NRF: Walmart Goes Big On Red, White and Blue

Discussion
Jan 16, 2013

Walmart is wrapping itself firmly in the American flag with plans to take logistics savings directly to the bank. The world’s largest retailer used the stage at this year’s NRF BIG Show in New York to announce a plan to invest in American manufacturing and hire thousands of military veterans over the next five years.

Bill Simon, president and CEO, Walmart U.S., told attendees that he came to the convention to talk about the company’s plan to contribute to an American "economic renewal" driven by retail. "When we work together, our retail industry can lead in a way no other industry can," he said.

Mr. Simon pointed to rising labor costs in Asia as well as the high cost of fuel and other logistical challenges as giving manufacturers reason to consider bringing production back to the U.S.

"Through our buying power, we can give manufacturers confidence to invest capital here — and play a role in revitalizing the communities we serve," said Mr. Simon.

One example of an opportunity to bring manufacturing back to the U.S. is the cotton industry.

"It’s crazy that 70 percent of cotton grown in the U.S. is shipped overseas, spun into products like towels, and then often shipped right back here," said Mr. Simon. "We can cut out two shipments across the world and weeks on the water and cut our costs in the process. We can save our customers money by employing more of their neighbors — why wouldn’t we do this?"

Walmart plans to spend an additional $50 billion over the next 10 years to help spur domestic manufacturing. According to Mr. Simon, the company has designated a team of senior executives to lead the effort and is prepared to sign long-term deals with vendors to support investments they make in manufacturing in the U.S.

Creating jobs for veterans of the American military was personal for Mr. Simon who related his own experience moving from active duty in the Navy to a job at a pub in Charleston, SC that provided him with an income before going on to graduate school.

"Beginning Memorial Day, Walmart will offer a job to any honorably discharged veteran within his or her first twelve months off active duty," said Mr. Simon. "Not every returning veteran wants to work in retail. But every veteran who does will have a place to go. We project that Walmart will hire more than 100,000 veterans over the next five years."

What is your reaction to Bill Simon’s speech? Can American retailing work together to revitalize manufacturing and significantly affect job creation in U.S.?

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23 Comments on "NRF: Walmart Goes Big On Red, White and Blue"


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Paula Rosenblum
Guest
9 years 4 months ago

Well, I have multiple reactions, but let me cut to the important chase (at least for me).

As the main driver of the shift of sourcing to China, the retail industry and its ecosystem can certainly work together to revitalize production (it’s hard to call it manufacturing, but okay..manufacturing) in the US and make a significant difference to our country’s future. The industry will expect tax breaks in return, and I’m actually okay with that. My soapbox for the past 5+ years has been that an economy without a balance between production and consumption is like a veal calf. It’s imperative that we start making things again (said the schmatta girl!).

Nothing would please me more than to see my industry take the lead in this area. By the way, New Balance already produces a large percentage of its footwear in the US, so kudos to that company right out of the gate.

David Livingston
Guest
9 years 4 months ago

I can understand trying to be more efficient with the overseas shipping issues. This talk of hiring vets is a way for Walmart to not do anything out of the ordinary, but get a lot of flag waving mileage for free.

Walmart just needs warm bodies, period. They need people to come in and stay for about nine months and then leave before they start getting raises and benefits. Turnover is high. The average veteran is way more qualified than what they need so of course they would like to have vets. Let’s see, Walmart probably hires over a million people a year to replace the million or so that leave. A 100,000 vets over 5 years is only 20,000 a year. Out of about a million a year of new hires, that’s like 2%? I’m sure that would have occurred anyway.

Most people won’t see through that and Walmart is counting on consumers just seeing the flag waving.

Robert DiPietro
Guest
9 years 4 months ago

I’m taking this at face value and waving my flag along with them! It’s a symbolic gesture and one that helps our veterans that want to chose retail as a path. It would be interesting to know what percent of those hires make $20k as a greeter or $100k+ and run stores.

Show me the math on working together to manufacture here. On the surface, shipping containers of cotton to China then towels and clothes back to the US may offset making stuff in the USA again.

Max Goldberg
Guest
9 years 4 months ago

Bravo Walmart! These steps are not a panacea for American manufacturing and jobs, but they are firm steps in the right direction. With its size and buying power, Walmart can make a difference and have a positive impact.

John Boccuzzi, Jr.
Guest
John Boccuzzi, Jr.
9 years 4 months ago
Great move by Walmart. Sam Walton would be proud. I was only disappointed that the real reason for the move was not so much about hiring Americans (which they could have been doing all along), but really because as Mr. Simon stated “…rising labor costs in Asia as well as the high cost of fuel and other logistical challenges….” Brilliant move to offer every honorably discharged veteran a job at Walmart. This is the type of leadership we need to see out of major US based organizations. In the end, Walmart needs to please share holders and Wall Street. I am really pleased that the right move for shareholders now aligns with Americans and US jobs. In part, I believe America suffered economically because of the push of jobs to Asia (Walmart helped lead this move). I also believe the move back to manufacturing in America will play a major role in our recovery and we now need to give Walmart some credit for our recovery. Over the last few years I have been very… Read more »
Bob Phibbs
Guest
9 years 4 months ago

Walmart is the face of offshore, low price, grind ’em until we get the few cents off that effectively made American made too expensive. It seems a bit disingenuous now to say it is “crazy” that 70% of our cotton is exported when it is their relentless pursuit of making products anywhere cheaper than the US.

Charles P. Walsh
Guest
Charles P. Walsh
9 years 4 months ago

I believe that Bill may have chosen the wrong industry as an example of bringing manufacturing back to the USA. The textile industry is traditionally one of the most labor-intensive industries in manufacturing.

Some of the last major textile industries to depart were the non labor intensive ones such as hosiery, linen, bath towels and so on. Yet even these manufacturing jobs involved enough labor to make them non competitive against India, Pakistan and China. In addition to the cost of labor, there is a history in the US media as characterizing these jobs as being low-end, and exploitative to American workers.

That said, there are definitely many businesses where the value/labor ratio or high volume commodity nature makes them a good candidate for a return to American based production.

In any case, I applaud Bill Simon and Walmart’s position and dedication to supporting US based production and have no doubt that they will succeed in doing so.

Ben Ball
Guest
9 years 4 months ago
My reaction to this story is not so much to the story itself, but rather to the media and other reactions to the story. For anyone to think that any business decision does not have elements of both economic reality (we went to China because the landed cost of goods was cheaper—now it’s not so we are coming back to the U.S.—duh!) is laughable. The same is true of a contemplated expectation of how the public in general, and customers in particular, will react (we are going to hire people—let’s hire vets because it’s a good thing to do, and let’s announce it because people will like that) and to think otherwise is simply naive. The funny part of our fallible human nature is the way we process these situations through our own paradigms. In every instance some people see a ginger bread house and other people see a witch inside. The truth is, every ginger bread house has a witch inside. Which we see is all driven by opinions and beliefs long since formed.… Read more »
Al McClain
Guest
Al McClain
9 years 4 months ago
I thought Bill Simon gave a nice speech and that the two initiatives mentioned above were at least a little noble, assuming that Walmart’s role is to support the American economy and the American retail and manufacturing sectors. But, it was an odd setting to deliver this message, since a large minority of attendance at the “BIG Show” is comprised of international execs, and it’s hard not to imagine many of them marveling at American jingoism on display front and center. As a multinational company, is Walmart’s role really to try to move jobs from one country to another? Another key point made was regarding NRF’s “Retail Means Jobs” campaign. There has been criticism that retail jobs are low paying jobs, with generally poor benefits as well. I thought Bill Simon did a pretty good job of countering that by saying people work in retail for a variety of reasons including the desire for part-time or temporary work, but that if they want to work their way up in retail, they can and do. And,… Read more »
Zel Bianco
Guest
9 years 4 months ago

It’s great that Walmart is waving the American flag and wants to bring manufacturing back to the U.S. This should create new jobs—which is something that we need. Any job creation in the U.S. is a good thing that can only help the economy. As far as offering jobs to veterans, I think most veterans will be over-qualified for retail positions and probably be looking for jobs in other industries. This announcement should help bolster Walmart’s image in the eyes of shoppers and hopefully increase revenue in the long run.

Joan Treistman
Guest
9 years 4 months ago

Walmart has vital attention—getting ability. Their promise and deeds will encourage US based businesses to act similarly. I don’t know if it will revitalize manufacturing and significantly effect job creation on its own. However, if more companies follow suit, it will go a long way to achieving those goals. In the meantime, the positive spirit will have a domino affect in hopes, dreams and shopping behavior.

Bill Bittner
Guest
Bill Bittner
9 years 4 months ago
I assume everyone got to see the 60 minutes episode on robots this past Sunday. I don’t have the video in front of me, but as I recall, the full-in operating cost of a robot over its estimated 5 year life span was three dollars and change per hour. No health insurance, no breaks, no retirement plan, no bad moods and few illnesses (i.e. breakdowns). Although it may be financially better for companies to begin bringing back the manufacturing that has been sent overseas, I am not sure it makes for a better world. The economic interdependencies created by extended supply chains build familiarity among nations. Business travel and associations create ties that enable people of different backgrounds to understand one another. By bringing everything home, we risk the chance of creating “voluntary isolation” which is exactly the thing that hurt us in the 1930s – 1940s as the world established tariffs to protect local economies. We know how that story ended. The other challenge is that robots are not retail customers. I guess, theoretically,… Read more »
Roger Saunders
Guest
9 years 4 months ago

Walmart’s messages to the consumer have been:

  • “Always Low Prices”,
  • “Low Prices. Everyday. On Everything.”
  • “Save money. Live Better.”

Walmart has accomplished that be continuously taking costs out of their systems, and, in most cases, seeking vendors to help them accomplish that step. Walmart has to carry this operating practice around the globe, as they are an international company.

Bill Simon leads Walmart USA. His objectives stem from Walmart Corporate. He has the ability to place an added spin on the larger objectives of Walmart.

That is what he is doing as he properly ties Walmart U.S. to strategies of interest and importance to the U.S. economy and to consumers. Hiring veterans, manufacturing in the U.S., where appropriate to larger goals, and keeping the organization flexible to capitalize on opportunities are the right steps for consumers, associates, communities, and shareholders.

Nice move.

Dennis Serbu
Guest
Dennis Serbu
9 years 4 months ago

Walmart by virtue of size can move markets. This mindset and ideal of bringing manufacturing back to the US is fine thing in whatever form it takes. Bill Simon is putting his money where his mouth is as well, taking a leadership position and setting an example for other.

In turning around the American economy, it certainly won’t be the politicians and certainly not this administration. We won WWII through logistics not through brilliant generals and politicians. Logistics and grunt fighters.

Ed Dennis
Guest
Ed Dennis
9 years 4 months ago

Unlike most cynics, I see a company that is reading the tea leaves and knows what is going on. In a time when the labor pool is filled with slackers the move to welcome ex-military will supply Walmart with employees who are reliable and mission oriented.

With regard to sourcing in the USA, it is possible to make quality products in the USA now as cheaply as in China. This is occurring as automation and robotics increase. Doesn’t it make sense for Walmart to get on the front edge of this evolution and corner the supply of USA produced products ahead of competition? Cotton is a great place to start as it is plentiful in the USA and is now incurring round trip shipping cost. You want to make some major bucks.

Find the companies automating and the robotics companies and make an investment! And Walmart might be a good investment too!

Gordon Arnold
Guest
9 years 4 months ago
Logistics and travel time are a legitimate burden for goods to carry, but not measurements for determining manufacture locations. The total landed costs of goods sold ( COGS ) is the determining measure for success in any manufacturing effort. COGS control is more imperative for non-essential product or service which is in fact a large majority of goods produced for free market societies. Many countries throughout the world are aware of the traumatic effects placed on the environment and individuals when large amounts of toxins are at work in a small area for production purposes. Laws for prevention of damage to individuals, property, naturally occurring resources and to improve land fill safety have been converted to dollars and now must be added to the COGS with a significant cost burden equal to or higher than wages. Essential goods and services are also being tested in their efforts to continue placement in countries in the world with strong environmental protection efforts. Nowhere is this more evident than in the medical and pharmaceutical industries which until the… Read more »
Kai Clarke
Guest
9 years 4 months ago

Go Walmart! Support our troops, our country and our economy! Nothing more needs to be said.

Craig Sundstrom
Guest
9 years 4 months ago

Define “significantly.” I’ll defer judgement on whether this is a well-intentioned—albeit naive—effort to change the nation’s economic landscape, or simply yet another example of cynical corporate flag-waving, but I don’t see it really leading anywhere. And even if WM is successful in replacing a few of those $80K/yr—or was it $150K/yr?—dockworker jobs we discussed just a few weeks ago with $11/hr manufacturing jobs, I’d be unwilling to declare victory.

Ed Rosenbaum
Guest
9 years 4 months ago

Yes, the first thing I thought was hooray for Walmart and the red, white and blue flag Mr. Simon is waving. I hope I can say the same thing a year after the program is implemented.

Sid Raisch
Guest
Sid Raisch
9 years 4 months ago

I have one word for this. “Flagwashing.”

Carol Spieckerman
Guest
Carol Spieckerman
9 years 4 months ago

Great comments that cover off on many angles. As I listened to Mr. Simon’s presentation, I couldn’t help but think about the connection between it and Li & Fung’s recent downturn and profit warning. You know, the Asian mega middle man whose services Walmart ratcheted back last year?

M. Jericho Banks PhD
Guest
M. Jericho Banks PhD
9 years 4 months ago

It’s a start. At the very least it advanced the dialogue about offshoring. But as Ben Ball pointed out, it’s disingenuous for Walmart to take proactive credit for moving production/manufacturing back to the U.S. when international economic changes are beginning independently to make such moves more feasible. As somebody smart once said, “leadership is finding a parade and getting in front of it.”

Vahe Katros
Guest
Vahe Katros
9 years 4 months ago

The hugely improved energy scenario, especially as it relates to manufacturing via hydraulic fracturing and horizontal drilling and the increases in China’s labor costs = “It’s a grand old flag!”

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