“Since last year I’ve been making the rounds talking to just about anyone who’ll listen about this opportunity to re-establish a manufacturing base in the U.S.”
Not long ago, a statement like that from Walmart U.S. President and CEO Bill Simon would have been met with disbelief, if not outright derision. In a 2007 study for the Economic Policy Institute, Robert E. Scott looked at Walmart’s sourcing from China ($27 billion in 2006) and reported, “Walmart’s increased trade deficit with China eliminated 133,000 manufacturing jobs….”
Scott’s analysis had followed Charles Fishman’s book, The Wal-Mart Effect, in which Fishman had praised the giant retailer for its business acumen but noted the destructive impact of its policies on U.S. manufacturing.
“[T]hey are constantly dissatisfied with the cost that everything’s delivered at. Let’s make it a little less expensive. The result of that though is that eventually people have to move manufacturing offshore…” Fishman observed in a 2006 interview with NPR’s Robert Siegel, adding, “[I]t’s very clear that Walmart drives jobs overseas and ultimately undermines the quality of original products in order to deliver on this always low price promise.”
But in January 2013, Walmart signaled the beginning of an effort to put more merchandise made in the U.S. in its stores. The company said it would buy an additional $50 billion worth of domestic products over the next 10 years.
Walmart followed up with a manufacturing summit in Orlando last August which convened nearly 1,500 suppliers and government officials. At the summit, Walmart announced that a number of companies had promised to invest more than $70 million in U.S. production and create over 1,000 jobs.
This week, Simon emphasized the importance of U.S. manufacturing at the company’s Year Beginning Meeting in Orlando. He reminded the audience that Walmart now has pledged to spend $250 billion on U.S. products over the next 10 years. The Boston Consulting Group estimates this commitment will create 1 million jobs. Simon cited some of the domestic manufacturers Walmart has signed up to make products for the retailer:
- Element Electronics recently opened a factory in Winnsboro, S.C., to assemble and package flat-screen TVs and expects to employ 500 people eventually at the facility.
- 1888 Mills employs 200 workers in manufacturing in the U.S. Simon said sales of the towels 1888 Mills makes for Walmart increased 24% in the past year, and the firm is expanding with a 500,000 square foot facility in Griffin, Ga.
- American Home Manufacturing is moving production of comforters to South Carolina, Simon announced, and will create 200 jobs at that facility.
At the meeting, Simon announced that Walmart will be putting its patio furniture out for bid and is looking for U.S. manufacturers. The reason: “There are long lead times and we have to make a commitment for the following year before any of the current year’s merchandise has sold,” he said. “Making the furniture closer to point of sale will be better for our planning and better for our customers.”
Walmart Establishes Foundation to Support Manufacturing Innovation
Walmart, along with the Walmart Foundation and the U.S. Conference of Mayors, also announced this week the launch of a $10 million Walmart U.S. Manufacturing Innovation Fund. The company said the fund will provide grants of $100,000 or more to non-profit organizations with innovative ideas for the production of textiles and “common manufacturing processes that apply to a broad range of consumer goods, including small motor manufacturing and tooling for injection molding.” Applications for the grants are due April 22, 2014.
On July 8, Walmart will hold an open call with U.S. manufacturers to listen to pitches for new products. And Simon said Walmart will hold another manufacturing supplier summit in August in Denver.
