story by Kim Souza
ksouza@thecitywire.com
Wal-Mart has leveraged its massive size and scale over the past 18 months to woo more suppliers into onshoring product manufacturing. The retailer says it’s just getting started, but is ready to make more progress during its U.S. Manufacturing Jobs Summit in Denver held Aug. 14-15.
It’s been 18 months since Wal-Mart pledged to invest an additional $250 billion in products made in America over the next decade. To date Wal-Mart confirmed with The City Wire that its product spending toward the goal is ahead of projections. The retailer said more definitive numbers would likely be given in its annual sustainability report.
“We will continue to lead on U.S. manufacturing. ... We have drawn a deeper understanding of the challenges that stand in the way from the work already done,” said Michelle Gloeckler, Walmart’s executive president of consumables and U.S. manufacturing.
Gloeckler has been in this campaign from the get-go, but it was Bill Simon’s face and passion that was visibly absent from the summit’s opening meeting Thursday (Aug. 14). Greg Foran, the new CEO of Walmart U.S. did appear onstage at the Thursday’s summit. Foran, who previously ran Wal-Mart’s China operations, said he fully supports the U.S. jobs initiative because it makes economic sense.
Wal-Mart CEO Doug McMillon concurred.
“We need manufacturing here because we have so many stores here and we need the jobs so people who live near those stores can shop more.”
Gloeckler said 200 suppliers attended this year’s summit and 87 component manufacturers were also there with exhibits to help suppliers put the puzzle pieces together. There were 42 state delegations and representatives from Puerto Rico.
“We have 359 meetings scheduled for tomorrow (Aug. 15). That’s 20% more than last year,” she said.
Gloecker also gave an update on the recent Open Call event held in Bentonville.
“We had never done that before but it was an incredible day. We held 800 meetings for new products and awarded 15% of them contracts on the spot. Another half of them, we continue to talk about ongoing possibilities,” she said.
Many of the new products like Trash Ease, Jen’s Crab Cakes and Taco Plates, because they are made in the U.S., will be in stores by the holidays, Gloeckler said. The update Gloeckler gave on her efforts to onshore patio furniture manufacturing or assembly was underwhelming. She said after an exhaustive search and more research, most products cannot now be made competitively in the U.S. This was an unexpected outcome for Gloeckler who had hoped the long lead times and short sales window for bulky patio furniture would be a sure fit for sourcing in America.
“It was a learning experience and this is what we found out. The suppliers who contacted us were open-minded, nimble, smart and by all means the experts. Seven out of 12 items we examined were significantly more expensive to make in the U.S. Though all of our order commitments are made for 2015, I hope to have five items made in the U.S. by the 2016 season,” Gloeckler said.
WAL-MART CRITICS
Not all are impressed with Wal-Mart’s effort to boost U.S. manufacturing.
“If you think Walmart is making this pledge for purely PR reasons, you’d be both right and wrong,” Alliance for American Manufacturing President Scott Paul said in a statement. “Right, in the sense that lots of folks blame Walmart and its sourcing practices for the decline in manufacturing jobs, and thus eager to garner some positive publicity. But wrong, in the sense that – in some cases – the economics now favor “reshoring” of work back to the U.S., due to an emerging domestic energy cost advantage, rising wages in Asia, and wage stagnation in the U.S.”
Mary Bottari, deputy director at the Center for Media and Democracy and a former trade analyst for Public Citizen’s Global Trade Watch, blamed Wal-Mart and its “relentless pursuit of cheap goods” for the decline in U.S. manufacturing. The Center for Media and Democracy recently added new information on its website tracking Wal-Mart claims related to its onshoring effort.
And not to be left out when it comes to criticizing Wal-Mart, the head of the AFL-CIO also blamed the retailer for manufacturing job losses and low wages.
“It’s about time Walmart figured out that America’s workers are the most qualified and the best skilled at getting the job done,” AFL-CIO President Richard Trumka said in a statement. “For decades, Walmart has led the charge on outsourcing and a global race to the bottom. But workers will not benefit from a Walmart-ification of our manufacturing sector. Jobs in the Walmart model won’t restore America’s middle class or build shared prosperity given the company’s obsession with low labor costs and undermining American labor standards.”
RECENT SUCCESS
During the summit’s opening meeting Wal-Mart shared several success stories involving more U.S. manufacturing jobs as a result of the involvement.
Burt Hanna of Hanna’s Candles, John McCutcheon of PolyTech Plastics and Mel Redman, all based in Northwest Arkansas said their businesses directly were able to add jobs because of the Wal-Mart initiative.
South Carolina Governor Nikki Haley also announced another victory for her state during Thursday’s summit. Enor Corp, a family-owned manufacturer of plastic toys, outdoor games and junior sports items, is establishing a new manufacturing facility in Fairfield County to supply U.S.-made toys to Walmart stores. The multi-million-dollar investment is expected to create 151 jobs to Fairfield, S.C.
Enor is the fifth Walmart supplier announcing a new facility in South Carolina since August 2013, joining Element Electronics, Louis Hornick & Co., Kent International and Giti Tire. Element Electronics made their deal exactly one year ago at Wal-Mart’ first manufacturing summit in Orlando. Today after a $7.2 million investment there are 325 jobs this year and the plant is sending televisions to Wal-Mart every day.
“That’s pretty amazing to think that plant didn’t exist a year ago,” Gloeckler said.
FUNDING INNOVATION
Kathleen McLaughlin, president of the Walmart Foundation awarded seven universities with a total of $4 million to fund innovative research that supports new manufacturing processes around injection molding and textile dyes. The awards were made possible from a collaboration between Walmart, the Walmart Foundation and the U.S. Conference of Mayors (USCM), who pledged to give $10 million for innovative research toward manufacturing over the next five years.
The fund focuses on the development of domestic manufacturing with a specific goal of advancing the production or assembly of consumer products in the U.S.
“Innovation is part of the heart and soul of Walmart,” Gloeckler said. “By investing in American ingenuity originating everywhere from the research lab to the assembly line, we can transform our approach to manufacturing to be more cost-effective and efficient. We can bring more jobs and more production back into American communities.”
The grant recipients were selected for their ability to address two key areas that currently present barriers to increased domestic manufacturing: Reducing the cost of textiles manufacturing, including home textiles and apparel, in the U.S. by addressing obstacles throughout production; and Improving common manufacturing processes with broad application to many types of consumer products.
Following are the 2014 Walmart U.S. Manufacturing Innovation Fund grant winners.
• Georgia Tech Research Corporation for innovation of thread-count-based fabric motion control, a critical enabling technology for the automated production of sewn goods.
• Indiana University-Purdue University at Indianapolis (IUPUI) to advance and accelerate the industrial implementation of metal 3-D printing for the manufacturing of plastic injection tooling as an alternative to current metal-shaping practices.
• North Carolina State University College of Textiles to address challenges to manufacturing of furniture cushions in the U.S. by implementing new technologies in both fabric printing and cut-and-sew automation.
• Oregon State University to develop two novel alternative mold fabricating approaches, and evaluate for functionality, precision and cost reduction potential.
• Texas Tech University to support collaborative research on cotton breeding and biotechnology, cotton production, and various aspects of textile manufacturing, dyeing efficiency and specialty finishes.
• University of Texas at Arlington to develop a novel manufacturing system that will autonomously prepare small motor sub-systems and assemble the motor components.
• University of Georgia Research Foundation to develop an innovative approach to fabric dyeing that will greatly reduce, and perhaps eliminate, the need for water in dyeing cotton and cotton/polyester fabrics and yarns.