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Jennifer Marks

Yes, but…

September 3, 2013

There has been much cheer following Walmart's announcement in January that it will buy an additional $50 billion in U.S.-made products over the next decade. Walmart has long set the pace for the domestic retail industry, both in pricing and in practice.
There's also a fairly large nit to pick with the kudos attending the policy. That $50 billion represents a sliver of the approximately $900 billion Wal-Mart Stores Inc. will generate at its U.S. stores over the decade. And as several critics have noted, a goodly amount of that U.S. buying will involve food.

During the summit Walmart convened two weeks ago in Florida to promote the cause, a roster of business execs, government officials and the like made the case for the return of U.S. manufacturing: lower energy costs, a more predictable rule of law, low interest rates, flexible workforces, and proximately to the market as well as rising labor and transportation costs overseas.
GE chairman and ceo Jeff Immelt said the prospects for domestic manufacturing are improving. "The U.S., on a relative basis, has never been more competitive. We can compete from here," he said.

Left unspoken was the degree to which automation plays a part in re-establishing U.S. manufacturing. Immelt and other business leaders addressing the summit used the occasion to announce plant expansions in the U.S. to support Walmart's push. It was 150 jobs here, 200 jobs there. Altogether, they'll add up to about 1,000 new U.S. jobs - said figure courtesy of Wal-Mart Stores Inc. president and ceo Mike Duke.
That's a drop in the bucket compared to the nearly 9 million jobs lost during the recession, of course. Then there's the matter of the "flexible" workforce touted by so many. Could that flexibility mean part-time work with an ever-shifting schedule of the sort Walmart has brought to its stores? Methinks so.

One does not rebuild a middle class with such jobs. One creates more customers for Dollar General.
The best hope for this enterprise might be that other retailers follow Walmart's lead - as they certainly did in the march to offshoring. That would be something to celebrate.