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BENTONVILLE, Ark. — Two years ago this month Walmart announced that it would support the U.S. manufacturing industry with a commitment to purchase an additional $250 billion worth of goods supporting U.S. jobs by 2023.
Two years ago this month Walmart announced that it would support the U.S. manufacturing industry with a commitment to purchase an additional $250 billion worth of goods supporting U.S. jobs by 2023.
The initiative is intended to give a boost to a sector of the economy that is an important source of American middle-class jobs. But it also makes good business sense, says Michelle Gloeckler, executive vice president, consumables and health and wellness, U.S. manufacturing lead for Walmart U.S.
"It’s about bringing our customers the lowest-price, highest-quality goods possible," Gloeckler says. "We believe that by supporting American manufacturing, we can create U.S. jobs. That’s good for the communities we serve and great for our customers."
For her work in promoting Walmart’s U.S. manufacturing initiative, which Boston Consulting Group estimates has the potential to create 1 million U.S. jobs, the editors of MMR have named Michelle Gloeckler the publication’s Marketer of the Year for 2014.
The initiative is partly a matter of timing. While manufacturers in past decades have shifted production overseas to take advantage of lower labor costs, Gloeckler notes that in recent years the economic equation has changed, at least for some products.
"We’ve analyzed about 1,300 categories," Gloeckler says. "And we’ve found that if they have a certain set of characteristics, the United States can be very competitive as a place where those products can be manufactured."
Walmart has identified five characteristics that make a product a good candidate to be made in America. Are the raw materials for the product available domestically? Is the production process highly automated? Does the manufacturing process consume a fair amount of energy? (If so, the fact that the United States lately has access to an inexpensive and dependable supply of energy becomes a factor.)
Also, is a product inefficient to ship so that the cost of freight is a big part of the overall expense of getting it to the consumer? The time it takes to ship the product can also be a factor. If the product is trendy or seasonal, or dependent on the weather, the longer lead times required by overseas manufacturers can sometimes be a problem.
"Our role, since we don’t actually make anything, is to facilitate and accelerate this process, or to at least encourage suppliers to consider it," Gloeckler says.
Walmart can help in other ways as well. One challenge a supplier may face involves just arranging the capital to get started or to buy or build the factory or equipment it needs to produce its merchandise in the United States. Walmart may work with vendors in some cases, signing multiyear agreements with some suppliers to give them the confidence they need to invest.
Then there are companies seeking to add U.S. plants but frustrated by the complexity of finding the right location and identifying and taking advantage of the various incentives available.
"Because Walmart has such a big footprint in terms of stores and distribution centers," Gloeckler says, "we have an extensive and well-established government relations team."
The result is that Walmart can often provide a supplier interested in establishing a factory in the United States with a lead or an introduction. And the retailer’s U.S. Manufacturing summits (held last August in Orlando, Fla., and this year in Denver) bring together suppliers with government officials and retailers.
"We’ve hosted hundreds of meetings where an interested supplier who’s shopping for a location can meet with officials from six or seven states, all in one day and at one location," she says.
Last year’s summit also addressed a new obstacle that comes up for some suppliers wanting to manufacture products in the United States, which is that they often still have to import many of the component parts for the products they make because they don’t have a clear sense of who makes what in the U.S.
"So in August we held a sort of trade show, so that suppliers who were looking for something — maybe a metal grommet or a plastic part or a fastener — could shop what was essentially a trade show for component parts."
Gloeckler reiterates the fact that Walmart’s U.S. Manufacturing initiative is about giving its customers what they want.
"Our customers tell us it’s important to them where products are made and that they’re willing to pay more for U.S.-made goods," she says. "It’s just that we at Walmart don’t think they should have to."
