For the past nine months, the company has been trumpeting patriotic promises to stock more U.S.-made goods.
For the past nine months, however, Wal-Mart has been trumpeting patriotic promises to stock more U.S.-made goods. Manufacturing means “good middle-class jobs, and that’s exactly what our country needs,” said Bill Simon, chief executive of Wal-Mart’s U.S. arm, in a revival-style speech at a recent supplier meeting in Orlando, where a children’s choir sang the national anthem.
So far, Wal-Mart has announced plans to offer U.S.-made socks, towels, candles and light bulbs, among other things, creating more than 1,200 jobs. On Monday, it will announce that Redman & Associates LLC will open a plant in Rogers, Ark., next year to make battery-powered toy cars. The cars, large enough for children to drive, currently are imported from China. Another Arkansas-based company, Hanna’s Candle Co., says it has doubled its workforce to about 200 people, including temporary workers, in the past year because of an increase in sales to Wal-Mart.
Wal-Mart’s new emphasis on U.S. goods spells opportunity for Lip Yow, a Malaysia-born entrepreneur who until recently made everything in China. Yow’s company, AFC Trident Inc., Ontario, Calif., uses contract manufacturers in Shenzhen, China, to make plastic cases that shield smartphones and tablet computers. In April, Trident began production at a small factory in Rancho Cucamonga, Calif. Yow aims to shift most production from China to the new California plant, partly to appeal to retailers like Wal-Mart.
Getting on the shelves of Wal-Mart, the nation’s largest retailer, is “very important,” Yow said, showing a visitor his new plant where an American flag hangs from an overhead crane.
Wal-Mart has promised to increase purchases of U.S.-made merchandise by $50 billion, which would work out to an average of $5 billion a year. That affects just roughly 2% of what Wal-Mart spends annually on merchandise at U.S. stores, said Matthew Nemer, an analyst at Wells Fargo Securities. It is less than 1% of the U.S. trade gap in 2012.
“It’s a great place for us to start,” said Michelle Gloeckler, a senior vice president at Wal-Mart. “We believe it will be bigger.”
The campaign is partly public relations, depicting Wal-Mart as a good citizen, but also promises financial benefits. To the extent it can find low-cost manufacturers in the U.S., Wal-Mart can reduce inventory costs because goods spend less time in transit. With U.S.-based suppliers, Wal-Mart can get new merchandise into stores faster when consumer fads change.