I wrote this guest blog post for Wal-Mart Watch using my actual name and job title (horrors!). Since I'm getting professional about this Wal-Mart stuff, I'm probably going to have to stop using curse words (not that I did all that often already) and making fun of Tom Friedman. OK, maybe that last one is too much to ask.
One of my concerns is that, with manufacturing out of this country, one day we'll all be selling hamburger to each other."
- Former Wal-Mart CEO David Glass to author and New York Times columnist Tom Friedman in The World Is Flat, 2005.
Factories have been moving in order to find cheaper labor for as long as the United States has been an industrialized nation. The textile industry, for example, started in New England, then moved to the South in the early-Twentieth Century to take advantage of cheap labor there. At the end of the last century, it started moving overseas for the same reason. Other industries began to move to the Sun Belt after World War II in order to escape the largely unionized workforces of the Northeast and Midwest.
In recent years, all kinds of industries have left their once affordable locations in the United States and relocated their manufacturing facilities to places like Mexico or China. The primary reason for these relocations has been the cheap labor available outside the United States. Last year, a Chinese labor organizer told the Washington Post that employees at a typical factory supplying Wal-Mart worked "80 hours per week during the busy season for $75 to $110 per month." Yet if Wal-Mart is only one of many companies taking advantage of cheap labor around the world, an obvious question to ask is, "Why pick on them?" Isn't Wal-Mart just doing what many other companies are doing?
What I want to do here is try to answer these questions. After that, since so many opponents of outsourcing have nationalistic or even racist motives, I want to draw a distinction between opposition to Wal-Mart and opposition to workers in the countries who supply the United States with cheap goods.
The most obvious reason to single out Wal-Mart for its outsourcing is the volume of outsourced goods that the chain sells. For example, Newsweek recently reported that 80% of Wal-Mart's suppliers are located in China. As Wal-Mart itself explains on its Wal-Mart China web site:
Wal-Mart procures high volume of merchandise from China and exports to the rest of the world through its Global Procurement Center located in Shenzhen. Our direct and indirect procurements have increased every year, with USD10 billion in 2001, USD12 billion in 2002, USD15 billion in 2003 and USD 18 billion in 2004. Wal-Mart will continue to expand investment and cooperation in China and contribute to the economic development.
By doing this, Wal-Mart is accelerating a trend that is already hurting hundreds of American companies and destroying countless American jobs. Indeed, a recent study by the Economic Policy Institute put the total number of jobs lost between 1989 and 2003 because of our growing trade deficit with China at 1.5 million. While it is impossible to stop outsourcing in a free market, Wal-Mart is doing everything it can to accelerate this destructive trend, and nothing to mitigate it besides selling foreign-made products to the very workers who their policies have displaced.
The second reason that Wal-Mart should bear special responsibility for its outsourcing is the company's hypocrisy. Not too far back in history, Wal-Mart claimed, "We Buy American Whenever We Can." One of its publications declared:
"The Buy American program is both a commitment and a partnership. It's a commitment to our customers -- our friends, neighbors and fellow American citizens -- that we will buy American-made products whenever we can that deliver the same quality and affordability as do their foreign-made counterparts."
The escape clause here is easy to spot, American products are no longer as affordable as Chinese products. Therefore, this promise is no longer operative. As Professor Gary Gereffi of Duke University explained to Frontline, "In 1995, 6 percent of Wal-Mart's total merchandise was imported. Today, in 2004, 60 percent of Wal-Mart's total merchandise is imported." But has Wal-Mart told anyone that this promise has been retracted? Of course not. Instead, they are still basking in the residual goodwill of a ten-year old Buy American promise even as the company's business with China soars to new heights.
The final reason to hold Wal-Mart accountable for its outsourcing is its lack of concern for this problem. Other companies are often apologetic about their decision [Levi Strauss, for example, tried to hold out before it closed its last plant in the United States]. Wal-Mart, on the other hand, denies that a problem exists. At the section of its website devoted to the sourcing of its products, the company tells you first about how much business it still does with American firms. At the "Meet Our Partners" section of its web site, the firm lists six American firms and none from any other country. It doesn't take a genius to figure out that there is a reason that the companies selected here aren't even remotely representative. They are trying to deceive the casual observer.
I think it is important to note that my concern about this issue, as well as the concern of many other Wal-Mart opponents, is not anti-foreign or anti-Chinese specifically. As Professor Gereffi explains:
We're trying to blame countries like China or other big exporters to the United States for the import surge we're facing. In fact, the biggest drivers of U.S. imports are U.S. retailers...And the biggest U.S. company that supplies goods offshore is Wal-Mart.
By calling attention to the effects of imported goods on American workers, we can help build support for legislation to help limit their suffering. By calling attention to the conditions of labor at Wal-Mart's foreign suppliers, we can help workers in developing countries around the world too.
This is more than one can say about Wal-Mart's attitude. In his book, The Case Against Wal-Mart, Al Norman recalls a 1992 incident when then Wal-Mart CEO David Glass was confronted with photographic evidence of child labor at one of the company's suppliers in Bangladesh:
Glass: "The - the picture - the-the-the- pictures you showed me mean nothing to me. I'm - I'm not sure where they were or who they were, you know. Could have been I'm not sure.
[NBC Correspondent Brian] Ross: I'm telling you, they're not of anything, they're of the Sharaka factory, of children making Wal-Mart clothing.
Glass: Well, I'm - I'm comfortable with what we have done.
I wonder if David Glass is still comfortable with what Wal-Mart has done. More importantly, assuming Wal-Mart's American customers find out the truth, I wonder if they'll be comfortable too.
JR