- Joined
- May 14, 2009
By Alan Rooks, Editorial Director
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Some companies are so big that anything they do makes news. Wal-Mart Stores Inc. is one of those firms. So, when the world’s biggest retailer pledged it would buy an additional $50 billion of U.S.-made products over the next decade, I figured I should pay attention. The idea of all those Wal-Marts stuffed with American products is certainly appealing, since they sell A LOT of stuff.
In August, Wal-Mart held a well-publicized summit on its $50 billion idea, with 1,500 government officials, suppliers and retailers in attendance and some big names on the podium. The event’s tagline was “Here’s what we find beautiful: American jobs leading to American prosperity.” And, of course, Mom and apple pie are great, too.
But wait a minute. Isn’t it Wal-Mart that helped engineer the movement to move U.S. manufacturing jobs to China and other low labor-cost countries so they could get things cheap, cheaper and cheapest? Isn’t this the same company that helped kill thousands of mom-and-pop stores and hollow out the main streets of America? And didn’t it sponsor a “Buy America” program in the 1980s at the same time it was moving most of its sourcing overseas? Was this summit just a gimmick to improve Wal-Mart’s public image?
Let’s look at what was said. Bill Simon, president and CEO of Wal-Mart, announced the $50 billion pledge was “just the start.” He said Wal-Mart hopes to build a “network of support” by working with groups like the National Retail Federation, which helps manufacturers make products in the U.S. and helps retailers buy more U.S. goods. “We can’t become solely a service economy,” Simon said. “We have to make things in America.” Hard to disagree with that.
Jeff Immelt, chairman and CEO of General Electric, a panelist, said, “The U.S., on a relative basis, has never been more competitive in my career than it is now.” He announced GE would add 150 jobs to plants in Illinois and Ohio to develop high-efficiency light bulbs that will be sold in Wal-Mart stores in 2014.
OK, sounds good. But what does that $50 billion pledge really mean? After the summit was over, Michael Hlinka, business commentator for Canadian broadcaster CBC, pointed out that with sales of $250 billion a year, $50 billion worth of additional U.S. products over 10 years would equal less than 2 percent of Wal-Mart’s sales over that time period. And Stacy Mitchell, a researcher with the U.S.-based Institute for Local Self-Reliance, claimed that the “buy American” pledge could be met just by Wal-Mart’s “continued takeover of the U.S. grocery business.” Most grocery products sold in the U.S. are produced in the U.S, and Wal-Mart will be buying more of those products, particularly produce, as it takes market share from other grocers, she said.
So, some skepticism is in order. But if we take Wal-Mart at its word that the $50 billion pledge is just the beginning, its initiative could make a difference. Several manufacturers made job-related announcements at the summit. Hampton Products International Corp., a maker of locks, lighting and automotive products, is adding 150 jobs at a Wisconsin facility. Apparel maker Kayser-Roth Corp. is hiring 100 new employees in North Carolina and investing $28 million in manufacturing plants. And Element Electronics Corp. will start making TVs in Winnsboro, S.C., creating 500 jobs.
The truth is that the U.S. reshoring movement has some legs. It is more cost-effective to make products in the U.S. than in years past due to lower labor costs, lower labor input (automation), cheaper energy and better logistics. Wal-Mart has read the writing on the wall and wants to be seen as leading the reshoring movement, even though they’ve had little to do with it until now. But if their sourcing really does lead to more U.S. goods being sold in Wal-Mart, that’s a good thing.
Still, manufacturing is always changing. GE may be creating jobs with the lighting plants in Illinois and Ohio, but it is also closing a different lighting factory in Ohio, cutting 80 jobs, according to Bloomberg News. If it happens, any real recovery in U.S. manufacturing jobs will take years to achieve, so let’s put off the celebration until then. CTE
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Click Here for a free subscription to Cutting Tool Engineering magazine.
*This article is reprinted with permission from CUTTING TOOL ENGINEERING Magazine, and is protected under U.S. and international copyright laws. CUTTING TOOL ENGINEERING Magazine is protected under U.S. and international copyright laws. Before reproducing anything from this Web site, call the Copyright Clearance Center Inc. at (978) 750-8400.
Click Here for a free subscription to Cutting Tool Engineering magazine.
Some companies are so big that anything they do makes news. Wal-Mart Stores Inc. is one of those firms. So, when the world’s biggest retailer pledged it would buy an additional $50 billion of U.S.-made products over the next decade, I figured I should pay attention. The idea of all those Wal-Marts stuffed with American products is certainly appealing, since they sell A LOT of stuff.
In August, Wal-Mart held a well-publicized summit on its $50 billion idea, with 1,500 government officials, suppliers and retailers in attendance and some big names on the podium. The event’s tagline was “Here’s what we find beautiful: American jobs leading to American prosperity.” And, of course, Mom and apple pie are great, too.
But wait a minute. Isn’t it Wal-Mart that helped engineer the movement to move U.S. manufacturing jobs to China and other low labor-cost countries so they could get things cheap, cheaper and cheapest? Isn’t this the same company that helped kill thousands of mom-and-pop stores and hollow out the main streets of America? And didn’t it sponsor a “Buy America” program in the 1980s at the same time it was moving most of its sourcing overseas? Was this summit just a gimmick to improve Wal-Mart’s public image?
Let’s look at what was said. Bill Simon, president and CEO of Wal-Mart, announced the $50 billion pledge was “just the start.” He said Wal-Mart hopes to build a “network of support” by working with groups like the National Retail Federation, which helps manufacturers make products in the U.S. and helps retailers buy more U.S. goods. “We can’t become solely a service economy,” Simon said. “We have to make things in America.” Hard to disagree with that.
Jeff Immelt, chairman and CEO of General Electric, a panelist, said, “The U.S., on a relative basis, has never been more competitive in my career than it is now.” He announced GE would add 150 jobs to plants in Illinois and Ohio to develop high-efficiency light bulbs that will be sold in Wal-Mart stores in 2014.
OK, sounds good. But what does that $50 billion pledge really mean? After the summit was over, Michael Hlinka, business commentator for Canadian broadcaster CBC, pointed out that with sales of $250 billion a year, $50 billion worth of additional U.S. products over 10 years would equal less than 2 percent of Wal-Mart’s sales over that time period. And Stacy Mitchell, a researcher with the U.S.-based Institute for Local Self-Reliance, claimed that the “buy American” pledge could be met just by Wal-Mart’s “continued takeover of the U.S. grocery business.” Most grocery products sold in the U.S. are produced in the U.S, and Wal-Mart will be buying more of those products, particularly produce, as it takes market share from other grocers, she said.
So, some skepticism is in order. But if we take Wal-Mart at its word that the $50 billion pledge is just the beginning, its initiative could make a difference. Several manufacturers made job-related announcements at the summit. Hampton Products International Corp., a maker of locks, lighting and automotive products, is adding 150 jobs at a Wisconsin facility. Apparel maker Kayser-Roth Corp. is hiring 100 new employees in North Carolina and investing $28 million in manufacturing plants. And Element Electronics Corp. will start making TVs in Winnsboro, S.C., creating 500 jobs.
The truth is that the U.S. reshoring movement has some legs. It is more cost-effective to make products in the U.S. than in years past due to lower labor costs, lower labor input (automation), cheaper energy and better logistics. Wal-Mart has read the writing on the wall and wants to be seen as leading the reshoring movement, even though they’ve had little to do with it until now. But if their sourcing really does lead to more U.S. goods being sold in Wal-Mart, that’s a good thing.
Still, manufacturing is always changing. GE may be creating jobs with the lighting plants in Illinois and Ohio, but it is also closing a different lighting factory in Ohio, cutting 80 jobs, according to Bloomberg News. If it happens, any real recovery in U.S. manufacturing jobs will take years to achieve, so let’s put off the celebration until then. CTE
-----------------------------------------------------------------
Click Here for a free subscription to Cutting Tool Engineering magazine.
*This article is reprinted with permission from CUTTING TOOL ENGINEERING Magazine, and is protected under U.S. and international copyright laws. CUTTING TOOL ENGINEERING Magazine is protected under U.S. and international copyright laws. Before reproducing anything from this Web site, call the Copyright Clearance Center Inc. at (978) 750-8400.
