Was Wal-Mart’s Manufacturing Summit Just a Stunt?
Few phrases have the ring to American ears quite like “Made in the U.S.A.” After decades of watching manufacturing jobs leave the country, with fewer products bearing the American-made label all the time, an oft-cited perpetrator of outsourcing U.S. jobs recently hosted the “U.S. Manufacturing Summit” in Orlando. Is this conference hosted by Wal-Mart (NYSE:WMT) anything more than a publicity stunt?
If so, the conference had a high-profile cast of characters. According to an Associated Press report, in attendance were U.S. Commerce Secretary Penny Pritzker, General Electric (NYSE:GE) Chief Executive Jeffrey Immelt, and the governors of eight U.S. states. The intention was to have every side of the equation — small business suppliers, government officials, and Wal-Mart Inc, the world’s largest retailer — discuss how manufacturing in the U.S. could make a comeback.
Overshadowing the conference was the reason for Wal-Mart being in the news recently: the struggle over its proposed expansion into Washington, D.C. The district’s mayor has been stalling on a decision on a bill that would raise the minimum wage to over $12 (according to the Washington Times, he has yet to receive it), leading to a standoff for the entire summer. In Wal-Mart’s view, the entry-level, low-skill jobs in question should not be the focus.
Instead, Wal-Mart U.S. President Bill Simon used the Manufacturing Summit to explain why jobs such as cashier and store clerk ought to be low-wage, and in fact had no impact on the struggle of the working class to reach to the middle class.
“The solution isn’t to get rid of these starting points,” he said at the conference, per a report by Fortune. “The solution is to fill in the middle with more good jobs.”
On the topic of “filling the middle” with solid manufacturing jobs, there was plenty of talk from prominent business leaders, including GE’s Immelt. Following the announcement General Electric would not open a planned solar panel factory in Colorado, Immelt noted the company would add 150 jobs at plants in the Midwest. In a country where adding 162,000 jobs in a month is considered a disappointment, it’s easy to question the impact of such an announcement.
Yet Wal-Mart is happy to push this concept in the public eye while several thousand jobs are on the line in the D.C. standoff. Wal-Mart has threatened to halt its planned expansion into D.C. should the living wage bill pass. The company’s profit margins would suffer, it claims, and the prices on the average consumer’s trip to the store would reflect that increase.
However, the figures were less than daunting. In one study, the estimates pegged the effect a price hike by Wal-Mart would end up costing the consumer less than $0.50 per shopping trip. It’s unlikely consumers would have a problem with that increase if their troubled neighborhood had a new store and several thousand new jobs were added. Yet Wal-Mart was downplaying such effects during its “U.S. Manufacturing Summit.”
The company has pledged to invest $50 billion during the next ten years in American-sourced products, according to company statements. That’s an impressive figure and likely to help spur some growth in the manufacturing sector. As far as manufacturing “renaissance,” the word some politicians and business owners have used for the effect, few expect such a transformation to occur. One prominent retail consultancy executive discussed the Wal-Mart event in starker terms.
“It’s a very positive PR move for the company,” Strategic Resource Group President Burt Flickinger told the AP. “But it took two decades to unwind the American manufacturing base, and it will take two decades to bring it back.”