September 28, 2016
As an ad guy, I like the true-grit TV ads. They’re well-produced and inspiring. But after a couple views on Monday Night Football and Dora the Explorer, I couldn’t help but notice that the steel being turned in the new Walmart “Creating American Jobs” campaign resembles more of a fork truck’s fork being made than the plastic dinnerware or garden rake I might pick up at Walmart.
So I became curious: how will we know if Walmart succeeds in their job creation quest? And who’s substantiating their public pledge to step up purchases of U.S.-made goods by $250 billion over 10 years into 2023? Detractors are quick to remind us, that Walmart, a $478 billion firm driven to offer customers rock-bottom prices, has been widely recognized as being instrumental in pushing factory jobs from the U.S. to China (and other low-wage countries) for years. Not to mention leading an “invest the register receipts now, pay for it later” supply chain financial model that has turned the product in manufacturing today into an unstable loss leader for many publicly traded and private companies.
Walmart announced its job creation pledge in January 2013, as rising factory wages in China were helping make U.S production of some goods more attractive, and with manufacturing employment here rising for the first time since the late '90s. Since 2010, the national economy has added nearly 800,000 manufacturing jobs. But that's a fraction of the 5.7 million lost from 2000 to 2010 — 1 out of every 3 manufacturing jobs the country had at the start of the decade. (Source: Milwaukee-Wisconsin Sentinel)
The Boston Consulting Group says that $250 billion in added spending over 10 years could create 1 million jobs. Indeed, Walmart says the initiative is expected to create 1 million new U.S. jobs with 250,000 in direct manufacturing and 750,000 in support and services. But how exactly, I mumbled aloud recently while sampling my daughter’s latest TV snack idea (peanut butter and Pirate Booty) will we know?
Of course, I hope, for her especially, that Walmart is sincere and successful in its efforts to fulfill the pledge. But the fact that they are releasing no numbers leads even the most trusting to be doubtful.
It Just Doesn’t Add Up.
All Walmart will say is that they are “on target.” Their annual reports include no such breakdown. But an Alliance for American Manufacturing press release (June 2016) reports that 80 percent of Walmart’s suppliers are still located in China. The Journal of Commerce reports that for several years (2012-2015), Walmart has been the single largest U.S. importer of consumer goods, surpassing the trade volume of entire countries. They have increased their foreign shipping containers by 10% since 1999.
2012: Walmart ranked No.1 at 720,000 TEUs
2013: Walmart ranked No. 1 at 731,500 TEUs
2014: Walmart ranked No. 1 at 775,400 TEUs
2015: Walmart ranked No. 1 at 795,900 TEUs
In America, estimates say that Chinese suppliers make up 70-80 percent of Walmart’s merchandise, leaving less than 20 percent for American-made products. (Source: Walmart China, Frontline, The Atlantic)
You Can’t Just Say, “Made in USA.”
There is another relevant issue, with regard to Walmart’s Made in America pledge, that being their past misuse of the “Made in USA” label. Fortune reports that in October 2015, Walmart was forced to remove “Made in the USA” logos from its e-commerce site after an inquiry by the Federal Trade Commission into its labeling. The retailer avoided FTC action by “voluntarily” cooperating.
But ad watchdog group Truth in Advertising reported in June 2016 that Walmart’s website is still “replete with false and deceptive U.S.- origin claims.” The group compiled over 100 of these cases from June 2016. They reported baseball caps and safety vests that were labeled “Made in the U.S.A.,” yet were in fact produced in China. In some cases, products had parts made outside of the U.S., but were likewise labeled “Made in the U.S.A.”
The “Made in USA” mark is a country of origin label indicating the product is “all or virtually all” made in the United States. The label is regulated by the Federal Trade Commission (FTC). I personally think it’s time for us all to hold it up with an increasing amount of reverence and respect if we expect change from Walmart, or anyone else for that matter.
A Positive Note: The Walmart U.S. Manufacturing Innovation Fund
Launched in 2014, the Walmart U.S. Manufacturing Innovation 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. Over the next five years, the fund will provide a total of $10 million in grants.
Walmart, the Walmart Foundation, and the United States Conference of Mayors recently released a third round of Requests for Proposals (RFP) for 501 (c) (3) organizations and public universities that are instrumentalities of a state government interested in receiving support for applied research from the Walmart U.S. Manufacturing Innovation Fund. For this cycle, the fund prioritized textile manufacturing activities with an emphasis on sustainability.
In 2015, five leading research and academic institutions were awarded a total of $2.84 million in grants by the fund for work focused on innovations in textile manufacturing. U.S. Manufacturing Innovation Fund grant winners include:
- Clemson University for energy and effluent reduction through innovative dyeing of polyester fabrics
- Oregon State University for environmentally conscious dyeing of fabrics using continuous digital printing and drying of biopigment inks
- University of Texas at Austin for on-loom fabric defect inspection using contact image sensors
- North Carolina State University for developing a non-stop tying-in process/approach to improve weaving efficiency
- Cornell University for recycling post-consumer textile waste and a raw material substitute for new textiles
The 2014 Walmart U.S. Manufacturing Innovation Fund grant winners were:
- 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.
We must credit Walmart for any effort to promote and develop domestic manufacturing and advance the production or assembly of products in the U.S. Will they succeed in their pledge to step up purchases of U.S.-made goods by $250 billion over 10 years? Only time will tell. With no numbers forthcoming from the retail giant there’s no way of knowing.
At least we’ve made some inroads with regard to factors that will determine their success or failure. We plan to keep tabs on Walmart and promise to let you know of any new information we may find. We’ll revisit the topic in a few months. Stay tuned for our next installment, which will celebrate National Manufacturing Day and Massachusetts Manufacturing Month by discussing how to bring back American jobs and pump up American manufacturing with national and industry-led efforts that connect to relevant education programs.