“America is open for business.”
This story first appeared in the August 23, 2013 issue of WWD. Subscribe Today.
That was the message Thursday as Wal-Mart Stores Inc. and the National Retail Federation hosted a manufacturing summit in Orlando, Fla., for an audience of 1,500 suppliers, retailers, governors and business leaders.
The conference underscored Wal-Mart’s previous commitment to buy an additional $50 billion in U.S.-made products over the next 10 years and featured announcements from suppliers that, combined, are expected to fuel more than $70 million of factory growth and create more than 1,000 jobs.
The event had something of a speed-dating element with governors and state officials pitching the advantages of their locales — low taxes, affordable housing, qualified workers — directly to manufacturers who were ready to create jobs in their communities. Suppliers were able to present potential projects and learn about the resources available in different states.
“I wear heels,” said Nikki Haley, governor of South Carolina. “We kick hard in South Carolina. We have no unions.”
Florida Gov. Rick Scott said, “We cut business taxes and property taxes. We want to get our state back to work.”
“The state of Mississippi’s workforce is highly skilled and can support an American manufacturing renaissance,” said Gov. Phil Bryant.
“We’ve started to bring [the $50 billion] initiative to life,” said Bill Simon, president and chief executive officer of Wal-Mart U.S. “We’re meeting with suppliers and government leaders. This is bigger than just us.”
Mike Duke, president and ceo of Wal-Mart Stores Inc., said the company wants to get “other retail businesses involved, our competitors. This can be a game-changing meeting, a milestone day.”
It was a surprise to see Wal-Mart and the NRF side by side. The retailer, which has had a feud with the organization dating to 1969 when founder Sam Walton was rejected for membership and became a member of its rival, the Retail Industry Leaders Association, this year joined NRF “to be as inclusive as possible,” Simon said. “There are certain goals in the industry that we can agree on. NRF is cohosting this today.”
“The NRF board and our members are pleased to be a partner in this summit,” said NRF chairman Stephen I. Sadove, who is chairman and ceo of Saks Inc. “There is no mystery behind the logic and intent of this event. This is a much-needed cooperative effort to build a strong, competitive and thriving manufacturing industry sector for the U.S. economy.”
“The economics of manufacturing are changing and it makes sense to locate manufacturing closer to the point of consumption,” Simon said. “It’s finding the right suppliers, financing, incentives and raw materials. We’re going to share best practices with suppliers and across our industry.”
Simon said success stories have already come to light. “We’re going to hear that the numbers work,” he said. “Some people may be wondering how to work with state governments. It’s difficult. Business leaders are already getting it done. Tomorrow, you’ll meet with each other and dig into the numbers. We have over 300 meetings set up. This can’t be about a series of one-off projects. We can map out opportunities and put some systems in place. Nothing less than the future of our country is at stake here. We can’t become solely a service economy. We need to make things in America.”
Products made domestically account for two-thirds of the merchandise Wal-Mart sells, according to Simon. Wal-Mart’s U.S. push comes at a time when manufacturing apparel overseas, particularly in countries such as Bangladesh, has become more controversial for the retail giant. Wal-Mart labels were allegedly found at the Rana Plaza factory used by a subcontractor, where 1,129 garment workers died in April in a building collapse.
U.S. Secretary of Commerce Penny Pritzker said America broke records for exports — $1.1 trillion worth — in the first half of the year, more than the country exported in all of 2003. “American manufacturers have added half a million manufacturing jobs since 2010,” she said. “They are good paying jobs. The Commerce Department will continue to play a lead role in the growth of manufacturing and exports.”
Other reasons to make products in the USA: China wages have increased more than 10 percent each year for the past decade, Pritzker said. The output of U.S. workers is 9 percent higher than before the recession. Also, “we could have trade agreements in place with more than 60 percent of the world’s GDP,” she said.
Moving the discussion from the theoretical to the practical were manufacturers such as Bud Kilby, president and ceo of Renfro, a multinational legwear corporation. “We specialize in socks. Fruit of the Loom, Dr. Scholl’s and Wrangler,” he said. “We were founded in 1921 and we’ve manufactured in our own U.S. factories ever since. Several years ago demand created a need for more capacity. We increased our investment and added 247 jobs over the past two years. When Andy Barron, [executive vice president of softlines,] called me and asked if Renfro Corp. would support Wal-Mart, we invested an additional $10 million over the next two years and created an additional 195 jobs.”
Kayser-Roth’s president and ceo, Kevin Toomey, said the company invested more than $100 million in the U.S. Its brands, No Nonsense and George, are made in America. “Wal-Mart came to see our facility,” Toomey said. “They challenged us to bring them a better product at a lower price. It was a huge challenge, but we took the challenge and made it happen. We will break ground on two facilities in North Carolina. We’ve figured out how to make a better product at a better price here in America.”
“The merchandising team [at Wal-Mart] is 100 percent behind this goal,” said Duncan Mac Naughton, the retailer’s chief merchandising and marketing officer. “Lowering our cost of goods is core to our business strategy.”