Tara Stewart, a Wal-Mart spokeswoman, said: "We expect our suppliers to drive the costs out of the supply chain. It's good for us and it's good for them."
This is the key quotation in a New York Times article on Wal-Mart which appeared in yesterday's business section. What makes this quotation so important is that if anything is good for business in George W. Bush's America, ordinary working people better watch their wallets, or in this case, their jobs.
Wal-Mart benefits by putting people out of work. And it's not just manufacturing workers or people employed by its competitors. I'll use this article to illustrate my point.
The NYT article is a puff piece about how manufacturers appreciate Wal-Mart for making them more competitive. It runs counter to series of bad stories from last year, such as the
Fast Company piece
about Vlasic pickles being forced to take a loss on everything they sell to Wally World or
the Rubber Maid situation covered by PBS's Frontline.
Toro, it seems, instituted wide-spread cost-cutting in its manufacturing operations so that it could sell at Wal-Mart:
As part of the cost-cutting plan, Toro did close some United States plants and opened two in Juarez, Mexico. Of Toro's 5,300 employees, only about 15 percent of them are at the Juarez plants. Mr. [Kendrick B.] Melrose [President of Toro] says he resists moving production overseas just to save money.
"Obviously we can't compete with the labor costs in China," he said. But "to maintain the consistency of our quality," he tries to keep production close to home.
Not close enough, Mr. Melrose.
I've written before about how Wal-Mart has set up an office in China so that it can assist its suppliers in moving there. This is an example of outsourcing that is indirectly affected by Wal-Mart. Although the NYT doesn't mention it, there are more examples in this article:
Levi Strauss knows the drill. The company was flailing for years as its once-formidable business withered, especially among younger people who were looking for both newer styles and lower prices.
Levi responded in 2003 with its moderately priced Signature brand of jeans for sale through big discounters like Wal-Mart. The margins are much lower than they are for Levi's other brands, but volume makes up much of the difference. "Our inventory turns two to three times faster" than Levi's older brands, said Scott LaPorta, president of Levi's Signature division.
Shortly thereafter (in January 2004), CNN reported:
Levi Strauss & Co., the California Gold Rush outfitter whose blue jeans are a globally recognized symbol of America, closed its last two U.S. sewing plants Thursday.
About 800 workers at the 26-year-old San Antonio plants lost their jobs in the move, which was announced last September.
The financially troubled company, based in San Francisco, has been shifting production to overseas contractors for years to offset drooping sales in the ultra-competitive apparel market. Only two decades ago, it had 63 U.S. manufacturing plants.
Sure seems like a connection, doesn't it? But these are just manufacturing jobs. What if you don't work in manufacturing? There is still reason to be worried.
The whole article is premised on the idea that Gillette and Proctor & Gamble are merging in order to stand up to Wal-Mart. According to
Fast Company's blog, that deal will cost 6,000 jobs as the "inefficiencies" of these two giant firms are worked out so that it can produce cheap enough for Wal-Mart's satisfaction.
Remember these stories if you think that Wal-Mart's business practices don't affect you. The next job to go may be your own.
JR
