WASHINGTON — Wal-Mart Stores Inc. upped the ante on Thursday in its drive to revive American manufacturing, revealing the creation of a new manufacturing fund — and apparel and textiles are one of the prime targets.
Bill Simon, chief executive officer and president of Wal-Mart U.S., told a gathering of more than 280 mayors attending the U.S. Conference of Mayors here that the “time is right for a resurgence” in American manufacturing and said the company is creating a $10 million fund to support it.
Wal-Mart Stores and the Wal-Mart Foundation will fund the five-year program, which will launch in March. The fund will provide grants to “innovators’” in the manufacturing sector and comes on the heels of Wal-Mart’s commitment last year to buy an additional $50 billion in American products over 10 years.
“Overseas, the middle class is growing. It is driving demand for products that are made in those countries and that increases labor costs abroad and makes the U.S. more competitive,” Simon said. “Meanwhile, energy costs in the U.S. are relatively less expensive than all around the world. Higher transportation costs in general are increasingly making it necessary and efficient to build things closer to the point of consumption — Asian production for Asian demand, American production for American demand.”
There remain significant hurdles to bringing back large-scale apparel production to the U.S., however. In a separate press briefing following his speech, Simon said some technological innovation is required to do that.
“That is one of the reasons we launched this fund,” the ceo said. “Why can’t we make a pair of blue jeans in the U.S. that costs less than $10 that we can get to market for $14 or $15? The cotton is grown here. Capital is agnostic to geography. If you buy a piece of equipment, it is pretty much the same cost whether it is located in Indiana or Asia. Transportation costs are favorable. Energy costs are favorable.…
“Wages are rising outside of the U.S. Do the math,” he added. “We retailers have carrying costs. We don’t have to take production earlier as we do for imports. So there is an economic benefit for us and flexibility in our supply chains. It is a big math puzzle and the math suggests that it is tilting in our favor.”
Simon said 72 percent of Wal-Mart’s suppliers have said U.S. manufacturing will be “cost favorable” to them within four years, adding that 40 different departments at Wal-Mart are in active discussions with suppliers to manufacture in the U.S.
To fuel the Made in USA initiative, Wal-Mart will use the $10 million fund to provide grants to universities and think tanks in an effort to develop new processes to help expand American manufacturing, he said. The retail giant will also launch an advertising and social media campaign next month to support the effort, Simon said, giving the audience a preview of one of the TV ads set to bow. In it, a man’s voice speaks against the backdrop of an empty factory, outlining the rise and demise of American factories and the determination to rise again. The ad was shot in an actual factory with people whose lives have been impacted by the demise and resurgence in U.S. manufacturing, Simon said.
The executive said Wal-Mart will host its second U.S. manufacturing summit in Denver in August. He said a key area of focus for the summit will be connecting manufacturers in need of component parts with factories with excess capacity in cities and towns around the country.
“I think we have made some pretty good progress in the first year of this initiative, but we have to be ready to meet challenges on the horizon and there are substantial and significant challenges,” he said. “For example, our suppliers tell us that some categories such as textiles and apparel are more difficult to bring back to the U.S. for a lot of reasons and we need some innovation in that space. Also, they tell us there are crucial components that are just not made in the U.S. anymore and we have to solve that problem.”
While Wal-Mart continues to push for more American production, a larger debate in the country over increasing the minimum wage is also part of the cost equation. Simon said in his speech that he supports the debate in Washington over increasing the minimum wage, but he warned that it will not “solve the whole problem.”
He told reporters later there might be some “wage compression” if the federal rate is raised, but said the discussions are in the formative stage. He also noted that Wal-Mart is not primarily a “minimum wage payer,” noting that less than 1 percent of its workforce is paid at the minimum wage level.
“The reason why minimum wage is on the table as a national discussion is that we have had no wage increase in six or seven years because…the economy is not growing at the rate we would like it to be,” Simon added. “We have got to have growth in this country. If we do, wages will follow and if the government wants to set the minimum wage at a rate it thinks is fair and acceptable, we as businesses will adapt to that and move forward, but it has got to come with growth.”
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia
Azzedine Alaïa's “I-did-it-my-way” ethos stood out starkly at a time when brands are experimenting with consumer-facing fashion shows, coed formats and trans-seasonal collections – anything to perk up lackluster sales of ready-to-wear in an age of Insta-everything. “It’s not creation anymore. This becomes a purely industrial approach,” the late designer told WWD in an interview last year. “But anyway, the rhythm of collections is so stupid. It’s unsustainable. There are too many collections.” Read more about the iconic designer’s life and work on wwd.com, link in bio. #wwdfashion #azzedinealaia (📷: @WWD Archive, 1986) #alaia
Sneaker reselling app @goat’s latest exhibit, "The Greatest: New York," tells the story of New York's sneaker culture. To celebrate the exhibit, an intimate crowd gathered on Thursday night at the pop-up gallery space, located at Platform in Culver City, to hear guest speaker and illustrator @esymai talk about her own rise in streetwear and women in the business. "For me I'm just someone who is creative. I like to create things," said Chang. #wwdfashion
Azzedine Alaïa, one of the most iconic couturiers of the modern era whose body-con designs defined Eighties fashion, has died in Paris. The diminutive Tunisian-born designer, known for his structured knitted dresses with fitted waists and impeccably cut, figure-hugging second skin silhouettes was deeply admired by his peers, and counted supermodel Naomi Campbell - his adoptive daughter - among his inner circle, one of a gang of glamazons including Farida Khelfa, Carla Bruni and Stephanie Seymour who became ambassadors of his style. (📷: Alexandre Guirkinger) #wwdblast