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Walmart to Boost US-Made Products

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Reposted from ABCnews.com

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Walmart to Boost US-Made Products 

Susanna Kim | January 15, 2013 | ABCnews.com

gty walmart mi 130115 wblog Walmart to Boost US Made Products(Image credit: Frederic J. Brown/AFP/Getty Images)

Walmart announced today that it is increasing the sourcing of U.S. products by $50 billion over the next 10 years, hoping to boost U.S. manufacturing and jobs.

Walmart, based in Bentonville, Ark., is the largest retailer and private employer in the U.S. with 4,601 stores and clubs.

In a speech at the National Retail Federation’s annual convention in New York City, Bill Simon, Walmart’s U.S. president and CEO, said Walmart and Sam’s Club will buy an additional $50 billion in U.S. products over the next decade by increasing what it already buys and helping onshore U.S. production in “high potential areas like textiles, furniture, and higher-end appliances.”

Michael Keara, equity analyst with investment firm Morningstar, said the announcement was a good public relations announcement, given the negative press lingering over Walmart’s bribery scandal in Mexico.

But Keara said it has “little impact” on his financial analysis of the company.

Keara said the $50 billion was “very little, and it’s over 10 years” for a company that makes about $400 billion in sales worldwide annually.

In its last earnings report, Walmart said its net sales for the third quarter rose 3.4 percent to $113.2 billion, from $109.5 billion in the third quarter last year.  Its earnings were $3.63 billion, up 8.7 percent from the same period a year earlier.

Walmart said there is a “popular misconception” about where it sources the majority of its products.

“According to data from its suppliers, items that are made here, sourced here, or grown here account for about two-thirds of what the company spends to buy products at Walmart U.S. The company sees room to do more,” the company said in a statement.

A company spokesman said the company does not break down the percentage of products sourced in the U.S.

Scott Paul, president of the Alliance for American Manufacturing said, “If Walmart’s ‘Made in America’ announcement is real, it’s a game changer. No company drives retailing trends like Walmart.”

“Ideally, Walmart’s and Sam’s Club’s pledge of increased domestic sourcing will include higher-ticket items like appliances and apparel, and not simply more of the current paper goods and vegetables that are made in the U.S.,” Paul said.

In 2012, grocery and consumables comprised 55 percent of Walmart’s net U.S. sales. The next highest was entertainment with 12 percent. Health and wellness products comprised 11 percent of the business and hardlines, including sporting goods, at 10 percent.

Apparel sales make up 7 percent of Walmart’s U.S. business last year.

“We can do so much more by working in partnership – as an industry and with governments,” Simon said in a statement. “I’ve talked with a number of governors, including the incoming chair of the National Governors Association, Oklahoma Governor Mary Fallin, about how governors and retailers and manufacturers can drive this issue together. Governors from both sides of the aisle are enthusiastic about getting their constituents back to work.”

A statement from a nonprofit group called the Institute for Local Self-Reliance, based in Washington, D.C. and Minneapolis, said Walmart’s statement “raises several critical questions about how the company defines domestic sourcing and how this can be measured in an publicly accountable way.”

“No other company has played as pivotal a role as Walmart has in the demise of U.S. manufacturing over the last 30 years,” senior researcher Stacy Mitchell said in a statement. “Its relentless insistence that suppliers provide ever lower prices has forced countless companies to shift production overseas, eliminating jobs and undermining America’s industrial capacity.”

7 Responses to “Walmart to Boost US-Made Products”

  1. Tom T says:

    Implement Warren Buffet’s plan immediately! The market would start taking care of our trade imbalance.

    This article shows that big corporations need a real government to set the rules for capitalism (and REAL enforcement mechanisms), not businesses themselves. They have had too much influence over the rules that they operate under. I never once saw a kid that needed spanking spank themselves (oh yes, I am familiar with the Ken Salazar statement on spanking the industry he was regulating). Where are the adults in the room? This is like Walmart saying, hey, we will spank ourselves in the public interest but only 10% as hard as needed. “Just let us off this one time this time (future requests to be handled by lawyers, lobbyists, and public relations teams)”,

    • W. Raymond Mills says:

      Tom T and Will want the Buffet plan to be implement – immediately in Tom’s view. I think supporting the Buffet plan is a big mistake and here is my main objection (I have others).

      The Buffett plan impacts all importers in all nations. I want restrictions from only 3 nations. Why restrict imports from those nations that are trading with us the way we want to trade -with a near balance of exports to imports? In 2011, nations other than the big three purchased 1.28 trillion of goods from us while selling to us 1.61 trillion, producing a deficit of -332 billion. Contrast that deficit to -738 billion paid out to all nations for goods imports in excess of goods purchased from us in 2011.

      Will is correct when says that the Buffett plan is the only way to guarantee we will get to where we need to be. But I don’t want to get all the way to our goal in one step. I want to take the first step. To establish the principle that the U.S. Congress is going to pass laws that will move our foreign trade in the direction we want – less money sent overseas to pay for trade deficits. This first step requires a tremendous reversal of “conventional wisdom”. Let’s begin with something that is less radical than the Buffett plan.

      • Will Wilkin says:

        Hi Ray, I don’t see anything radical about an effective Balanced Trade policy using Import Certificates issued in the same amount as our exports. The Balanced Trade Restoration Act of 2006 bill even states that “Article XII of the General Agreement on Tariff and Trade (GATT 1994), annexed to the Agreement Establishing the World Trade Organization entered into on April 15, 1994, permits any member country to restrict the quantity or value of imports in order to safeguard the external financial position and the balance of payments of the member country.” In other words, it would be completely legal even without altering the terms of our WTO membership.

        Would targeting tariffs at selected countries be so? Under WTO rules, each participating country is supposedly applying its tariffs equally to exports from all WTO members. To single out China, Germany and Japan would thus be more radical than an Import Certificate system, because to me it seems it would violate our terms of membership in the WTO. In fact, wouldn’t it be more like declaring a trade war on those countries rather than a legal and fair and even-handed approach focused on a legitimate end result for the USA?

        • W. Raymond Mills says:

          The Buffett plan is radical in that it impacts all our trading partners. The Targeted Tariff plan is radical in that it ignores the WTO. Rejecting the rules, etc. of the WTO is a good way to begin. I like thumbing our nose at the WTO rather than reducing imports from nations that are in near balanced trade with us.

          A trade war occurs when a nation acts without regard for the impact of its actions on its neighbors. These three nations selected for tariffs will still have a trade surplus with the U.S., it will just be smaller. Do they want a trade war because their trade surplus is reduced? We as a nation no longer subscribe to the goal of the WTO, we seek balanced trade rather than more trade. We have a right to change our mind about what is important to us. The new decision is to increase manufacturing activity in the U.S. by moving towards balanced trade.

          This goal is recommended for all nations. All trade deficit nations should take steps to reduce their trade deficit. What we are doing is protecting our own interests but in a way that all nations can also adopt.

          What we are doing is not protectionism in the classical sense because we are not discriminating among products and we are preserving competition among products produced
          in the U.S. and products produced all over the world.

      • Tom T says:

        Raymond, adjustments could be made to the Buffet plan and it could be implemented over 5 years or so. Raw goods like oil and other resources could have lower costs attached to them. If the Buffet plan was implemented, those 3 countries would bear the burden because their costs would go up since they export more items to us. Mind you, strategic tariffs could achieve the same result but I guess everything has to be wrapped in Christmas paper to pass. I am more interested in implementing real actions that happen in the fastest manner. This problem is so large, a multitude of solutions could be applied.

        The whole reason to do this is both strategic and economic. As our strategic goals become more paramount, adjustments could be made. As economics (our current big immediate problem) is larger, the adjustments could be made in that area based on good policy decisions.

        The problem right now is that too little is being done. We don’t need the perfect solution to start moving in the right direction, we need action.

        All of the labor and economic standards could be put in the program in a similar manner.

        We just need action—-yesterday.

        Tom T.

  2. Will Wilkin says:

    Walking through a Walmart is no different than walking through any other retail store in America, except in scale. All of them are stocked with imports, although next to the US flag on the box we read “packaging designed in the USA.”

    Tom is right, it is time the American government look out for the American people and the American future with a law requiring BALANCED TRADE, and the Buffet Plan would be the only way to guarantee the results we need.

    • Henry says:

      Absolutely. We need to start with implementing a VAT with targeted corporate tax relief that targets companies that develop and build here.

      The impact of this Wal-Mart move is big. Alone, it would reduce our trade deficit by $50 billion assuming WM replaces formerly imported goods with made in the USA. If it just means stocking shelves with existing USA made inventory, then it means nothing.

      The only concern I have about it is the potential impact of the growing online USA made retailers and their businesses. Maybe they will be smart enough NOT to sell to Wal-Mart. We will see if this isn’t just a bunch of PR fluff.

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