Inside This Issue - Opinion
Walmart puts focus on American products
September 9th, 2013
by David Pinto
Last month Walmart organized a “summit” conference in Orlando, Fla., to explore the opportunities in bringing more consumer-goods manufacturing back to the United States. The carrot was, of course, Walmart’s commitment to buy — and sell — more goods made in America, at the expense of foreign-produced products.
Some 1,500 people attended the two-day summit. In addition to a group of senior Walmart managers and merchants, the event brought out 500 suppliers, a handful of governors (from Florida, Maine, Arkansas, Mississippi and New Mexico), the newly installed U.S. Secretary of Commerce, the CEO of General Electric, senior executives from several management consultant firms, and representatives from two trade groups, the National Retail Federation (listed as a cosponsor of the event) and the Retail Industry Leaders Association.
Perhaps most impressive, all 50 states were represented, each with an exhibit booth and a pitch to encourage suppliers to consider bringing a facility to their state.
At the outset, it must be stated that Walmart deserves much credit for organizing so impressive an event. It is not every U.S. retailer — or indeed, business of any kind — that can command so strong a turnout for so laudatory a purpose. At its face, there appears little overt gain for Walmart in encouraging suppliers to produce more goods in America.
Moreover, the world’s largest retailer appears to be sincerely interested in encouraging this proposition. As Bill Simon, the retailer’s U.S. president, put it in opening-day remarks: “The advantages foreign production have had over U.S. manufacturing, once formidable, are not nearly as great as they once were, as foreign wages have increased and the costs of shipping merchandise to America are growing. So this is the time for such a grand initiative.”
For their part, suppliers were understandably interested in exploring the possibilities of producing goods in this country, despite the fact that Walmart stopped short of unequivocally committing to buy U.S.-made products. Many industry veterans remember previous Walmart proposals to buy American-made products, proposals that sometimes disintegrated over price issues.
Then, too, other considerations have emerged in 21st century America. As one branded supplier remarked at the meeting: “We’re no longer in the production business to anywhere near the degree we once were. Today, we’re in the branding business, a situation where we own the brand but outsource its production. That’s not going to change. In fact, it’s going to increasingly become our operating method.”
But Walmart executives appear committed to this initiative. Moreover, they want the supplier community to share that commitment — not at some unspecified future date, but now. Duncan Mac Naughton, Walmart’s chief merchant, insisted that his staff would begin working to immediately move the initiative forward as soon as he returned to the retailer’s Bentonville, Ark., office.
Walmart also claims to have invited other retailers to participate in this initiative, though none have yet accepted the invitation. Too bad. For too long now have this country and its retail and supplier components been criticized for moving business off-shore in the name of profit, none more than Walmart. With reason. The country’s largest retailer has gained an unenviable reputation not only for buying foreign-made merchandise rather than the American product, but for working with Asian factories whose safety standards have apparently left something to be desired.
So, as stated, this appears at first glance to be a sincere initiative to adjust the manufacturing and retailing balance in the United States or, at the least, refocus it a bit more equitably where the United States is concerned. However, no one really knows what’s involved here. It’s not clear, for example, if Walmart is talking about present or future business, if the retailer is asking its suppliers to replace foreign-produced goods with U.S.-made products or merely — and this sounds more logical — to produce future products in America.
No matter. Difficult as it has become in some quarters to give Walmart credit for any initiative, credit is clearly deserved here, at least at the outset. If, as this initiative moves ahead (if indeed it does — no second step has initially become obvious) Walmart shows its willingness to meet the supplier community even 10% of the way, a bright new day in the retailer-supplier sales equation could be dawning — with consumers the clear winners. Which is, after all, as it should be.