A top Walmart executive said she thinks the company’s beefed-up emphasis on buying American carries special potential benefit for Georgia.
The impact of any change in Walmart buying can be huge: the Arkansas-based company is the largest retailer on the planet with annual sales of more than $480 billion. So just the amount of the proposed change dwarfs most other companies.
Over the next decade, Walmart has vowed to spend a whopping $250 billion more on U.S.-made goods than it already spends, and much of that work could go to factories in Georgia, said Michelle Gloeckler, executive vice president for the Arkansas-based retail giant, responsible for consumables and health and wellness divisions and U.S. manufacturing.
Shifts in global economics have made American manufacturing a better choice on some goods, she said in an interview with the Journal-Constitution during a recent visit to Atlanta. “It just makes good business sense if you pick the right categories to manufacture things closer to where you are selling them.
“And why do we grow cotton here and ship it elsewhere and then ship it back?”
About two-thirds of Walmart’s spending is already domestic, partly because many factors that used to make overseas factories the best and cheapest choice have been tilting back toward American-made, she said: The costs of raw materials, energy and transportation, as well as the inefficiencies of managing and fine-tuning production on the other side of the world.
Yet the commitment was not spurred by crunching the numbers, she said. “It’s customer-driven. The customer wants more local choices.”
People generally won’t pay much more to buy American and Walmart is not going to choose products where they have to, she said. “You have to be competitive. The cost may not be lower but you have to be competitive.”
The flow of manufacturing overseas started decades ago and was often led by low-value, labor-intensive production of items like clothing. But some low-cost manufacturing in the United States has already returned to competitiveness, she said, fingering her Brooklyn-made, Faded Glory sweater.
All the Faded Glory sweaters currently listed by Walmart online cost less than $17.50.
Technology can help accelerate an American manufacturing rebound, even in sectors like textiles and apparel, she said. “Automated cut and sew could be a game-changer.”
Once a year, Walmart holds an “open call” for U.S.-made goods. Last year they met with about 800 American companies hoping to get their goods onto Walmart shelves.
That goal is, by most accounts, a mixed blessing, but one that is highly coveted.
Walmart for decades has been renowned for pressing suppliers to cut their costs so that Walmart in turn can offer ever-lower prices to customers. That ratcheting pressure pushes companies to become more efficient, but can also force them close to the line between profit and loss.
So close that Walmart has occasionally been blamed for bankruptcies.
But on the other hand, the chance to put products in up to 5,000 stores can be a spectacular growth opportunity.
Among the significant suppliers that Walmart has in Georgia already:
— 1888 Mills in Griffin, a maker of towels.
— Elan Polo, a Missouri-based company that has opened a shoe-making plant in Hazlehurst.
— Monarch Beverage Company, an Atlanta-based maker of “craft sodas.”
— Mohawk Industries of Calhoun makes flooring products.
— Okabashi, a Buford company that makes flip-flops, clogs and sandals.
Because of its dominance and business model, Walmart has often been criticized for its impact on the economics of local areas – charges that company officials generally reject. But when it comes to buying American, Gloeckler said that the company’s approach shouldn’t draw too much flack.
“It’s good for our communities and good for our business,” she said.
Georgia’s manufacturing sector currently has about 373,500 workers, compared to 451,000 a decade ago. But the last few years have seen modest growth.