walmart made in usa consumer goods
Matt Rourke/AP
By James B. Kelleher

Walmart Stores (WMT), which has pledged to buy an additional $250 billion in U.S.-made goods over the next decade, is hitting a snag as it tries to meet that promise: Some vendors keen to participate in the initiative complain that after decades of offshoring it has become impossible to domestically source even commonplace components for their products.

So America's largest retailer has invited dozens of small- and midsize manufacturers that aren't necessarily interested in having a direct relationship with Walmart to come to Denver this week for a two-day matchmaking event.

The goal? To connect Walmart vendors hungry for key parts with manufacturers that have idle plants -- and to put those plants back to work cranking out components, such as small electric motors or polyester yarn, that have become hard to find.

"We're going to try to match up [vendors] who are looking for component parts with factories that have capacity in the hopes that we can rebuild that supply chain that doesn't exist anymore," said Michelle Gloeckler, the Walmart senior vice president in charge of the initiative.

Critics of the retailing giant are quick to claim that Walmart, which built its empire on low prices, is partially to blame for the sorry state of U.S. manufacturing.

Mary Bottari, a former trade analyst for Public Citizen's Global Trade Watch, says Walmart's push for cheap goods "has fueled a global race to the bottom in wages and working conditions." And the Economic Policy Institute, a union-friendly think tank, estimates Walmart's trade with China alone has cost the United States 200,000 jobs.

Walmart disputes those claims, and spokeswoman Brooke Buchanan says Boston Consulting Group has estimated that the domestic-sourcing initiative will create 1 million jobs in manufacturing and related service jobs.

Zippers and Snaps

The "Made in USA" program was conceived as a way to help Walmart win back customers who have defected in recent years to even cheaper competitors such as Dollar Tree (DLTR) and Dollar General (DG). So far the effort has failed to stem a five-quarter-long decline in U.S. sales.

Walmart says the 18-month-old program is a winner with customers. It hopes the Denver event, which has attracted 100 component part manufacturers as well hundreds of existing and wannabe Walmart vendors, will allow it to rapidly increase the number of U.S.-made products available in its more than 4,200 U.S. stores.

But the event is also a tacit acknowledgment that the "Made in USA" pledge is harder than it might have seemed when it was announced last year.

Not only are some raw materials and components hard to find, but many of the companies tempted to participate in the domestic-sourcing program are unprepared to do business with Walmart and its storied -- but complex -- inventory control and logistics system.

By eliminating the ocean freight, what we've done is lower the overall cost of goods. So I can not only beat Chinese prices, I can obliterate them.

Walmart's suppliers say difficulties with the program do not invalidate the idea. A number of factors, including rising wages in China, plummeting productivity-adjusted wages at home and a new appreciation for short, responsive supply chains, mean they can compete with Chinese rivals.

"By eliminating the ocean freight, what we've done is lower the overall cost of goods. So I can not only beat Chinese prices, I can obliterate them," says Keith Scheffler, president of Creative Things, an Arkansas toymaker that recently shuttered its last Chinese plant.

Still, vendors say they are forced to go overseas for such commonplace items as zippers and snaps.

Element Electronics, which makes flat-screen TVs for Walmart, has moved incrementally after finding "there was no known existing domestic supply base" when it moved assembly back to the United States, says Chief Executive Officer Mike O'Shaughnessy.

The company started simple, focusing on things like packaging materials. Now it is seeking U.S.-made suppliers of plastic and metal parts.

O'Shaughnessy figures three years may pass before domestic suppliers can supply all the parts Elements needs.

Supply-chain problems aren't the only challenge Walmart vendors face when they join the "Made in USA" push.

The retailer's "Retail Link" system presents vendors with a torrent of real-time sales, inventory and purchase information that they need to learn how to analyze so Walmart can minimize in-store inventories while keeping shelves stocked.

It's a difficult balancing act that even sophisticated suppliers like Mel Redman, a former senior Walmart executive who runs Redman and Associates, a toy manufacturer that supplies the retailer, struggle to achieve.

"Everything works backwards," he says.

"What a vendor needs to learn to do is to work from must-arrive-by date backwards through the production schedule, lead time and lag time. It's very complicated."


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Iselin007

Walmart wants made in America. I worked in many factories that made products in the USA that Walmart now buys from Offshore!

The cheap foreign slave factories, the high taxes here, and the trade deals enticed the majority of the producers to go off shore or over the border. Demanding vendors reduce prices to get the box stores business helped to cause great domestic job losses.

August 14 2014 at 5:33 PM Report abuse -1 rate up rate down Reply
Valerie

Oh, NOW, Walmart wants to lead the parade to return to "Made In America" goods??? After they led the stampede to import low-quality and often dangerous Chinese-made items so they could jack up their store profits without regard for the hazards to consumers???

What a sick joke. Guess the Walmart execs never heard the old story about closing the barn door after the horse has run off.

If ever there was a big corporation that deserves to go out of business --- Walmart is it.

August 14 2014 at 3:53 PM Report abuse +1 rate up rate down Reply
1 reply to Valerie's comment
Iselin007

I have worked in companies that made parts for Regina Vaccum, Purolator, and other American manufacturers. I use to work in the a moldbase and component manufacturer that made molds for many US manufacturers like Black & Decker, Stanley Tool Works before the merger and before many companies had gone off shore with most of their work. I even worked at a Division of Mattel Toybefore they went to Mexico ect.

I had something to do with many of the products now made off shore for the Walmart chain. GE, Westinghouse, Briggs& Stratton, Sony, and many to numorous to remember were all buying molds and mold bases made in the NTM plant that I worked at in the 1980's.

August 14 2014 at 5:23 PM Report abuse rate up rate down Reply
gee.effwye

Any chance our dollar has become weak enough that it just makes fiscal sense for companes to export from here instead of imoort to here?

August 14 2014 at 3:24 PM Report abuse rate up rate down Reply
1 reply to gee.effwye's comment
gee.effwye

It was a typo.....look at your keyboard....you'll figure it out.


Aren't you the.same.guy who wrote DOPEY-EST?

August 14 2014 at 10:20 PM Report abuse rate up rate down Reply
skantorco

Walmart may struggle as I personally have seen the impact of WALMART putting domestic manufacturers in the apparel industry out of business.
Thereby, terminating the supply of laor, of skilled labor and of equipment needed to produce garments or shoes!
ISE, quoted here, kows very little in their comments...it was consumers with an insatiable demand in the US for more and cheaper that slaughtered manufacturing! Walmart and many others readily performed theexecutions!

August 14 2014 at 3:08 PM Report abuse +1 rate up rate down Reply
2 replies to skantorco's comment
gee.effwye

That wasn't walmart's.doing. it was the customers.

August 14 2014 at 3:22 PM Report abuse -2 rate up rate down Reply
Iselin007

Remember when the box store had forced Pillowtex to move off shore causing some 5,000 workers to lose their jobs?

I have a Pillowtex Comforter " Made in the USA" in the burgundy color that I had purchased from K-Mart, it is still in the Clear plastic case.

August 14 2014 at 5:05 PM Report abuse rate up rate down Reply
Iselin007

Robert Smith
-----------------------------------------------------------------------------------------------

Just so you know the news item about illegals losing Healthcare subsidies for improper information is listed in today's NJ Star Ledger News Paper. More than 10,000 in NJ and over 300,000 nation wide are at risk to lose subsidies if they fail to come up with the proper information.

August 14 2014 at 1:12 PM Report abuse -1 rate up rate down Reply
1 reply to Iselin007's comment
Robert Smith

That maybe ISE, but the ACA law still states what I told you, if an illegal seeks medical treatment in the USA, the ACA law covers it.

August 14 2014 at 1:34 PM Report abuse -2 rate up rate down Reply
Iselin007

Robert Smith
The ACA states that all Americans ( touching American soil ) are covered under the new law whether they are here illegally or not.

And it's " Lose " not " Loose "
-----------------------------------------------------
What is your problem?

August 14 2014 at 1:05 PM Report abuse -1 rate up rate down Reply
1 reply to Iselin007's comment
Robert Smith

I don't have one. Apparently you do though, comprende' ?

August 14 2014 at 1:08 PM Report abuse rate up rate down Reply
Iselin007

Robert Smith
NAFTA, had nothing to do with trading with the Chinese. That trade agreement was between Mexico, Canada, and the USA.
------------------------------------------------------------------------------
The Box Store imports several products under NAFTA such as candy and baked goods from Canada, and tomato's and other vegetables from Mexico.

Most of Pharmacy/ Medicine products are made from drugs imported from China. The USA producers get many of their drug material from China!

August 14 2014 at 12:47 PM Report abuse -1 rate up rate down Reply
1 reply to Iselin007's comment
Robert Smith

NAFTA still wasn't a trade deal with China. Did that go clear over your melon?

August 14 2014 at 12:53 PM Report abuse -1 rate up rate down Reply
2 replies to Robert Smith's comment
Iselin007

That's not the point. We know NAFTA is separate from China. Were pointing out that NAFTA has hurt the US .

August 14 2014 at 1:03 PM Report abuse -1 rate up rate down
Robert Smith

I just told you that.

August 14 2014 at 1:08 PM Report abuse -1 rate up rate down
Iselin007

Many more manufacturing jobs were lost in this country because of the demands of retailers forcing vendors off shore. Many workers in factories were contractors leased from temp firms or undocumented workers. The factories would list only the employees that were legal and permanent employees all others were off the books or cover by the temp agencies.

When the warn notice system was created to report layoffs of 50 or more employees the factories only reported permanent workers who were there at least 90 days all others for what ever reason escaped being counted as employees.

August 14 2014 at 12:35 PM Report abuse -1 rate up rate down Reply
Robert Smith

Just keep blaming Wal*Mart, but they aren't the only retailer selling Chinese made products, they are just the Com / Libs dog to kick. All retailers have foreign made stuff in their aisles, now they are buying up are food suppliers, get what their agenda is yet America?
Go out and buy your Rosetta Stone, how to speak Mandarin, so you will know what your new leaders will be telling you what to do.

August 14 2014 at 12:32 PM Report abuse -1 rate up rate down Reply
allyndp

It's not up to Walmart to stop buying form China. It's up to you all. You and you there that drive your Hyundi's and Toyota's etc. Your saving a buck for your own lifestyle so you can buy two cars instead of one and have a swimming pool in your back yard at your 3000 sq. ft. house with enough attic space for a whole other house. And you who's union demands retiement and health benefits that weigh down American manufacturing costs. Everyone has to start giving up a little. The global economy isn't going to make our standard of living prevale at its current level so get used to a little downsizing.

August 14 2014 at 11:57 AM Report abuse -1 rate up rate down Reply
1 reply to allyndp's comment
Robert Smith

No wonder why all the illegals are coming over the border. They want a 3000 sq ft house and a pool in the back yard too. That's okay, we will give them freebies to help them along on their journey, so keep paying your taxes, they couldn't do it without you.

August 14 2014 at 12:10 PM Report abuse -1 rate up rate down Reply
2 replies to Robert Smith's comment
Iselin007

The undocumented will loose their Healthcare subsidy if they can't prove their status. Everybody knew the millions of undocumented were being cared for in the US by Hospitals who add the charges to US patient bills or sent to medicaid.

August 14 2014 at 12:50 PM Report abuse rate up rate down
Robert Smith

The ACA states that all Americans ( touching American soil ) are covered under the new law whether they are here illegally or not.

And it's " Lose " not " Loose "

August 14 2014 at 12:58 PM Report abuse -1 rate up rate down