WASHINGTON — Wal-Mart Stores Inc. is standing by its pledge to boost American manufacturing.
This story first appeared in the November 1, 2013 issue of WWD. Subscribe Today.
Bill Simon, Wal-Mart’s U.S. president and chief executive officer, revealed at an investment summit here Thursday that three of its suppliers have committed to moving production back to the U.S., or expanding existing capacity, as part of the retail giant’s longer-term commitment to buy $50 billion worth of American-made products over the next 10 years.
Elan-Polo Inc., a global footwear manufacturer and supplier of Wal-Mart for 35 years, will start production of injection-molded footwear in March at a factory in Hazlehurst, Ga., as part of a joint venture, with plans to create 250 jobs and produce 20,000 pairs of shoes a day when the plant reaches full capacity.
EveryWare Global Co., which manufactures bakeware and tabletop and household glassware, plans to invest $1.8 million to expand factory capacity and establish a new product line of Mainstays Canning Jars in their Monaca, Pa., facility and Louis Hornick & Co., a manufacturer of window coverings and home textiles, plans to invest $2.5 million to establish a new facility in Allendale County, S.C.
“Due to changes in the equation — energy costs, rising labor costs in Asia and expansion of the middle class outside of the U.S. that is creating demand outside of the U.S. [this] puts us in a unique once-in-a-generation opportunity to make a change through investment in [U.S.] manufacturing,” Simon said a press conference on the sidelines of the Obama administration’s inaugural SelectUSA 2013 Investment Summit held here. The two-day summit, which ends Friday, has brought together leading public and private sector officials from around the world to discuss the benefits of investing in the U.S. and involved 1,200 participants, including 630 foreign companies.
Simon said the commitments by the three suppliers “highlights the opportunities that exist for manufacturers to invest in the USA by re-shoring or expanding.”
In 2012, an estimated $166 billion in foreign direct investment was made in the U.S., one of the top destinations for FDI, according to a White House fact sheet. The investment flows came primarily from Japan, Canada, Australia, South Korea and seven European countries, but investment from emerging economies of China and Brazil are “growing rapidly.”
“America is open for business. And businesses have responded,” said Obama, who spoke at the summit. “After a decade in which many jobs left the United States to go overseas, now we’re seeing companies starting to bring jobs back because they’re seeing the advantages of being located here. Caterpillar is bringing jobs back from Japan. Ford is bringing jobs back from Mexico. After locating plants in other countries like China, Intel is opening its most advanced plant right here in the United States.”
He said businesses are seeing several new positive developments, including lower energy costs in the U.S., more stability and increased productivity.
Obama unveiled an expansion of SelectUSA at the summit to help attract more foreign and domestic investment in the U.S. He said he will ask U.S. embassies around the world to focus on attracting new investment, provide more outreach from Washington and coordinated advocacy, provide new tools for foreign companies to cut through red tape and give more tools to state and local leaders to secure new investment.
Simon said Wal-Mart suppliers have committed to creating more than 1,600 U.S. jobs and investing more than $100 million in several product categories, including socks, televisions, light bulbs and hardware. Of the 1,600 new U.S. jobs pledged, Simon said 600 (including Thursday’s total) have been revealed since the company’s supplier summit in August.
Simon said Wal-Mart currently has more than 140 “active projects” aimed at bringing “manufacturing opportunity closest to the point of consumption here in the U.S.
“We’ve got a cascade of items and products,” he said. “When you look at two, three, five and 10 years out we can see when the economics of each one of those categories will tip [in favor of U.S. production],” the executive said. “Our team is ably working with suppliers on those timelines to understand when the labor, transportation costs and components of those make economic sense.”
For a category like apparel, where an estimated 90 percent or more of it sold in the U.S. is imported from other countries, the timeline on production shifts to the U.S. will vary, he said, in response to a question.
“In categories like apparel, we are starting to see movement in the technology-driven aspects of it in textiles and towels…and socks,” Simon said. “So the things that don’t require hand cut and sew are more near term. A little more further out would be hand cut and sewn items like [apparel].”
Asked whether new trade agreements, such as the Trans-Pacific Partnership agreement being negotiated by the U.S. and 11 other countries, including Vietnam, could potentially erode some of the production moving back to the U.S., Simon said a lot of “external issues” will change the equation, but he stressed that new paradigms typically have long cycles.
“The equation that led to the migration out [of the U.S. to offshore production] was a 30-year cycle,” he said. “I think there can be changes in legislation or in macroeconomic conditions that can impact it, but we believe we are on the front end of a very long cycle.”