount 5 fold.
MADE IN THE US is something I have been pushing for years. Why?
1) Manufacturing is necessary to keep a healthy/balanced economy. We can’t survive/thrive as a service economy. We need to make stuff.
2) Safety. Over the last 10 years we have had more than one scar (recall) on toys, building supplies and food coming from overseas.
3) Productive society. Not every child is going to be a doctor, lawyer or work on Wall Street. Manufacturing jobs are great jobs and a fit for a lot of Americans. Again, it comes down to balance.
Walmart and Mr. Simon. Welcome to the MADE IN THE USA Renaissance. My hope is you will embrace the movement and become a major contributor. No question it will pay back 10 fold to your bottom line in the long run.
Walmart is very serious about this stuff, but what is more important is that they intend to make money doing it. Walmart is NOT a public enterprise or charity. When they went into the grocery business, a lot of critics thought they were nuts—what did they know about groceries?
When they went into the “green” business, a lot of people thought this was just a PR ploy. They made money doing it, where it made sense.
When they promote American manufacturing, in partnership with even smaller businesses, they will make money doing it.
Nefarious government is NOT a friend to Walmart, particularly when it proposes to further price low paid employees out of jobs. Whether in manufacturing or service, robots loom as major competitors to entry level jobs. American manufacturing will NOT thrive until voters understand the reality, not the rhetoric, of left-leaning government.
Walmart improved the Chinese economy when it abandoned its “Made in America” emphasis—and WM continued to prosper. Now we are sensing that there is a possible solution for revival of U.S. manufacturing via WM.
While optimism is high, negative forces remain and they will be tough to dislodge. It seems that this condition has taken foot in the nation. Nonetheless, more manufacturing jobs in the USA must be our goal.
Walmart is important to the future of U.S. manufacturing. Let’s hope this is really Walmart walking the walk as well as talking the talk. Additionally, this has to be a long-term commitment from Walmart.
We are ignoring the elephant in the room.
While U.S. manufacturers have cried foul over the rush to source from China, other foreign companies are making hay by manufacturing right here in the good old U.S. of A.
My Nissan Titan was built in Alabama. My VW Passat was built in a brand new factory in Chattanooga. But Ford builds their trucks in Canada and GM builds their cars in Canada. So how can that be?
The answer is simple—newer plants with more efficient technology help—but the answer is cheaper labor. Right to work states get these plants and nonunion labor gets these jobs. They pay well enough to make worker satisfaction scores high in these plants, but they don’t contribute anything to PAC’s or politicians.
The jobs in the middle can come back in America. And they will pay the workers well enough—though not what Detroit was paying. But they won’t support the other costs America laid on its manufacturing infrastructure over the years. That has been hard for a lot of folks who publicly bemoan the “loss of the middle class” to swallow.
If Walmart does bring jobs to the USA, I envision it to be like what we currently have with our meat packing plants—the wages are low and the labor is imported. Success in manufacturing depends on cheap labor. Just because the jobs would be in the USA does not mean they would be well-paying.
We need higher wage jobs to revitalize the middle class. Nothing shocking there. But coming from Walmart? Shocking. PR move or not, it’s the right thing to do, and hopefully other markets will follow in their footsteps. A resurgence in U.S. manufacturing is exactly what the nation needs to help propel job growth. As the industry leader, any of Walmart’s efforts are definitely appreciated and I know job seekers will agree. It will be interesting to see how the industry responds.
On this one RetailWire post, I am glad I feel I can answer this question with a resounding YES. This is not because of any push by Walmart or any other retail group, but because it is going to make economic sense.
With the utilization of automation and technology, US manufacturers are going to be able to not only compete, but actually win against foreign suppliers, just as we are seeing happen in the automotive industry.
The two caveats are:
1. It will take fewer people to produce those goods. So we are going to need to find more goods to produce.
2. We are going to have to change our educational system to make sure that the workers have the skills needed to do 21st Century jobs.
Reviving U.S. manufacturing would be good for all retailers. Of course it’s a PR effort, but Walmart should not be criticized for engaging in category leader behavior.
Definitely good for the middle class, and good for Walmart. Just by some of the requirements it’s put on its order blanks over the years, Walmart has done more to bring about progress in quality/safety/green-ness of goods than our bought-and-paid-for Congress. Walmart will certainly help with this move, but it is laughable to think it would be the key to a revival of U.S. manufacturing. Our manufacturing will get stronger as it gets cheaper to make things here, plain and simple. That’s coming, for a lot of reasons that aren’t entirely pleasant, for those who look below the veneer.
My first question is: If they build it; will they come? Meaning, if WM brings manufacturing back to the good ole USA, will Americans take the jobs?
My next question is: What makes a manufacturing job middle class? Those we would dub as middle class are coming out of today’s schools with very different skill sets and far more capability.
I’m gonna go out on a limb here and say that I think manufacturing (for the most part) should stay in third world countries where the need is.
Then let’s rethink where true value is in retail and hire and pay accordingly. With customer demand what it is today, I can’t help but believe there is more opportunity and a better career path from the store level. Hmmm, something to think about.
As we speak the price of oil is up almost $3.00 per barrel. Fuel prices cascade into the entire world market causing unending consumer price increases. Overseas imports are now paying for round trip tickets for one way travel of goods. The only logical answer is to reduce the travel distances of goods and seek to create a two way commerce in importing to now include exporting of goods.
As long as there is cheap labor flooding into the USA, the opportunities to build and grow manufacturing against rising oil prices will remain a good investment. The fun part of this story went untold. I am wondering how Walmart will address its goal to remain labor union free within its new manufacturing facilities. This promises to bring many an interesting topic for future discussions.
“Nearly 1,500 government officials….” Hard to get very enthusiastic about any plan that begins with these three words; not (necessarily) because government is incompetent, but rather because its usually involved when something doesn’t work in the marketplace…which means it probably can’t work, period. And after having read the piece, larded with words like “explore” and “pledge,” I’m firmly with the critics who “expect minimal impact at best.”
“Measurable” being the operative term. Some product areas can come back, like autos or maybe even toys, but other areas, like apparel, no way. The overseas set up that enables price through quantity in apparel could never be reproduced here, simply because of cost.
A key would be for Walmart (in terms of domestic production) to start to think about pricing a little differently. As in, not always the same margins. Also, buying product in smaller batches. But even if those two fundamentals of low-cost goods get reversed, there’s still the customer’s expectations to deal with. In any case, a very daunting task. Don’t look for ‘measurable’ results anytime soon…and you know what that means for Walmart (no margin, no mission).
“Mission creep” is not confined to our military. It can also be found in the bylaws, policies, and practices of both public and trade labor unions. Once self-tasked as the protectors and champions of middle class workers, today’s unions are corrupt political inventions set up to gouge, cheat, lie, and pressure employers for more, more, more—well beyond the capability of employers to satisfy their unreasonable demands. The only clarion call to which unions respond is, “If a little bit is good, then a lot more is better.” Instead of nurturing the middle class, labor unions are crushing it. Their unfettered and mismanaged mission creep has run smack-dab into the law of unintended consequences.
As Ben Ball astutely pointed out, non-union employers and right-to-work states can be the salvation of the middle class in our country. B-b-but, that will require the oft-promised but never delivered help from our governing bodies. Instead of enacting new and more restrictive laws designed to handcuff U.S. employers (especially Obamacare and onerous taxation on businesses), our legislators to need to control their own mission creep.
I’m thinking that as Doc Banks points out, the law of unintended consequences is becoming even glaringly clear to Walmart. That is, when your consumers don’t have jobs—good jobs—they can’t buy your goods.
The difference between Walmart and Henry Ford is this: Mr. Ford realized this on the front end of his company’s rise. Walmart is just now realizing it on the back slide of their rise to such monumental levels.
Mr. Ford realized that if he doubled his worker’s wages, they could actually afford to buy his product. In the quest for “Cheap” goods, Walmart drove jobs right out of the market place. Ironically, those that they claim as their demographic, hurt the most by what Walmart did to deliver cheap goods, are their best customers.
It is only when the combination of continued pressure on wages and the UAW, that Mr. Ford’s plan went out of control and now the pendulum has swung the other way. So to has Walmart. They’ve faced declining same store sales for a very long time.
In their intention to grow U.S. manufacturing, their major obstacle with be regulation forced upon anyone in manufacturing or business today. We cry for jobs, yet punish those that create them and regulate them to the extent that job creation becomes nearly impossible.
Good intentions. Good luck.