The Supply Side: ‘Made in the USA’ commitment timely amid trade wars

When Walmart launched its Made in the USA agenda five years ago to support manufacturing jobs by sourcing an additional $250 billion in U.S.-made products, there were plenty of naysayers who doubted the retailer’s level of commitment given the 10-year time frame.

Walmart officials say the initiative has played out well. Cindi Marsiglio, vice president of U.S. manufacturing and sourcing, told the Northwest Arkansas Business Journal the program isn’t always easy, and it’s not perfect. But Walmart is moving the ball forward with the help of its growing supplier base.

Marsiglio said the goals of the 10-year commitment are simple:
• Accelerate growth in U.S. manufacturing
• Invest in our communities we serve
• Build trust with customers

As U.S. trade wars escalate with China and Canada, the timing for sourcing American-made products may have never been more important. Walmart President and CEO Doug McMillon recently told the media the majority of goods (roughly 66%) Walmart buys are made in the U.S. Much of that is food, given Walmart is the nation’s largest grocer. But over the past five years, the company has also played a role in the return of several other industries supporting categories like outdoor patio, kayaks and coolers, textiles, bicycles, televisions and tires.

The Boston Consulting Group estimated the 10-year effort should support 1 million manufacturing jobs. While those numbers don’t necessarily line up with the progress made through the first five years, Reshoring Initiative Founder and President Harry Moser applauds Walmart’s efforts and said the retailer is a big reason for the 171,000 new U.S. manufacturing jobs created last year. Reshoring Initiative reports 576,000 jobs have come back to the U.S. from offshore between 2010 and 2017.
There were 11.98 million U.S. manufacturing jobs in January 2013, according to the U.S. Bureau of Labor Statistics (BLS). The BLS reported 12.57 million manufacturing jobs in January 2018, a 4.96% increase. The May 2018 estimate was 12.67 million manufacturing jobs.

THE WADLEY STORY
Marsiglio said onshoring manufacturing and having to start from scratch in the U.S. takes time and money. She said Walmart’s role has been to provide companies a purchase order that they can leverage with city and state officials as well as financial partners to piece together the funds to begin manufacturing.

Since 2013, Walmart has made large financial commitments with more than two dozen manufacturing suppliers that began new production lines for items sold to Walmart. Southern Sales & Marketing of Atlanta purchased a shuttered plant in Wadley, Ala., in 2009. Ken Harbaugh, chairman of Southern Sales & Marketing, reached out to Walmart in early 2013 at its first U.S. Manufacturing Summit to see about being a source for U.S.-made patio furniture, a seasonal item in a category that had largely moved offshore.

“The Wadley plant reached out to us through our open invitation to try and source more U.S. suppliers,” Marsiglio said. “They fit a lot of the criteria we were looking at given the seasonal nature of the items.”

She said the Wadley story is a great example of how the effort is creating jobs in small communities and also providing more U.S.-made products for consumers at affordable prices. The plant in Wadley is the town’s largest employer and has brought back 250 jobs to a town of 406 people, too small to have a Walmart store.

Harbaugh said the plant is growing sales in large part thanks to the commitment from Walmart. Annual sales have ramped up to more than $40 million. His company has sold products to Walmart and Sam’s Club for more than 15 years. The line of patio furniture made in Wadley is branded Meadowcraft and includes side chairs, full patio sets and umbrella stands.

In an effort to source more outdoor furniture in the U.S., Marsiglio said other suppliers who have done business with Walmart for a long time have also added production lines that fit the retailer’s needs. In 2014, Mohawk Industries began making outdoor rugs for Walmart, and in 2015 Lifetime started making a folding patio table.

Marsiglio said the majority of manufacturing jobs created around the company’s initiative have come from existing Walmart suppliers, and that makes sense because they already have the relationship. Entrepreneurs who pitch products at Open Call often are outsourcing their manufacturing. But if Walmart wants to buy the item, additional manufacturing capacity is often needed.

Marsiglio told Talk Business & Politics the buyer team is always considering ways to source more U.S.-made goods where it makes sense. She said Walmart has good momentum behind the initiative and is able to control its own growth with events like Open Call, which has evolved over the past five years. She said Open Call creates a great inflection point for buyers who are working on it every day and travel to shows often.

ARKANSAS BENEFITS
Gov. Asa Hutchinson said the Walmart U.S. Manufacturing initiative is good for the state’s largest employer, and it’s also good for the state as there have been several announcements of new jobs as a direct result.

Rockline Industries has been making private brand baby wipes for Walmart for years. In 2015, the company spent $15 million to expand its Springdale plant, adding a new line of facial wipes and onshoring adding around 50 new jobs.

“Walmart has been a great partner for many years, and we’re pleased to be working with them to bring jobs back to the U.S.,” said Randy Rudolph, Rockline president. “Rockline has always been dedicated to helping the communities in which we operate, and we’re confident this move will create a beneficial impact throughout the state of Arkansas.”

Rockline opened a 240,000-square-foot plant in Russellville in 2015 dedicated to its U.S. facial wipe business, which created up to 50 new jobs. Like in Springdale, jobs were brought back from overseas operations.

In early 2015, Hanesbrands Inc. announced it would add 120 jobs in Clarksville (Johnson County) as part of a $1.4 million investment into the building and equipment that brings manufacturing jobs back to the U.S. Hanesbrands moved a hosiery production from Honduras to the Clarksville plant. The 120 new jobs 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.
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Editor’s note: The Supply Side section of Talk Business & Politics focuses on the companies, organizations, issues and individuals engaged in providing products and services to retailers. The Supply Side is managed by Talk Business & Politics and sponsored by Propak Logistics.