Wal-Mart updates progress of U.S. manufacturing agenda

by Kim Souza (ksouza@talkbusiness.net) 492 views 

Wal-Mart Stores CEO Doug McMillon couldn’t help pitching some of his favorite products to prospective suppliers during the retailer’s Open Call event held in Bentonville on June 28. McMillon said he wanted to just walk up and down the hallway saying “yes,” “yes” and “yes” to the great products pitched to buyers throughout the day. One of his personal favorites is Broo shampoo and hair products, which the retailer got through an Open Call event two years ago.

It’s been four years since Wal-Mart Stores Inc., announced its commitment to buy $250 billion more in American-made products over a 10-year period.

Since that time, dozens of new suppliers have been added as Wal-Mart business partners, existing suppliers have expanded their business and a few suppliers have on-shored production from abroad.

“I am really proud of the momentum we have been building together over these past four years,” Cindi Marsiglio, vice president of U.S. sourcing and manufacturing at Wal-Mart, said during the retailer’s Open Call event in Bentonville on June 28. “We have come a long way, we have learned a lot and we certainly still have more work to do. We have seen firsthand by supporting American jobs and American manufacturing, it’s great for our customers, it’s great for the business and it’s really great for the communities that we serve.”

Marsiglio has been the face of the program for the past three years and continues to work behind the scenes on the long-term mission.

“The single most important thing that I have seen in the journey is that American ingenuity and entrepreneurship is clearly alive and well across America,” she told the potential suppliers. “You are the entrepreneurs and farmers. You are the innovators and risk takers in all of this … Wal-Mart has a unique opportunity to help you accelerate that.”

A new report from McKinsey & Co. states the U.S. manufacturing sector drives 30% of the nation’s productivity growth, 60% of its exports and 70% of private-sector spending on research and development. However, the sector accounts for just 9% of U.S. employment, a much smaller share than two decades ago.

“Growing our economy through manufacturing is really important for a number of reasons. We want customers to have great jobs so they can have money to spend which helps fuel the whole system,” said Wal-Mart CEO Doug McMillon. “This is real and working together with our supplier partners we can help improve the lives of Americans who want to make things and do it in a sustainable way.”

McMillon told suppliers during his Open Call presentation that Wal-Mart is also committed to shaping policy in the country as it pertains to supporting U.S. manufacturing. He said some of the issues they are working on include:

  • Streamlining Made in the USA labeling
  • Public and private sector investments in people
  • Modernizing the tax code
  • Favorable trade agreements

McMillon said the retailer would be releasing several policy recommendations soon that are aimed at supporting U.S manufacturing jobs. He said Wal-Mart believes it should be one of the voices at the table to help renew U.S. manufacturing and help drive the creation of manufacturing jobs in this country.

“One of the areas we are weighing in on is Made in the USA labeling because we think that can be improved so that customers know what they are buying and where it’s coming from. Today’s rules are a bit too confusing,” McMillon said.

M FACTORY EYEWEAR
McMillon ended his presentation with a video that featured one of the faces that helps make products sold in its stores. Darryle Hawes of Brooklyn, N.Y., said he is a maker and not very many people he knows have the opportunity to make things for a living. Hawes is an eyewear craftsman at M Factory USA Inc., one of the only eyewear manufacturers in the U.S.

Hawes said from a young age his father would give him a box of nails and scrap wood and then tell him to make something. Alex Lanaro, founder of M Factory, said he was inspired by Wal-Mart, who challenged its buyers to purchase more goods made in the USA.

“I jumped at that opportunity,” Lanaro said.

Ericka Thumbutu, senior eyewear buyer at Wal-Mart, recently blogged about the retailer’s relationship with M Factory.

“When Wal-Mart first began working with our suppliers to reshore eyewear manufacturing, we were excited to find a revitalization project already under way in Brooklyn,” Thumbutu said. “There, a group of 25 Brooklyn natives is building a community of makers and craftsmen. We knew this was the right place to start our project, and today, this is where our aMerica eyeglass frames are made by hand.”

She said in today’s age of technology-driven factory assembly, there are very few industries investing in hand-crafted products. But eyewear is one category in which this is a must.

“Even the most inexpensive pair of readers is assembled in a process upwards of 50 steps,” she said. “And no machine exists to screw the temple pieces on a pair of glasses to the frame —that’s done by hand, at each step and for every pair.”

Wal-Mart just launched the new line of aMerica frames in its store optical centers the first week of June, and they are the first frames the retailer sells which are made in the U.S. This partnership has created dozens of jobs in Brooklyn.

Hawes said the jobs have instilled pride and helped to make lives better among those who want to make things for a living.

STAYING THE COURSE
John Bassett, chairman of Bassett Furniture in North Carolina, also spoke at the Open Call general session. His company made the choice to stay onshore and resisted the temptation to flee American soil for cheaper labor and more favorable tax structures, when most of his competitors did so around 2003.

“I didn’t grow up quitting on America,” he said.

Bassett said he used his U.S. location to his advantage and drastically restructured the way furniture was sold and delivered to his retail customers. He raised the bar to make and deliver furniture in seven days, which kept his customers from having to stock a lot of inventory.

The timeframe for getting delivery on furniture made abroad was six to eight weeks, and that meant retailers had to stock more inventory which raised their overhead costs. Bassett also extended the payment terms for his customers, telling them they didn’t have to pay for the floor samples for five months and they could take 30 days after delivery to pay him.

“This saved our business. We used our good old southern ingenuity and it worked,” Bassett said. “The most important thing for any company facing challenges to do is not panic.”

It wasn’t long before Bassett had convinced the doubters and his business was making it, despite the odds. When the financial crisis hit in 2008, Bassett said he noticed many of his employees had dropped health insurance on their spouses and sometimes children.

“Our people were hurting. Sales were down because new homes weren’t selling and furniture sales are linked to home sales. I brought my sons in and told them we had to do something to help our people. They have MBA’s, but that’s another story,” he said, jokingly.

“They told me we were losing money. And it would be hard to invest in help for our people, but I told them that was all the more reason to do it,” Bassett said.

The company partnered with a regional healthcare provider to set up primary care clinics onsite and treat any Bassett employee or any member of their family for free.

“We required that all workers get a free annual physical. We had 58 holdouts, all men. I took over the task and sent letters to their homes on a Friday telling them that if they didn’t get the physical within 45 days their families’ clinic privileges would be suspended. I didn’t send it to the employee. I addressed it to their wives, and 53 of them lined up on [the following] Monday morning to get their exam,” Bassett said.

He reiterated that manufacturing in America means something and no matter what changes may come it’s important to make the jobs available for future generations.

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