As manufacturing comes back to the United States from low-cost centers in Asia, business-friendly states like Georgia and South Carolina stand to reap the benefits, a Walmart Stores Inc. public affairs executive said in Atlanta.
“The aggressive governments, the smart states, are doing things quickly,” said Joe Quinn, senior director of public affairs and government relations for the world’s largest retailer by revenues. “We believe in states like the Carolinas and Georgia, which I believe are the epicenter for a lot of the good things that are happening right now.”
And it’s not just about tax breaks — companies are looking for communities that help them reduce complexity, he said, providing the example of South Carolina Gov. Nikki Haley giving her cell phone number out to prospects, whom she views as customers that need barriers removed, he said.
Walmart last year embarked on a campaign to spend $250 billion on U.S.-sourced products by 2023 in a bid to support American manufacturing jobs and change perceptions among young people of careers in the field, addressing a critical shortage of skilled labor, he said.
[pullquote]“We live in a country where 17-year-olds think manufacturing is what it was for our grandfathers: slightly dark, slightly dirty, scary and it doesn’t pay very well.”[/pullquote]
“We live in a country where 17-year-olds think manufacturing is what it was for our grandfathers: slightly dark, slightly dirty, scary and it doesn’t pay very well,” he said.
In reality, factory jobs are often high-tech jobs carried out in clean, well-lighted settings, with starting salaries that would make some liberal-arts majors blush.
“I could come here and get all technical, but what I’m really here to do is talk about how you are contributing to the American dream,” said Mr. Quinn in his keynote at the annual summit of Next Generation Manufacturing, a trade group creating a community of Georgia manufacturers to share best practices.
Critics might say it’s about time for Walmart to focus on the U.S. Some blame the company’s dogged pursuit of the lowest price for consumers is blamed for a mass exodus of American manufacturing and the decimation of mom-and-pop stores all across the country over the past two decades.
Mr. Quinn laid out economic reasons the tide has turned: He argued that the global economy has reached an “inflection point” where offshoring to China and elsewhere is no longer the surefire cost-cutting mechanism it was 20 years ago.
An example; In 1998, Walmart moved its bicycle sourcing to China, where it could save a full 25 percent versus manufacturing in the U.S. But that gap has narrowed today thanks to the rising cost of labor, energy and logistics in the Asian nation and factors like cheaper land and better automation in the U.S. Walmart is now sourcing from Kent Bicycles, which in January 2014 invested $4.3 million in a factory in Clarendon County, S.C.
That case also shows how a forward-thinking state leaders can make all the difference. When Kent was making its decision, it needed a gas line run to its plant. One call to Governor Haley was all it took, according to Mr. Quinn.
“I remind you, if you try to move a gas line in Vermont or Connecticut — maybe three years?” he said, to laughter from the crowd.
Patio furniture provides another example: Once sourced fully in China, it’s now being bought from a factory in Alabama that employs a new textile solution to print patterns on fabric. Companies like 1888 Mills, which makes towels in Griffin, Ga., and American Home Manufacturing, which moved comforter production to South Carolina, are also boosting their sales to Walmart.
Walmart’s decision to source locally is also driving foreign investment in the U.S. as suppliers aim to be closer to the action, but that prospect can sometimes lead to culture shock for communities that aren’t ready. In Virginia, Mr. Quinn went to an event put on by a Polish firm that had set up shop to be close to a local candle factory. He was surprised to find alcohol being served from an open bar at 9 a.m. meeting.
Mr. Quinn also gave manufacturers at the event a glimpse at what it takes to get into Walmart. It isn’t simply American-made; it’s being American-made at a low cost, with great reliability and at a massive scale.
“We’re really big. You have to understand how big we are,” he said.
It is doable, though, even for the smallest-scale entrepreneurs, he said. Walmart last July bought 1 million taco plates from Hugh Jarratt, an inventor who had previously been filling orders from his garage. His plastic plate holds three tacos upright while leaving segmented spots for side items.
Mr. Quinn admitted that Amazon — which recently surpassed Walmart in market capitalization —had a 10-year head start on online retail. Walmart is playing catch-up, looking into the best ways to use its brick-and-mortar stores to complement an Internet strategies.
The company is looking services that allow, say, a mom — the store’s target customer — to order groceries online and pick them up in a designated location without getting out of her car. It’s one example of a “frictionless” transaction consumers have come to expect since the “Uber-ization of America,” he said, referring to how the ride-sharing app has introduced the smartphone is an automatic medium of exchange.
Walmart is also launching new e-commerce fulfillment centers to meet online demand, including a 1.2 million-square-foot warehouse that opened Oct. 1 in Union City, with the potential to create 400 jobs. That’s one example of economic impact that Mr. Quinn says Walmart’s critics don’t evaluate fairly. Each store brings an average of $80 million in annual impact for its community, with 400 jobs and a manager that makes a healthy six-figure income.
“This is the snapshot you should have of a Walmart as an economic engine for this country,” he said.
The company spends $20 billion in spending with Georgia-based suppliers, accounting for 107,000 jobs, with that number set to grow as part of the new U.S. manufacturing initiative.
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