Walmart and US Manufacturing

Walmart Largest US Importer, Continuing to Grow Imports

According to the Journal of Commerce, Walmart was the largest importer of good to the United States in 2013. In 2013, Walmart imported 731,500 TEUs to the United States, more than two-and-a-half times the volume of goods it imported in 2002. In 2013, Walmart was responsible for 1 in 25 containers imported into the United States.

Walmart's Importing and Offshoring Strategy

According to the Journal of Commerce, Walmart was the largest importer of goods to the United States in 2013. In 2013, Walmart imported 731,500 TEUs to the United States, more than two-and-a-half times the volume of goods it imported in 2002. In 2013, Walmart was responsible for 1 in 25 containers imported into the United States.

An economist with the Economic Policy Institute estimated that Walmart was responsible for $27 billion in US imports from China in 2006 and 11% of the growth of the total US trade deficit with China between 2001 and 2006, with Walmart’s imports during this period leading to the elimination of 200,000 US jobs.

Nobel Prize-winning economist Paul Krugman attributed the speed with which Chinese imports grew to Walmart. “One of the things that limits or slows the growth of imports is the cost of establishing connections and networks. Walmart is so big and so centralized that it can all at once hook Chinese and other suppliers into its digital system. So – wham! – you have a large switch to overseas sourcing in a period quicker than under the old rules of retailing.”

Due to Walmart's size, even the largest suppliers must comply with the retailer's demands for lower and lower prices because they cannot afford to have their goods taken off its shelves. Companies that used to manufacture products in the United States, from Levi’s jeans to Master Lock, were pressured to shut their U.S. factories and moved manufacturing abroad to meet Walmart’s demand for low prices. In turn, Walmart’s business model accelerated the use of offshore suppliers by its competitors, contributing to a greater loss of American manufacturing jobs.

Walmart announces US manufacturing initiative, many questions remain

In January 2013, Walmart U.S. CEO Bill Simon first announced that the company would increase its purchases of American products. And in April 2014, the company said it has committed to “buy an additional $250 billion in products made, assembled, sourced or grown in the U.S. over 10 years in an effort to grow U.S. manufacturing and encourage the creation of U.S. jobs (began in 2013).” In conjunction with this promise, Walmart has produced a series of ads, highlighting manufacturing jobs at its American suppliers.

Walmart touts its manufacturing initiative, but the company's claims lack context, transparency, and clarity.

The numbers need to be put into context

Walmart’s initial commitment to purchase $5 billion a year in US products sounded substantial, but an increase of $5 billion per year amounts to just 2 percent of what Walmart currently spends buying goods for U.S. stores . If Walmart spends $250 billion on U.S. products over the next ten years, that only represents about 6% of the company’s estimated total costs at Walmart U.S. and Sam’s Club over that time. In contrast, Walmart is the country’s top importer of ocean container transport goods.

Walmart does not appear to be on track to take credit for one million new American manufacturing jobs either. At the end of the first year of Walmart’s program, the company’s suppliers had only created “more than 2,000 U.S. jobs,” 0.2% of the ten-year goal .

Increasing U.S. sourcing is something that Walmart would probably do anyway

Walmart will likely purchase $250 billion more in US-sourced goods anyway in the next decade simply due to its growth as a retailer – without making substantial changes to its sourcing practices for manufacturing goods. Walmart US CEO Bill Simon has previously indicated that because of rising transportation and labor costs, moving manufacturing back to the U.S. is something that is already happening. .

In fact, the Boston Consulting Group—the same firm Walmart hired to bolster its manufacturing job creation claims—reported in September 2013 that “More than half of U.S.-based manufacturing executives at companies with sales greater than $1 billion are planning to bring back production to the U.S. from China or are actively considering it.”

Publicly available research from the Boston Consulting Group makes it clear that Walmart’s additional investment in American manufacturing is not driven by patriotism alone. A 2011 report from BCG further explains:

China’s overwhelming manufacturing cost advantage over the U.S. is shrinking fast. Within five years, a Boston Consulting Group analysis concludes, rising Chinese wages, higher U.S. productivity, a weaker dollar, and other factors will virtually close the cost gap between the U.S. and China for many goods consumed in North America.

How “beautiful” is work at a Walmart supplier?

In its “Work is a Beautiful Thing” ad campaign, Walmart seizes upon the popular notion that American manufacturing jobs are well-paid jobs with good benefits, but Walmart supports the onshoring of these jobs at least partly as a cost saving mechanism in response to rising wages in China.

One of the first factories touted by Walmart in March 2013 was 1888 Mills in Griffin, GA. The company makes towels for Walmart. The Los Angeles Times reported that 1888 Mills was adding a mere 35 jobs as part of Walmart’s initiative and that 90% of its production would remain overseas.

Walmart uses political muscle to push trade policy that supports offshoring

Walmart spent $7.3 million on lobbying in 2013 alone. While this money was paid to influence a range of legislation, from promoting corporate tax cuts to discussing consumer online privacy, trade policy was among the issues Walmart lobbied on most aggressively. In fact, Walmart has lobbied to make it easier to push American jobs out of the country for years, playing a key role in in lobbying for NAFTA in the early 1990s.

Articles and Resources

Related SourceWatch articles

• Wal-Mart Stores
• Walmart and Women
• Walmart and The Environment
• Walmart and Wages

External Resources

Robert E. Scott, "Walmart's Reliance on Chinese Imports Costs U.S. Jobs" Economic Policy Institute, June 27, 2007.

Harold L. Sirkin, Michael Zinser, Douglas Hohner,"Made in America, Again: Why Manufacturing Will Return to the U.S." Boston Consulting Group. August, 2011

Marsha Salisbury “Top 100 US Importers in 2013” Journal of Commerce May 23, 2014

External Articles

Alana Semuels, "Factory Growth is No Job Machine" Los Angeles Times March 3, 2013

Amy Traub "Not Made in America: Top 10 Ways Walmart Destroys U.S. Manufacturing Jobs" Demos July 2, 2012