Wal-Mart's Manufacturing Pledge Met With Hope, Skepticism

by Mark Friedman  on Monday, Feb. 24, 2014 12:00 am  

Burt Hanna, CEO of Hanna’s Candle, said Wal-Mart’s orders increased from $4 million in 2012 to $30 million in 2013. By 2017, Wal-Mart is expected to buy $45 million worth of merchandise from his company that manufactures scented candles in Fayetteville. (Photo by Brooke McNeely Galligan)

The same-store sales “trend is terrible,” Davidowitz said. “Well, one way to get the middle class going is to have more domestic manufacturing.”

Manufacturing employment slowly has been rising in the United States after years of decline. The Bureau of Labor Statistics preliminary count of manufacturing jobs in December was 12.1 million, up from 11.96 million in December 2012. The number, though, is still a long way from the 17 million domestic manufacturing jobs of the 1990s.

Made in America

In January 2013, Bill Simon, president and CEO of Wal-Mart U.S., said at a conference held by the National Retail Federation of Washington, D.C., that Wal-Mart and other retailers could create more American jobs and support U.S. manufacturers by pledging to buy more American-made goods.

“In previous decades, investment mainly went to Asia,” Simon said in the speech, a transcript of which is posted on Wal-Mart’s website. “Wages were low. The price of oil was low.”

Now labor costs in Asia are rising and oil and transportation costs are high “and increasingly uncertain,” he said.

For example, while 70 percent of the global supply of cotton is grown in the United States, it’s then shipped overseas, where it’s made into a towel or other item and then shipped back to the U.S., he said.

“We can cut out two shipments across the world and weeks on the water and cut our costs in the process,” Simon said. “We can save our customers money by employing more of their neighbors — why wouldn’t we do this?”

Wal-Mart plans to increase what it buys in the U.S. in categories such as sporting goods, storage products, games and paper products.

Simon said that some manufacturers have told Wal-Mart officials that manufacturing overseas doesn’t make sense for them anymore. “Let’s give them the nudge they need,” Simon said. “Through our buying power, we can give manufacturers confidence to invest capital here.”

About two-thirds of the merchandise Wal-Mart buys already comes from the United States, but most of that is tied to its grocery side, said Katie Cody, a Wal-Mart spokeswoman.

“But we knew there was room to do more,” she said. “And it really is a pivotal time right now where it’s starting to make more sense from an economic standpoint for this to happen.”



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