The Supply Side: Peds New $16 Million Plant Part Of Wal-Mart Onshoring Effort

Editor’s note: The Supply Side section of The City Wire focuses on the companies, organizations, issues and individuals engaged in providing products and services to retailers. The Supply Side is managed by The City Wire and sponsored by Propak Logistics.

The opening of a $16 million Peds Legwear plant in Hildebran, N.C., is the latest activity promoted by Wal-Mart as proof of its ongoing commitment to return manufacturing jobs to the United States. Wednesday’s (March 11) opening even included the attendance of U.S. Under Secretary of Commerce for International Trade Stefan Selig.

“There has never been a better time to expand operations in the United States, given our attractive consumer market, thriving culture of innovation, and talented workforce,” Selig said in a statement.

Peds president Michael Penner said Wal-Mart’s commitment to purchase $250 billion in additional products made in the U.S by 2023, state and local government incentives helped make the new plant a reality.

Peds invested $7 million to rescue International Legwear Group (ILG), a failing sock company based in Burke County, N.C., which is an area hard hit by the recession and offshoring of textile production. Within 10 days of ILG’s announcing its liquidation, Peds re-hired workers who had been laid off and saved the company’s ongoing accounts.

“Today, the business is thriving,” Penner added. “The work force is expected to reach 150 employees by the end of this year, and sales have already quadrupled. We are on track for creating 205 jobs by 2018.”

Penner said the company invested in 90 machines from Italy that allow the company to knit yarn into tubes and then add toe seams.

“In the past these were two separate labor intensive processes, and manufacturers would send socks to Mexico or Central America to sew the toe, apply dye, and press and package the socks,” he said.

Cindi Marsiglio, vice president of U.S. Manufacturing at Walmart, said the collaboration with Peds Legwear is bringing U.S-made quality products to its 140 million weekly customers and is in line with its commitment to U.S. manufacturers, creating American jobs and helping strengthen local economies across the country.

Socks manufactured at the new facility are sold in the U.S., as well as in Canada, Mexico, and South Korea, Wal-Mart said.

Two years into Wal-Mart’s 10-year U.S. manufacturing initiative, Marsiglio recently told The City Wire that that there are more projects in the pipeline today than ever before, from concept to commitment and everything in between. While she would not provide an estimated number of projects, in October 2014 she said there 150 projects in various stages.

In terms of investment, Marsiglio said the spending is on par with the two-year target with the estimated prorated portion of $250 million 10-year commitment. 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.

Marsiglio said Wal-Mart doesn’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 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.

Mike Harvey, chief operating office of the Northwest Arkansas Council, applauded Wal-Mart’s efforts to onshore manufacturing, noting that it appears to be more challenging for some than others. He said when an industry’s supply chain and workforce has been missing for 20 years or more, it’s difficult and time consuming to put all the pieces back in place.

While there was hope Wal-Mart’s efforts would pay dividends in its own backyard, Harvey said there are a couple of hindrances at work. He said there is not enough ready, suitable manufacturing real estate in the region and more importantly the 4.9% unemployment rate and present openings going unfilled in local manufacturing jobs is a bigger red flag.

Harvey said Wal-Mart’s efforts to collaborate where they can to bring U.S. manufacturing back even in a small scale is positive for the nation’s economy.

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.