story by Kim Souza
Walmart U.S. CEO Bill Simon announced Thursday (Jan. 23) a $10 million innovation fund from the retailer and its foundation to spur new U.S. manufacturing commitments that lead to job creation.
Simon joined 280 of the nation’s mayors in Washington, D.C., at the U.S. Conference of Mayors meeting to announce the five-year program and the most recent addition of its suppliers that will provide onshore jobs, Kent Bicycles.
He said Walmart and the Walmart Foundation will fund the $10 million, five-year program and work in collaboration with the U.S. Conference of Mayors for a launch in March. The fund will provide grants to innovators in the manufacturing sector and seeks to create new processes, ideas, and jobs that support America’s growing manufacturing footprint.
“If we want to grow manufacturing and help rebuild America’s middle class, we need the brightest minds in our universities, in our think tanks, and in our towns to tackle obstacles to U.S. manufacturing,” said Simon. “The $10 million fund will identify and award leaders in manufacturing innovation and help us all work together to create opportunity."
In 2013, Wal-Mart announced that it will buy an additional $50 billion in American products over the next decade. Wal-Mart estimates cumulatively over the next decade the investment will total $250 billion. The Boston Consulting Group predicts that this $250 billion investment will create one million jobs, including the jobs in manufacturing and related services.
The initiative has already proven beneficial to Wal-Mart’s home region. Redman & Associates in October announced a $6.5 million investment to relocate its ride-on toy manufacturing business from Shanghai to Northwest Arkansas over the next three years. Redman operates a sales office in Bentonville that employs 16 people. Moving the manufacturing to Northwest Arkansas was estimated to create 17 jobs the first year, and ramping up to 74 by the time the entire operation comes online in Rogers.
Kent Bicycles is the latest supplier to move its production back onshore. The Parsippany, N.J.-based firm is relocating some production to Clarendon, S.C., which is expected to be at full capacity by 2016. The South Carolina plant will employ 175 workers, assembling 500,000 bikes annually. Onshore production is expected to begin this fall.
“We look forward to bringing production to South Carolina,” said Arnold Kamler, owner of Kent Bicycles. “Our company moved all manufacturing overseas in 1990 because it was so much more cost effective. When Walmart made its commitment to U.S. manufacturing last year, it opened our eyes to restarting some manufacturing here. We attended Walmart’s August manufacturing summit and were able to focus our efforts quickly and make things happen with South Carolina.”
Simon said those that have already taken the risk to move or expand manufacturing in the U.S. tell him they are experiencing a first-mover advantage of a significant leg-up in terms of market-share and momentum.
Wal-Mart also announced it will host its second U.S. manufacturing summit in Denver, Colo., in August 2014. One focus of the summit will be to connect manufacturers in need of component parts to factories with excess capacity.
“Many factories aren’t operating at full capacity. By working together, we have an opportunity to repurpose or help add production to some of these communities,” said Simon. “This will help rebuild the American supply chain to support U.S. manufacturing and create more jobs.”
Wal-Mart’s first summit in August 2013 brought together more than 1,500 attendees, including 500 suppliers, 34 states and government officials to discuss opportunities to create jobs, restore communities and drive economic growth.
Wal-Mart has been applauded by state officials for taking the lead in its efforts to rebuild the U.S. manufacturing sector, that has been in steady decline for the past decade. Arkansas officials see the Natural State benefiting from Wal-Mart’s manufacturing agenda.
Among the retailer’s vast supplier network it found that 72% of suppliers believe manufacturing in the U.S. will be result in better cost savings within four years or less.
Simon said 40 different departments at Walmart U.S. are in active discussions with suppliers to move manufacturing back American soil.