Wal-Mart exec says retailer still committed to U.S manufacturing push

story by Kim Souza

There have been many executive changes at Wal-Mart Stores in recent months, including a new management team at the retailer’s mammoth U.S. division. And while some say all has seemed quiet on the retailer’s push to return manufacturing jobs to the U.S. since the departure of former Walmart U.S. CEO Bill Simon, Wal-Mart disagrees.

“Our new CEO Greg Foran is equally committed to the U.S. Manufacturing initiative because it is a good business decision. Of course there are business advantages that come with a shorter supply chain particularly in responding to seasonal trends. But it’s also at the core of Everyday Low Price and is a cost-cutting strategy that is a crucial part of our business. It’s smart and we are quite pleased with the progress made in two years’ time,” said Cindi Marsiglio, vice president of U.S Manufacturing at Wal-Mart.

Marsiglio told The City Wire that there are more projects in the pipeline today than ever before, from concept to commitment and everything in between. While she would provide an estimated number of projects, in October 2014 she said there 150 projects in various stages.

In 2013, Wal-Mart announced it would 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. Simon was seen as the champion within Wal-Mart for the manufacturing push.

With respect to Wal-Mart’s 10-year commitment to purchase goods made in the U.S., Marsiglio said the spending is on par with the two-year target with the estimated prorated portion. The funds are being allocated based on three areas: new items sourced from current U.S. suppliers; new suppliers bringing new or improved items; and those suppliers looking to bring some of their manufacturing onshore, which is by far the toughest piece of the puzzle and the most time-consuming.

“We don’t have a specific target spending among these three areas. We are seeing a lot more production in the U.S. for items added to the our inventory as we are buying more from those we already do business with. Some existing manufacturers are expanding their plants as they take on new customers and more business and others are adding shifts. We are still seeing stable interest among those who want to onshore production and plan to build new facilities which is exciting and most difficult to complete,” Marsiglio said.

Two-thirds of products Wal-Mart already sells are made in the United States, but Marsgilio said many of those are food items given the retailer’s huge grocery presence.

“We want to increase that percentage with this $250 billion commitment and our buyers are very engaged in the process. Again, that’s because our customers want to buy local when they can, and it’s also many times cost effective for us,” she said.

A report from global consulting company A.T. Kearney suggests that reshoring is not yet making a difference. Its 2014 “Reshoring Index” was down 20 basis points compared to 2013, indicating that “offshoring to foreign manufacturing markets outpaces reshoring.”

“While the so-called reshoring trend has helped improve the mood of U.S. manufacturing since the Recession, the reality is that the import value of manufactured goods into the U.S. from 14 low-cost Asian countries has grown at an average of 8 percent per year in the last five years,” Pramod Gupta, A.T. Kearney principal and study co-author, said in a press release. “The 2014 Reshoring Index is not only an indicator of U.S. manufacturing capital flows, but also how the U.S. stacks up in terms of attractiveness as a source of manufactured products versus countries like China, Bangladesh, and Cambodia.”

The index also noted: “While there has been an overall lift in U.S. manufacturing for five straight years since 2009, imports of offshored manufactured goods into the U.S. have increased at a faster rate than any return of manufacturing operations to our soil and, for the 14 top offshoring locations combined, amounted to $630 billion in 2013.

U.S. manufacturing employment as of January was an estimated 12.33 million, according to the U.S. Bureau of Labor Statistics. That number was better than the 12.102 million in January 2015, but 13.5% below employment levels of 10 years ago. The January manufacturing employment is more than 36% below the January peak of 19.388 million in 1979. U.S. manufacturing employment reached a high point of 19.553 million in June 1979.

Catherine Johnson, seafood buyer at Wal-Mart for the past 5 years, said her team is seeking out locally sourced seafood items. She said they travel the country to seafood shows each year to find locally sourced fish and seafood because it allows for more a transparent chain of custody and traceability.

“Next month we are traveling to Boston for a seafood show and we recently completed a trip to the Pacific Northwest to Pike’s Market. We source shrimp and what we can from the Louisiana Gulf,” Johnson said.

One of the deals she recently worked on was with Big Easy, a Louisiana company that will supply cooked product from the Gulf. She said this new line helped add capacity to Big Easy’s production and they’ve hired 35 workers in the process. 

Johnson said another new line called Wild Alaska is going regional in June in the Pacific Northwest region. The deal came about because of ongoing work between Wal-Mart and Alaskan suppliers.

While Johnson said Wal-Mart continues to source its seafood globally, buyers are also looking at private label products with some of the Alaskan suppliers like Trident out of Seattle that is a fourth generation fishing business. 

“Seafood can be intimidating. I call it the Starbucks factor, because consumers might not know how to order it. There is also the wonder of where it comes from. Consumers still want their Mahi Mahi from Peru because that kind-of romances the product,” Johnson said.

In the last quarter, the retailer planned for a banner holiday, opened 178 new stores, including its 500th Neighborhood Market. Somewhat lost in the limelight was roughly a half dozen suppliers who got order commitments through Wal-Mart’s U.S. manufacturing initiative.

There were winners and losers. HanesBrands announced it would add 120 jobs in Clarksville, Ark. (Johnson County) as part of a $1.4 million investment in the building and equipment that brings manufacturing jobs back to the U.S. HanesBrands said it is moving hosiery production from Honduras to the Clarksville plant. When the 120 jobs are realized, the company will employ 570 in the county seat of Johnson County. The 120 new jobs will average approximately $39,000 per year in wages and benefits, a $4.7 million economic infusion into the local economy each year, according to information provided by the Arkansas Economic Development Commission.

“As companies continue to bring manufacturing jobs back to the U.S., we are committed to making Arkansas a leader in job creation and manufacturing,” Gov. Asa Hutchinson said in the statement. “Thanks to HanesBrands for its decision to make this significant expansion in Arkansas. The fact the company chose to expand this specific facility demonstrates the quality of our workforce in Clarksville.”

Mel Redman of Redman Industries also a veteran supplier to Wal-Mart, had planned to build his ride-on toys in Rogers, gradually shifting production from his Hong Kong manufacturer Sales Chief. A legal battle ensued and Wal-Mart pulled the $70 million product commitment from Redman who no longer sells the ride-on products. Redman is suing Sales Chief for $40 million in losses from this busted deal.

Other local manufacturers who have said their business is growing because of overall efforts to return manufacturing jobs to the U.S. include Creative Things in Lowell, PolyTech Plastics in Prairie Grove and MarshallTown Company in Fayetteville.

Jack Murders, vice president of operations at Marshalltown, said the company has continued to bring manufacturing back to the U.S. for many of products that were originally made abroad.

“We started doing that long before the current fad of ‘reshoring’ came into vogue and we’ll be doing it long after the fad fades. We don’t seek out attention for reshoring, but we are primarily a U.S.-based manufacturer and we make our decisions based upon cost-effectively making premium products,” Murders said.

The company has determined that U.S. based manufacturing is increasingly cost effective. That said, it continues to source some of its raw materials and finished goods from abroad where it makes sense to do so.


As previously noted, there were several new manufacturing announcements lost in the holiday hustle of the recent quarter. Most of the announcements did not disclose specific job additions nor investment expenditures associated with the new Wal-Mart product commitments.

“We continue to see the fruits of this initiative come through and we will have more announcements following our next Open Call slated for July 7 in Bentonville,” said Walmart spokeswoman Kayla Whaling.

True Science Holdings announced plans to add 200 jobs to its facility in Springville, Utah, in expanding a new pet treat line of products under the brands Delightibles, Betsy Farms and VetIQ. True Science purchased and renovated a 200,000 square foot manufacturing space in Springville for this new business.

“Working with True Science, Wal-Mart is able to bring customers quality pet products while also helping create American jobs,” said Michelle Gloeckler, senior vice president of U.S. Manufacturing at Wal-Mart. “An increase in U.S.-made products for our customers helps manufacturers create more jobs here in America.”

In Knoxville, Tenn., Dalen Products signed a deal to create a new line of U.S.-made  lawn and garden plastic owls. The new business has enabled Dalen to provide more year-round jobs at its facility. 

Pacifier maker NUK USA announced plans to bring some of its manufacturing to a facility in Reedburg, Wisc., from Europe. Nuk said it assembled baby products in the U.S. since 1949. With the Wal-Mart commitment, the company said it was able to expand its U.S. manufacturing footprint to give customers the option of  “Made in the U.S.” pacifiers.

In Salisbury, Mass., Andover Healthcare announced plans to expand with a 52,000-square-foot manufacturing center in nearby Portsmouth, N.H., where it will make cohesive bandages for Wal-Mart. Founded in 1976, Andover Healthcare has grown from just a few employees to more than 225 employees and it expects to hire more when the factory is at full capacity, the release states. No other financial terms were announced.

North Carolina continues to see new jobs added because of the Wal-Mart commitment. From Element Televisions to Kent Bicycles, which are now being assembled there, to the recent $16 million investment by Richeleiu Legwear. The Canadian-based sock maker plans to move production on its Peds Ladies and Medi-Peds product lines back to the U.S., creating 200 new jobs in Hildebran, N.C., by 2018.