Wal-Mart held its first manufacturing summit in Orlando, Florida, on August 22 and 23, 2013, to kick-start and repatriate manufacturing jobs in the U.S. The summit boasted attendance from 500 manufacturers, General Electric CEO Jeffrey Immelt, eight governors, officials from three dozen states, U.S. Commerce Secretary Penny Pritzker, and Bill Simon, president and CEO of Wal-Mart’s U.S. division—about 1,500 people in the audience.
The summit had the theme and Twitter hashtag of #MadeinUSA; more on that in a few paragraphs. Wal-Mart’s manufacturing summit did not get a lot of media coverage, and the coverage it did get met with cynicism.
Commentators raised eyebrows: Was the manufacturing summit just a PR stunt?
CBC business commentator Michael Hlinka was also skeptical of Wal-Mart’s motives.
The summit came seven months after Wal-Mart pledged to buy $50 billion more in U.S.-made goods over the next decade, representing about 10 per cent of what Wal-Mart will sell at retail in 2013.
When Wal-Mart is spearheading a manufacturing renaissance in the U.S., you know that the recession is dragging on. Since 2008, many economists have noted that this is the “jobless recovery.” I know people who used to have one living wage job, who now have several part-time jobs and are scrambling every month to make ends meet. I know one executive who used to shop at Harry Rosen, but now shops at Wal-Mart; he’s not making $250,000 a year any more.
When it takes the world’s largest retailer and third largest employer at 2.2 million employees worldwide (90,000 employees in Canada) [the U.S. military is second; the Chinese Army is first, based on active personnel], to tackle repatriating jobs back to North America, you know that things are much worse than the numbers show.
For decades, Wal-Mart has been known as the discount retailer who destroys living-wage manufacturing jobs by driving domestic suppliers to manufacture offshore. Wal-Mart’s famous for relentlessly squeezing suppliers to the point of forcing some to go out of business.
Today, Wal-Mart is now both hated and feared by its suppliers, a real-life Voldemort—the Evil Dark Lord.
At the summit, about 1,000 new American jobs were announced including 100 from Kayser-Roth legwear, 195 jobs from Renfro socks, and 150 jobs from GE for high efficiency lighting. Last December, Apple announced that it is bringing some of its Mac production back to the U.S. in 2013. And Ford, Intel, and Caterpillar are also bringing back jobs.
Seems that low wages are creeping up in Asia and so is the cost of transportation. Add to that fatigue of shoddy quality and long wait times to talk to customer service reps (who read prepared scripts, but have no understanding of your real problem), and companies take hits on their reputation by buying offshore.
When creating 162,000 is considered sluggish, 1,000 jobs is a mere drop in the bucket. Worse, the U.S. lost 6 million manufacturing jobs between early 2001 and late 2009, according to The Atlanta Journal Constitution. Wal-Mart said that its $50 billion commitment will create about 100,000 manufacturing jobs over a decade.
We’ve got a long way to go.
Back to the “Made in America” campaign. This was actually the title of Wal-Mart’s founder Sam Walton’s autobiography, co-written with FORTUNE managing editor John Huey, published in 1992, the same year as Walton’s death from bone cancer. Made in America was also a point of pride for Mr. Walton and the company.
“If you’re good to people, and fair with them, and demanding of them, they will eventually decide that you’re on their side,” Mr. Walton said in his autobiography.
When Mr. Walton was alive, workers got time-and-a-half for work on Sundays, an “open door” management policy, and a real chance at promotion (about 70 per cent of store managers started as hourly employees). Mr. Walton was one of the first retailers to set up a profit-sharing plan because he believed it was important to give every employee a sense of having a stake in the business.
One Wal-Mart Canada employee told me the way to keep a job Wal-Mart today is to show up on time, do as you’re told, keep to yourself, and never question management. And that’s a part-time job because Wal-Mart tries to keep everyone to about 25 hours, thereby avoiding paying out employee benefits.
During his lifetime, Sam Walton was liked and respected as a businessman. The trouble with Wal-Mart started with a string of successors after Mr. Walton’s death, and their respective management teams. They dedicated themselves to the relentless pursuit of profits, quarter-over-quarter, while selling cheap stuff. Add to that union-busting and a series of PR disasters, and you have a company that is loathed and ridiculed, with a few really rich executives.
Fifteen years after Mr. Walton died, the observation of writer Bob Ortega, who wrote In Sam We Trust (1998) and covered the retail industry for The Wall Street Journal rings truer than ever: “How high is the cost of low cost?”
Now, we know the answer.
Wal-Mart can help undo the damage it caused and contributed to. $50 billion is more than any other corporation is offering up. But this is not about cheerleading. When you’re the behemoth, you carry a lot of clout. Wal-Mart needs to help convince other big corporations that manufacturing in North America is not only good for them, it’s good for all of us. People spend more when they are making a living wage. What’s at stake is not buying more cheap stuff, but our standard of living.