story by Kim Souza
ksouza@thecitywire.com
Wal-Mart Stores does more than just sell stuff. Economic and social initiatives – often interwined – are a big part of the global retailer’s business model and public image. Sourcing more U.S. made products, empowering women, and putting veterans back to work, are just a few of programs pushed from Bentonville.
The company released on April 22 a 137-page Global Sustainability Report which provided some color on the progress it’s making in those three areas.
RESHORING MANUFACTURING JOBS
Wal-Mart’s efforts to source $250 billion in products supporting U.S. jobs over 10 years has been a high-profile initiative. The retailer said it is on target to reach its commitment by 2023. From light bulbs, to towels, patio furniture to toys, Wal-Mart said suppliers are expanding manufacturing and assembly in the U.S.
Infant pacifiers manufactured by NUK are being made in Reedsburg, Wisc. The company onshored some of its European production last year. Nuk said it assembled baby products in the U.S. since 1949. With the Wal-Mart commitment, the company said it was able to expand its U.S. manufacturing footprint to give customers the option of “Made in the U.S.” pacifiers.
The NUK move, like most of the onshoring initiatives underway, will be a gradual progression. There were about two dozen new jobs created in Reedsburg, Wisc., but more production is planned during the next year or two.
One of the largest onshoring moves was with Kent Bicycles who invested $4.3 million into a new assembly plant in Manning, S.C.
Kent CEO Arnold Kamler told The City Wire last year that it made sense for Kent to onshore some of its operations in China. Kamler said he attended Wal-Mart’s Year Beginning Meeting in Orlando in March 2013 where he met South Carolina Gov. Nikki Haley and the two discussed the idea of working together to bring some production or assembly back to the U.S.
Kent was already a supplier to Wal-Mart but found the retailer’s incentive ideal given that onshoring jobs take time and money. An estimated 50,000 bikes will roll off the assembly line in Manning this year. By the end of 2016, Kamler expects Kent to produce 500,000 bicycles which will support 175 U.S. jobs.
Wal-Mart’s decade-long commitment of $250 billion is expected to created one million U.S. jobs in manufacturing and related services, according to the Boston Consulting Group. Two years into the commitment the job creation numbers are behind the 100,000 annual average needed. Wal-Mart has not given a total tally of jobs created from its supplier commitments. However, the individual reports given thus far tally less than 10,000 jobs created.
A report released Tuesday (April 28) by the Reshoring Initiative indicates more than 60,000 manufacturing jobs were brought to the United States by reshoring and Foreign Direct Investment (FDI) combined in 2014, representing a 400% increase since 2003. It is not clear how many of those are related to products sold at Wal-Mart.
“With only 30,000 to 50,000 jobs being offshored to other countries in 2014, the resulting net gain of 10,000 or more jobs per year represents a shift in the right direction,” said Harry Moser, founder of Reshoring Initiative.
Of particular interest are the reasons companies gave for reshoring and FDI. Government incentives, the skilled workforce, capitalizing on the value of a Made in USA label, and automation topped the list in 2014. At the same time, companies cited lower quality, long lead times, high freight costs and rising wages as reasons against offshoring.
The data also indicates that reshoring was strongest in the Southeast and Texas, a trend consistent with The Boston Consulting Group’s forecast for those areas to lead the way in becoming competitive with China for the manufacture of products to be sold domestically. Much of this is attributed to the trend for companies to build “green-field” factories in states with lower wages, lower taxes and right-to-work laws.
“We publish this data annually to show companies that the trend in manufacturing in the United States is to source domestically,” Moser said. “With 3 to 4 million manufacturing jobs still off shore, we see huge potential for even more growth and hope this data will motivate more companies to reevaluate their sourcing and siting decisions.”
Wal-Mart’s Manufacturing Vice President Cindy Marsiglio, recently told The City Wire that the retailer is pleased with progress it’s made on the manufacturing front in the past two years. While Marsiglio would not provide an estimated number of projects, in October 2014 she said there 150 projects in various stages.
“There are more projects in the pipeline today than ever before, from concept to commitment and everything in between,” she said.
Wal-Mart did say it expects to see more fruits from its onshoring initiative come through this year. The retailer will hold another Open Call for U.S. suppliers on July 7 at its Bentonville headquarters.
HIRING VETERANS
Hiring veterans has been a priority for Wal-Mart for many years, but more so since 2013 when then CEO BIll Simon, announced a commitment to offer a job to any eligibly discharged veterans within their first year post active duty.
Since Memorial Day 2013, Wal-Mart said it has hired more than 77,000 veterans. Also, through a $20 million philanthropic investment, Wal-Mart and the Wal-Mart Foundation are working with private and public sector organizations to support veteran reintegration.
In it’s home state of Arkansas, Wal-Mart has hired 2,207 veterans since 2013. In neighboring Texas, 10,102 veterans have taken jobs at Wal-Mart over the past two years.
WOMEN’S EMPOWERMENT
A big part of Wal-Mart’s efforts to empower women is to bring on more of them as suppliers. Since 2011, Wal-Mart said it has sourced $11.24 billion in products from women-owned businesses, including $4.16 billion in the most recent fiscal year.
“Our female customers in the U.S. have told us they’re interested in purchasing products sourced from women-owned businesses so Wal-Mart has supported WEConnect International and Women's Business Enterprise National Council (WBENC) in the creation of a Women Owned logo that can be used by certified businesses to clearly identify products and services as such,” the company noted in the report.
In 2011, Wal-Mart committed to source $20 billion from women-owned businesses by the end of 2015. The retailer said it’s $775 million ahead of its goal to date.
Wal-Mart also sought to double the sourcing of products from women-owned business in its international markets through 2016. The retailer said it has calculated the baseline spent on women-owned business in seven markets, tracked quarterly progress and began to implement strategies to grow the amount spent. In five of the markets Wal-Mart has increased annual spending among women-owned businesses more than 21% from 2012 to 2015.