Wednesday, April 23, 2014
By Anne D'innocenzio and Mike Schneider / The Associated Press
(Continued from page 1)
Wal-Mart U.S. President and CEO Bill Simon addresses attendees of the Wal-Mart U.S. Manufacturing Summit in Orlando, Fla., Thursday.
It's also reaching out to state and local officials to work with suppliers to explore rebates, training and other programs to attract U.S. makers. Additionally, the discounter also says it's changing the way it does business with suppliers, giving multi-year commitments for basic goods where it makes sense, instead of season-by-season ordering.
Rebuilding U.S. manufacturing jobs is resonating even more these days. The nation's unemployment rate of 7.4 percent, while now at a 4 1/2-year low, is still well above the 5 percent to 6 percent typical of a healthy economy.
Meanwhile, Wal-Mart and other major retailers have been under fire for not doing a better job monitoring worker safety in factories overseas. That pressure increased after a factory collapse this past spring in Bangladesh, killing 1,129 people. That was the deadliest incident in the history of the garment industry.
But what could really propel the movement this time around is pure economics: Labor costs are rising in Asia, while oil and transportation costs are high and increasingly uncertain.
Rising wages have erased some of the competitive advantages China had in manufacturing, Wal-Mart's Simon said, and manufacturing jobs offer a path into the U.S. middle class.
"We think we can map out opportunities and put some systems in place and commit to this for the long term," Simon said. "There's nothing less than the future of our country at stake here."
Wal-Mart said several manufacturers had told executives privately they had defined "tipping points" at which making goods overseas will no longer make sense. Wal-Mart says it doesn't believe that its customers should pay any more for made-in-America goods and is focusing on working with suppliers to make sure the prices are in line with what shoppers want to pay.
"It's an economic advantage when you have the wind in your back, instead of having the wind in your face," said Hal Sirkin, a senior partner and managing director at the Boston Consulting Group and an expert on manufacturing. He is serving as a consultant to Wal-Mart. He believes that the movement could create 100,000 more jobs in the next decade.
Wal-Mart, with more than 4,000 stores in the U.S. and about $460 billion in total sales, has proven that it has the clout to get other suppliers and merchants on board. For example, in 2009, Wal-Mart created a coalition among stores, suppliers, government, nonprofit organizations and academic experts for a sustainability index that measure whether goods were made in a responsible way and whether the materials are safe.
Wal-Mart has said that items made, sourced or grown in the U.S. account for about two-thirds of the company's spending on products for its U.S. business, according to data given by suppliers. But analysts say that much of its clothing, home furnishings and consumer electronics are made elsewhere.
One company to sign up is Sleep Studio, which is now working with Wal-Mart to produce memory foam mattress toppers. Before, all of the discounter's toppers were produced by manufacturers overseas. This year, 20 percent will be made in the U.S.
CEO Michael Rothbard said Wal-Mart worked with the company to streamline the costs, eliminating $10 from the price tag. The New York-based company has factories in California and Georgia.
"The selling process was really intense," Rothbard said. "We had to convince them our products offered unique benefits, and that we could meet their needs."