Posted on 03/14/2006 2:21:23 PM PST by A. Pole
In "The Bully of Bentonville," BusinessWeek writer Anthony Bianco produces the most penetrating examination of Wal-Mart's business practices and their ripple effects in American society [...]
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[Bianco:] "Today, nearly half a century since Sam Walton opened the first store in Rogers, Ark.,it is far from certain that even Wal-Mart can thrive in a Wal-Mart world,"
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The fate of the Huffy Corp. of Celina, Ohio, is offered as a classic case of what can happen to a Wal-Mart vendor. According to Bianco, Wal-Mart ordered 900,000 bicycles, conditioned on a sizable, reduction in price per unit.
The bicycle company opened a second factory in Farmington, Mo., that was staffed with low-paid, nonunion workers to meet the demand. But at the Wal-Mart price, Huffy lost $10 million in 1995. Huffy had to negotiate a pay cut with its unionized workers in Celina. The union members readily agreed just to keep their jobs.
But Wal-Mart kept up the price-cut pressure, and the union balked at another wage cut. Huffy then closed its Celina plant, laying off 935 workers. It shifted production to the Missouri plant and opened another in Southhaven, Miss. But even the nonunion workers in those plants earned more than Huffy could pay and make Wal-Mart's price.
The bicycle maker then closed both those factories and subcontracted work to China, where bicycle plant workers were paid 25 cents to 41 cents an hour. But that didn't save Huffy. When it fell into bankruptcy in 2004, its top creditor was its Chinese subcontractor. Its possessions were turned over to the China Export and Credit Insurance Corp., an agency of the Chinese government.
But that's not the real glaring irony of the story. A developer built a Wal-Mart supercenter on the site of the historic old Huffy plant in Celina, Ohio
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(Excerpt) Read more at boston.com ...
After WW2 there came together a belief that a golden age was lost to the First World War. To these Utopians the world up to 1914 was one of free trade, prosperity, open borders and possibilities. But if that was the case, why did the failure of WW1 happen? We are still living in the world made by the fall out of WW1 - from the break up of Yugoslavia to the Middle East to Russia and China.
These free trade Utopians came up with an answer - what stood in the way of peace in an era of free trade and open borders was nationalism. That it did not matter that nations traded with each other with almost no restrictions - they were prone to nationalistic outbursts which destroyed the free market system.
Solution?
To bring about the end of the nation state. To make borders and nations passe.
There is no one world govt on the horizon - it is the elimination of nations beyond some nominal system like the EU which preserves the fiction of nation states. That is why it resembles Karl Marx's thesis on free trade - it is a combination of Marx and Smith and Ricardo - it is classic Communist dialectic synthesis thinking.
That's a BS response. And you know Labor and the CP have been joined at the hip, and that the entire organized labor movement is an attempt to install a global communist party.
Now, as far as FreeTraitors go, I think we would both agree that free trade is BS, Fair Trade is better.
Net worth has increased some. The '80's were great due to the high-tech boom. The rest is rising land prices, increasing hours-worked per capita, and increased workplace efficiency, IMHO.
"Is home ownership better than renting - increased debt notwithstanding?"
Yes. The current trend towards higher home-ownership percentages was/is temporary, IMO, and had more to do with the higher availability/lower-interest home-loans.
"Exactly how much do they own and why is that number alarming?"
Not precisely sure how much. I've seen the numbers, but can't find them ATM. Alarming because it shows a trend where the profits made from US-based business increasingly flows overseas. We're selling off our most important capital asset (land), to purchase consumer goods, and avoid devaluation of the dollar. You don't see the problem with that trend? (Hint: it's an economic feedback-loop that ends with us owning nothing domestically but debt)
"That investment is the lifeblood of our economic expansion and is the driving force of innovation."
Actually, consumer demand, military/space exploration technology, education, profit motive, and R&D are the driving forces of innovation. Investment in R&D is only one factor. Other direct investment can capitalize on innovation, but doesn't actually produce it.
Foreign direct-investment was higher in China than the US as of 2003
The other investment you're referencing is treasury bills, and outright purchase of American properties in the way of stocks and real-estate.
Interest rates are going up, lending practices are tightening, foreign ownership is increasing, and household savings are going down. Home-ownership percentages are sure to trend downwards (although actual real-estate prices may remain stable due to foreign purchases).
Rather than stand on a price they could MAKE A PROFIT AT, Huffy CHOSE to take the loser deal...
That's Bush's fault, right??
They booked the deal, booked the commissions, and then realized they couldn't do it....
*** But we can't compete when are hands are tied behind our backs by Washington.***
Exacty!!!!!!!
The added costs of LIBERALISM make it impossible to compete for many US companies...
Instead, it's CHEAPER to move something across the planet!
Until we address WHY this is, we're screwed, and NOBODY seems to want to tackle that issue, for fear of upsetting the electorate.....
Imagine Imagine there's no heaven, It's easy if you try, No hell below us, Above us only sky, Imagine all the people living for today... Imagine there's no countries, It isn't hard to do, Nothing to kill or die for, No religion too, Imagine all the people living life in peace... Imagine no possessions, I wonder if you can, No need for greed or hunger, A brotherhood of man, Imagine all the people Sharing all the world... You may say I'm a dreamer, but I'm not the only one, I hope some day you'll join us, And the world will live as one. ======================== Written by: John Lennon © Bag productions inc.
Really?
That is what all failed companies do. You can tell from the story the Huffy management was just plain stupid.
From 1900 to 1950 the number of farmers required to feed American fell from 90 percent of our work force to less than 4 percent of our work force. The same is happening to manufacturing.
One can no longer make a living farming with a team of mules. One can no longer survive as a manufacturer using human labor.
Are you kidding? Our household net worth went from $21 trillion in 1981 to more than $51 trillion today. Is that how you define some? LOL
Do you understand that this increase, in just 25 years, is more than the entire previous 200 years combined? Do you realize that it has more than doubled since 1994?
The '80's were great due to the high-tech boom. The rest is rising land prices, increasing hours-worked per capita, and increased workplace efficiency, IMHO.
Your opinion may be humble but it is most certainly wrong. I would highly recommend that you spend some time reviewing the fed funds report linked below.
Fed Funds Report: Page 110 of 124
...and had more to do with the higher availability/lower-interest home-loans.
I'd guess all those families, who are now homeowners instead of renters, are probably pretty thankful all that capital is flowing into the US and keeping interest rates low. Wouldn't you?
Alarming because it shows a trend where the profits made from US-based business increasingly flows overseas
American companies opening and developing new markets is bad? Increasingly, it is necessary to be located in the country you want to do business in. That trend has been growing for many years.
We're selling off our most important capital asset (land), to purchase consumer goods, and avoid devaluation of the dollar.
Is that what those pesky foreigners are doing with their dollars? Land development? No wonder construction jobs and wages are increasing so rapidly. I thought all those foreigners were just buying government debt so they could call their loans due and own us or, that they'd dump their dollar denominated assets on the open market just to screw with us. I can't keep the alarmism straight.
Actually, consumer demand, military/space exploration technology, education, profit motive, and R&D are the driving forces of innovation.
Without capital formation and entrepreneurial ability, none of these other things can exist. We do it so well that we continue to lead the world in almost every area of technology and our economy remains the envy of the world.
China has 1.5 billion people and a growing economy. Do you realize how difficult it is to open new markets these days? There aren't that many of them. It's no surprise then that investment in China would be booming.
Interest rates are going up, lending practices are tightening, foreign ownership is increasing,
And our economy just keeps humming along. It's all good.
..and household savings are going down
American's have cashed in more than $3.5 trillion in capital gains since 1997 and the government refuses to count that as savings. They do however, count the taxes we pay on those gains against the savings rate. Household savings going down is all a myth. If it were true we wouldn't have the net worth we do and we wouldn't have the most per-capita assets in the world.
Home-ownership percentages are sure to trend downwards (although actual real-estate prices may remain stable due to foreign purchases).
Yet home prices keep rising. Maybe there's more demand there from Americans than you think. We have not experienced a year over year decline in the aggregate value of real estate in this country since before WWII. I say that history will prove you very wrong in your assumption.
They think that will stop the trauma of another WW1 which caused the depression and WW2 and the Cold War and the little post colonial terrorist wars around the world.
That is why Yugoslavia was the first test of this doctrine.
Talking about this issue in terms of protectionism and wage scales, and competitiveness - illegal immigration - all meaningless - a waste of time.
'Imagine there's no countries'
This is a very interesting point you are making. You are comparing the last 25 years with the previous 200 years of USA history. And you are using as a measure "household net worth".
Good find! Some passages about the pickles (BTW, this is how the mass retailers are destroying traditional good food in Poland):
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This is the product that Wal-Mart fell in love with: Vlasic's gallon jar of pickles.
Wal-Mart priced it at $2.97--a year's supply of pickles for less than $3! "They were using it as a 'statement' item," says Pat Hunn, who calls himself the "mad scientist" of Vlasic's gallon jar. "Wal-Mart was putting it before consumers, saying, This represents what Wal-Mart's about. You can buy a stinkin' gallon of pickles for $2.97. And it's the nation's number-one brand."
Therein lies the basic conundrum of doing business with the world's largest retailer. By selling a gallon of kosher dills for less than most grocers sell a quart, Wal-Mart may have provided a ser-vice for its customers. But what did it do for Vlasic? The pickle maker had spent decades convincing customers that they should pay a premium for its brand. Now Wal-Mart was practically giving them away. And the fevered buying spree that resulted distorted every aspect of Vlasic's operations, from farm field to factory to financial statement.
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At some point in the late 1990s, a Wal-Mart buyer saw Vlasic's gallon jar and started talking to Pat Hunn about it. Hunn, who has also since left Vlasic, was then head of Vlasic's Wal-Mart sales team, based in Dallas. The gallon intrigued the buyer. In sales tests, priced somewhere over $3, "the gallon sold like crazy," says Hunn, "surprising us all." The Wal-Mart buyer had a brainstorm: What would happen to the gallon if they offered it nationwide and got it below $3? Hunn was skeptical, but his job was to look for ways to sell pickles at Wal-Mart. Why not?
And so Vlasic's gallon jar of pickles went into every Wal-Mart, some 3,000 stores, at $2.97, a price so low that Vlasic and Wal-Mart were making only a penny or two on a jar, if that. It was showcased on big pallets near the front of stores. It was an abundance of abundance. "It was selling 80 jars a week, on average, in every store," says Young. Doesn't sound like much, until you do the math: That's 240,000 gallons of pickles, just in gallon jars, just at Wal-Mart, every week. Whole fields of cucumbers were heading out the door.
For Vlasic, the gallon jar of pickles became what might be called a devastating success. "Quickly, it started cannibalizing our non-Wal-Mart business," says Young. "We saw consumers who used to buy the spears and the chips in supermarkets buying the Wal-Mart gallons. They'd eat a quarter of a jar and throw the thing away when they got moldy. A family can't eat them fast enough."
The gallon jar reshaped Vlasic's pickle business: It chewed up the profit margin of the business with Wal-Mart, and of pickles generally. Procurement had to scramble to find enough pickles to fill the gallons, but the volume gave Vlasic strong sales numbers, strong growth numbers, and a powerful place in the world of pickles at Wal-Mart. Which accounted for 30% of Vlasic's business. But the company's profits from pickles had shriveled 25% or more, Young says--millions of dollars.
The gallon was hoisting Vlasic and hurting it at the same time.
Young remembers begging Wal-Mart for relief. "They said, 'No way,' " says Young. "We said we'll increase the price"--even $3.49 would have helped tremendously--"and they said, 'If you do that, all the other products of yours we buy, we'll stop buying.' It was a clear threat." Hunn recalls things a little differently, if just as ominously: "They said, 'We want the $2.97 gallon of pickles. If you don't do it, we'll see if someone else might.' I knew our competitors were saying to Wal-Mart, 'We'll do the $2.97 gallons if you give us your other business.' " Wal-Mart's business was so indispensable to Vlasic, and the gallon so central to the Wal-Mart relationship, that decisions about the future of the gallon were made at the CEO level.
Finally, Wal-Mart let Vlasic up for air. "The Wal-Mart guy's response was classic," Young recalls. "He said, 'Well, we've done to pickles what we did to orange juice. We've killed it. We can back off.' " Vlasic got to take it down to just over half a gallon of pickles, for $2.79. Not long after that, in January 2001, Vlasic filed for bankruptcy--although the gallon jar of pickles, everyone agrees, wasn't a critical factor.
[...]"
Yet companies continue to line up like jets at O'Hare hoping to become a supplier for Wal-Mart. The only Americans who are shopping their way to the unemployment line are those who have absolutely no skills or those who don't want to work.
It's sad that so many here choose to believe the leftist propaganda against a great American success story like Wal-Mart.
http://www.pbs.org/wgbh/pages/frontline/shows/walmart/secrets/shots.html "Is Wal-Mart Good for America?"
Correspondent Hedrick Smith examines the power of Wal-Mart and other mass retailer chains, as the world's gateway to the American consumer. Washington -- For me as a reporter, the most startling discovery of six months of reporting was how much our major mass retail chains call the shots in today's global economy, with a powerful impact on the decline of manufacturing in America and the rise of manufacturing in China and Asia. "Wal-Mart is one of the key forces that propelled global outsourcing -- off-shoring of U.S. jobs -- precisely because it controls so much of the purchasing power of the U.S. economy," says Gary Gereffi, a Duke University professor who studies global supply chains. "Wal-Mart," Gereffi continues, "has life-or-death decision over [almost] all the consumer goods industries that exist in the United States, because it is the number one supplier-retailer of most of our consumer goods -- not just clothes, shoes, toys, but home appliances, electronic products, sporting goods, bicycles, groceries, food."
At first blush, this seems a stark assertion. It comes as a shock because this isn't the way most of us think the global economy works. We don't imagine that retail chains are deciding whether goods should be produced in the U.S., China, Mexico or Bangladesh. This is because global economics is a bit like geology: Massive subterranean shifts take place below the surface, and we discover them only when our world is shaken. So we notice U.S. jobs migrating overseas as we see factory lights go out from Ohio to the Carolinas to California. We're generally aware of job losses since the early 1980s to waves of imports from Japan and the Asian tigers that hit one industry after another -- steel, autos, electronics, textile, apparel and toys. So when it comes to cause and effect, we attribute our woes primarily to the export boom in China -- and before that, in Japan, Korea, Hong Kong and Taiwan.
But scholars now explain that since Japanese cars and electronics swept into America in the late 1970s and '80s, most of our job and industry losses didn't happen primarily because of Asia's aggressive export policies. Instead, the experts tell us, these are self-inflicted wounds. American companies played a central role in the rise of China and the Asian Tigers. The seismic shifts in the global economy, they say, have been largely driven by American companies -- not just by multi-national manufacturers like GE or Hewlett Packard moving production overseas, but by giant American retailers like Wal-Mart, Target, Kmart, Toys "R" Us and Home Depot, and brands like Nike or Liz Claiborne galvanizing Asians to export to the U.S. The Americans, they say, have gone well beyond merely hunting for bargains already being produced in Asia.
In fact, both academics and business executives report, American retailers have actively driven outsourcing -- teaching East Asians how to design and manufacture products for American consumers, creating their own house brands in league with Chinese and Asian producers, and then bluntly warning beleaguered U.S. manufacturers that they'd better move their American plants to China and Asia if they want to survive.
Years of extensive interviews with Asian and American manufacturers, as well as study of trade flows, have persuaded Professor Gary Hamilton of the University of Washington, that the big box retailers, epitomized by Wal-Mart, have been "driving a massive restructuring of production worldwide; moving jobs from the U.S. and Europe to Asia. They do it by setting price points and forcing suppliers to meet their targets. Only lowest-cost labor can meet their targets, and that means producing in Asia."
Case in point: Bill Nichol, CEO of Kentucky Derby Hosiery, a sock manufacturer that has supplied Wal-Mart for 40 years. He credits Wal-Mart with forcing his company to be more disciplined and efficient, but he adds: "Their message to us, surprisingly, is, 'There's a broad market out there. If you want to focus on the lowest-cost part of the market, it's obvious that you can't do that in the United States'." So half of Nichol's 1,500 U.S. employees will soon be out of work and he'll have to open plants in China and other low-cost countries to hang onto his Wal-Mart account. We heard that story again and again from American manufacturers in sectors as diverse as electronics, apparel, bicycles, furniture, and textiles. They expressed private dismay at the relentless pressure from the likes of Wal-Mart and Target to cut costs to the bone in America and then, when that did not satisfy the mass retailers, more pressure to move production to China or elsewhere offshore.
But most did not dare to go on camera and tell their story publicly for fear of jeopardizing their remaining sales to Wal-Mart. Wal-Mart -- Changing the Economic Balance of Power What lies behind this surprising story is the largely unnoticed shift in the balance of power in American business.
This world has been so dramatically transformed in the past 15 years that academic analysts say we now live in what they call a "buyer-driven" global economy. Nelson Lichtenstein, an economic historian at the University of California, Santa Barbara, draws a colorful analogy to medieval times: "The power of Wal-Mart is such, it's reversed a hundred-year history in which the manufacturer was powerful and the retailer was sort of the vassal," he says. "It's changed that. It turned that around entirely. Now the retailer, the mass global retailer, is the center, the power, and the manufacturer becomes the serf, the vassal, the underling, who has to do the bidding of the retailer. That's a new thing."
Brink Lindsey, an economist at the Cato Institute, a liberterian Washington think tank, agrees. "We've definitely seen a shift in the balance of bargaining power between manufacturers and retailers," Lindsey says. "Back in the old days, manufacturing was a high-productivity endeavor; retailing and distribution was fairly low-productivity. And manufacturing was big and consolidated; retailing was small-scale and decentralized. And so manufacturers called the shots. "Now, things are very different. You have large-scale retailing that's very high-productivity, that has a lot of bargaining power. And they can go to smaller manufacturers and call the shots and say, 'If you want to be on our shelves, you have to do it our way.' …Wal-Mart -- they're very demanding, and they've got a lot of bargaining clout to back up their demands." So how did the world of business get turned upside down? In part, as Lindsey says, power shifted because the mass discount chains consolidated the retail industry. At Rubbermaid, for example, former CEO Wolf Schmitt recalls that in the early 1980s his company used to make products for thousands of different retailers, but within a few years, Rubbermaid was selling two-thirds of its output to just half a dozen big chains.
Today, many manufacturers sell 20-30 percent of their output to just one big box retailer -- Wal-Mart, which represents the consolidated buying power of 100 million customers who shop in its 3,500 stores every week.
But there are other secrets to Wal-Mart's leverage in the marketplace. One is that, far better than its competitors, Wal-Mart understood the power of information. It revolutionized the retail industry by blazing a new trail with information technology. David Glass, who succeeded founder Sam Walton as Wal-Mart's former CEO, helped persuade Walton to invest in IT and computers. Bobby Martin Jr., for a long time Wal-Mart's chief information officer, pushed the retail trade to adopt the universal barcode, forcing manufacturers to adopt common labeling in place of their own labels. That helped put retailers in the driver's seat. Then Wal-Mart exploited the magic of the information hidden in the barcode. That put Wal-Mart ahead of the curve, and ahead of its suppliers, in terms of understanding exactly what consumers want and are buying.
"You can track sales on specific items specific weeks, specific days, specific hours of the day," former Wal-Mart store manager Jon Lehman told me. "You can find out what size of toothpaste is your best seller, what times of the year you sell that toothpaste. You can track sales spikes during the year, during certain seasonal periods -- clothes, sizes, colors, flavors -- all of those things. It's really incredible." By accumulating information from year to year, Wal-Mart can foretell seasonal trends. From current sales, it can jump on hot new items.
From detailed data gathered at each individual store, it can tailor the product mix to the demographics of local shoppers -- young or old, rural or urban, civilian or military, warm climate or cool, boot-cut jeans or straight cut, chunky peanut butter or smooth. Wal-Mart's use of IT gave it another leg up -- undisputed mastery of the arcane but vital world of logistics. It has fine-tuned its supply chain from factory floor to store shelf, insisting on just-in-time deliveries from its suppliers to cut waste and down-time in warehouses. Sam Walton -- Going Global for Bargains and Profits As a world leader in logistics, Wal-Mart has taken its logistical genius around the globe and made the most of it. Back in the late 1970s, Sam Walton, Wal-Mart's founder, first began scouring the globe for cheap imports. But Sam Walton was not the first. Sears, Montgomery Ward, JCPenney and Kmart got to Asia ahead of Walton, and for several years Wal-Mart lagged behind them in global sourcing. But as Wal-Mart gained competitive advantage through its computerized supply chains, it overtook its rivals and became the most efficient global sourcer of all.
Today, it is a massive conveyor belt to the U.S. consumer of $15 to $30 billion a year in products from China. By the estimate of Retail Forward, Wal-Mart now imports more than half of its non-food products. "They were more single-minded in terms of global cost cutting and internal efficiency than any other U.S. retailer," says Professor Gereffi of Duke. "And that helps us understand how and why they were able to pass companies like Kmart and Sears that were the early leaders in U.S. retailing and offshore sourcing." For a long time, Wal-Mart soft-pedaled its growing dependence on low-cost Asian imports, especially during the late 1980s and early 90s when Wal-Mart was touting Sam Walton's "Buy American" campaign. In fact, in several highly publicized examples, Sam Walton did help out some U.S. companies by buying their products when imports were on the verge of driving them out of business. Nonetheless, Wal-Mart kept steadily expanding its low-cost Asian imports through the '80s and '90s, according to Jay Moates, chief U.S. accountant for PREL (Pacific Resources Exports, Ltd.), Wal-Mart's exclusive global buying agency from 1989 to 2002. "I think it's one thing to have those sentimental thoughts and values and another to short your shareholders," said Moates. "I mean if you can get the [imported] product cheaper and sell it, I think you're obligated to do that."
Imports helped fatten Wal-Mart's profits, Moates told me, because he estimated Wal-Mart's profit margins were four to six times higher on Asian imports than on American-made goods. A Global Procurement Center in China Wal-Mart ramped up its global sourcing even further in 2002, when it took over the global buying operation from PREL and set up its own global procurement center in Shenzhen, the "miracle city" and hub of South China's export industries.
Wal-Mart prefers to deal directly with the Chinese and other suppliers, Ray Bracy, Wal-Mart Vice President for Federal & International Public Affairs, told me. "If there's a middleman in our process, even if it's a Wal-Mart middleman," Bracy said, "we try and eliminate those."
From PREL's long work, Wal-Mart inherited a massive list of global suppliers, now winnowed down to 6,000 global suppliers, 80 percent in China. Lee Scott, Wal-Mart's current CEO, and other top Wal-Mart executives make the point that Wal-Mart is serving American consumers by getting imported goods at the lowest possible prices. Some economists even credit Wal-Mart with lowering the U.S. rate of inflation by its aggressive cost-cutting and raising U.S. productivity through its supply chain efficiencies.
But when Lee Scott and Tom Schoewe, Wal-Mart's chief financial officer, talk with Wall Street analysts, they also point to global sourcing as vital to maintaining and increasing Wal-Mart's bottom-line profits. Moreover, both scholars and U.S. manufacturers describe Wal-Mart's role as much more pro-active in pushing U.S. production overseas.
Professors Gereffi and Hamilton contend that Wal-Mart's global procurement operation has the power to decide not only what to buy but where and in what countries goods will be produced. "Wal-Mart gets its economic power because it is a gateway to the U.S. consumer," says Duke's Professor Gereffi. "The demand for Wal-Mart stores is what provides China and other countries in Asia with their access to the most powerful capitalist economy in the world."
What's more, the analysts say, the power of Wal-Mart -- and competitors like Target -- is increasing, as they reduce their dependence on well-known American brand names by developing their own in-house brands. According to Wal-Mart Vice President Bracy, Wal-Mart has significantly stepped up development of house brands "because there [are] supply chain efficiencies to gain by working directly with the factories." And also, more profit for Wal-Mart. Chinese entrepreneurs describe how Wal-Mart presses them to integrate their operations into Wal-Mart's business plans and supply chain. Frank Ng, a partner in Force Electronics, which makes radio-controlled toys and other high-tech gadgets for Japanese toy firms to sell to Wal-Mart, told me Wal-Mart requires his firm to send managers for training to Wal-Mart's center in Shenzhen, makes the firm use Wal-Mart's computer software, and then monitors its production.
Collaboration with its firms now extends to joint efforts at creating, designing, and producing products for the American market. "Wal-Mart gives Chinese suppliers the specifications for Wal-Mart products," says Professor Gereffi. "And they teach those suppliers how to meet those specifications. They have to do with price. They have to do with quality. They have to do with delivery schedule. So, in a sense, Chinese suppliers learn how to export to the U.S. market through large retailers like Wal-Mart."
"It sounds like a commercial marriage made in heaven," I suggested. "Wal-Mart and China are a joint venture," Gereffi replied. "And both are determined to dominate the U.S. economy as much as they can in a wide range of industries." This hand-in-glove partnership increases the squeeze on U.S.-based manufacturers to outsource or shut down.
Privately, they report that Wal-Mart house brands, made in China, are undercutting their American-made products. Some add that Wal-Mart buyers "advise" and push them to move a certain share of their production abroad, up to 30 percent, and then periodically check to see whether American firms are meeting Wal-Mart's quota for overseas production. When I asked Wal-Mart's Ray Bracy about the complaints of U.S. suppliers that they were being pressured to shift production overseas, he said he could not confirm that happened but added, "I suspect that this is a legitimate occurrence that you're citing and, and there may be some validity to that." Bracy concluded by citing the economic facts of life, as Wal-Mart sees them: "The sad truth is because of, perhaps, the pressure on price … and because the pressure of costs on the other side [for American suppliers], that it's difficult to make ends meet -- if you're a business -- by staying here. It's a sad, if you will, situation."
Hedrick Smith is the correspondent for "Is Wal-Mart Good for America?" His most recent FRONTLINE reports include "Tax Me If You Can," "The Wall Street Fix," and "Bigger Than Enron,". home + introduction + watch online + secrets of wal-mart's success + transforming america china connection + interviews + producer's notebook + american radio work's companion reports join the discussion + correspondent's chat + teacher's guide + press reaction + tapes & transcripts credits + privacy policy + FRONTLINE home + wgbh + pbsi posted nov. 16, 2004 FRONTLINE is a registered trademark of wgbh educational foundation. web site copyright 1995-2005 wgbh educational foundation
Pure BS.
Nobody is holding a gun to anyone's head demanding anything of the sort. Wal-Mart requires that their suppliers drive costs out of their system so they stay competitive and remain the lowest price retailer. Wal-Mart suppliers can either meet the cost requirements or choose not to do business with Wal-Mart. There will always be more suppliers wanting to do business with Wal-Mart than those who are fortunate enough to be suppliers for Wal-Mart.
I notice your PBS (LOL!!) source didn't bother to mention that less than 10% of Wal-Mart's total purchases come from China. You anti-capitalists assume that just because Wal-Mart asks their suppliers to reduce costs that they automatically close down their facilities and move to China. What manufacturer would do this just to appease a retailer who could, for any reason, eliminate them as a supplier at any time? Vlassic was run by desperate and incompetent managers. Wal-Mart took advantage of that. Vlassic killed Vlassic; not Wal-Mart. The Vlassic brand is now owned by Pinnacle Foods and is doing very well.
Some can retrain and successfully find new careers, others have less flexibility or fewer opportunities in their communities.
So workers with skills do better than those without? Nothing new there. The difference is that the anti-capitalists will blame the company for eliminating a job that was never theirs to begin with while capitalists will hold the worker accountable for his success or failure in an economy offering more opportunity than at any other time in our history.
I know it just makes you crazy when the citizens of this country are allowed to keep their money and grow wealthy instead of giving it to the state for redistribution. Instead of net worth, let's look at the accumulation of personal assets.
Since 1945, when the US truly embraced free trade - thanks in large part to Smoot-Hawley - the amount of assets owned by the American public has increased from $6 trillion to more than $62 trillion. No other country can match that kind of wealth creation. It's exactly why so many people from communist and socialist countries risk so much to get here. Of course, there are others who come here to promote their failed ideology believing that it just hasn't been tried by the right people yet.
Since 1945?
Or, would you like to offer your own figures to refute what I'm telling you?
If so, could you answer two questions?
1. How the wealth is being measured, what is being counted as wealth?
2. How the wealth is distributed?
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