Wal-Mart pledge to buy American meets with skepticism

A verbal commitment by Wal-Mart CEO Bill Simon to buy an additional $50 billion US in U.S.-made products over the next 10 years has met with skepticism.

CEO Bill Simon says retailer will buy $50B more from U.S. over 10 years

Wal-Mart U.S. president and CEO Bill Simon addresses participants at the Wal-Mart U.S. Manufacturing Summit in Orlando, Fla., last Thursday. (Phelan M. Ebenhack/Associated Press)

A verbal commitment by Wal-Mart CEO Bill Simon to buy an additional $50 billion US in U.S.-made products over the next 10 years has met with skepticism.

Wal-Mart, known for buying the lowest-cost goods wherever they are made, has become a lightning rod for community leaders worried about the hollowing-out of America's industrial base.

But at Wal-Mart's Manufacturing Summit held in Orlando, Fla., late last week and attended by 1,500 government officials, suppliers and retailers, the company said it sees a future for U.S. manufacturing.

"At the summit, we are building a network of support for domestic manufacturing," Simon said. "In the room, we have the capital, the expertise, the ideas, and, most importantly, the will."

Buying in U.S. good PR

CBC business commentator Michael Hlinka dismissed the pledge to buy American as "pure PR" motivated by a political climate in which it is seen as good business to invest in the U.S.

"Wal-Mart has been a wonderful organization with a shark-like focus that says whatever is the lowest price, that's what we’re going to do," he said on CBC's Metro Morning.

"Wal-Mart has been criticized about its procurement policies. It generates about two-thirds of its revenue in the U.S., and there is no way, when you step inside a store, you're going to see two-thirds of the products are built in North America."

He points out that with sales of $250 billion a year, Wal-Mart's pledge to buy $50 billion in U.S. goods over 10 years amounts to less than two per cent of its sales.

'Buying American' won't translate into jobs

Stacy Mitchell, a researcher with the U.S.-based Institute for Local Self-Reliance, says for Wal-Mart, buying American will be a byproduct of its continued takeover of the U.S. grocery business.

Most grocery products sold in the U.S. are produced in America, and Wal-Mart will be buying more U.S. foods, particularly produce, as it displaces other grocers, she says.

"But this doesn’t mean new jobs, because other grocers are losing market share and buying less," Mitchell said in an article for AlterNet.

She recalled Wal-Mart’s 1980s "Buy America" program, which occurred as the retailer was moving to do most of its acquisitions overseas.

But business analysts at the Wal-Mart summit say the low-cost manufacturing havens such as China are losing their competitive edge. As workers in developing nations demand higher wages and the cost of transporting goods increases with the cost of oil, it becomes cheaper to buy U.S.-made goods.

 Among the businesses who say they are manufacturing in the U.S. are:

  • GE, which produces energy efficient soft white lightbulbs in the U.S. for Wal-Mart.
  • The makers of No nonsense and Renfro socks.
  • Element Electronics Corp., which will open a new flat screen TV factory in Winnsboro, S.C., by December 2013.

"Right now, companies in America are making and selling products around the world at an all-time record pace, and the incentives to make things here and hire American workers is only getting stronger," U.S. Secretary of Commerce Penny Pritzker Pritzker told the summit.