pic: defenderofthemiddleclass
The buy American campaigns you would believe are self-explanatory. Purchase American products, you are supporting American workers. Much has been written about Wal-Mart’s effect on American jobs, from short pieces to books and even documentaries. Unions have lobbied their members and families to shop elsewhere and despite all of the efforts, Wal-Mart is America’s largest retailer/employer. Is it too late to reverse this course and take back our economy and grow good jobs again? Understanding the “why” is important to building a lasting non-Wal-Mart mentality.
One of the better books on this is The Wal-Mart effect written by Charles Fishman. I read this book quite some time ago, sharing it with others when I was done. The book had many examples of Wal-Marts cut throat business practices to get the lowest price possible from suppliers. Wal-Mart would basically enter into a business relationship with the supplier of a product and over time become the suppliers largest customer. When the supplier’s existence relied on Wal-Mart as a customer, that was when Wal-Mart would demand a LOWER price from them. To stay in existence the supplier would be forced to lower costs. That supplier’s options would be investment in leaner manufacturing or cutting their expenses. What is the biggest expense of most businesses? LABOR: wages, benefits and its size.
The two most notable examples from The Wal-Mart effect, the Levi Strauss company and Vlasic pickles. Starting with Vlasic, they became a standalone company after Campbell Soup spun them off to focus on their core business. Vlasic, an American company purchased their ingredients from farms in the United States and manufactured here. Wal-Mart being their largest customer, demanded a low price on pickles for the gallon jar size Vlasic supplied them. The price was less-than $3.00 a gallon, leaving Vlasic with minimal profit. Vlasic’s options were none if they wanted their product in Wal-Mart as the price was a demand not a request. The effect of the pricing would spread to the rest of Vlasic’s customers as well. The >$3.00 a gallon for pickles at Wal-Mart driving down prices at the rest of the retailers who carried Vlasic. Other retailers will not carry for $5.00 a gallon when their competitor Wal-Mart sells for under $3.00 and a customer wouldn’t pay $5.00 would they? The obvious and factual result, NO they would not. Wal-Mart got their price from Vlasic and with their profit margins at the bare minimum, Vlasic went bankrupt to be bought by Pinnacle Foods who were later bought out. Lost to the American economy were important jobs along with the investments of the people who bought Vlasic stock when it went to ZERO.
Levi Strauss> the iconic jean maker who closed its last United States manufacturing operation located in San Antonio, Texas in 2003. After a decade of contraction in their sales they entered into a business relationship with Wal-Mart in the hopes of reviving their business. Supplying Wal-Mart with their own label of jeans called Signature. Wal-Mart instantly became Levi’s largest customer and all was well for the San Antonio manufacturing facility with their 800 employees. In what was Wal-Mart’s signature move, when it became time to renew the agreement, Wal-Mart demanded a lower price. The price lower than what Levi’s could produce them for at the Texas plant. In order to continue to sell to their biggest supplier WAL-MART and stay in business, Levi Strauss closed the Texas plant and shifted their production to countries with cheaper labor, 800 jobs lost.
What these two examples show us is that looking for the AMERICAN MADE label is not enough. Where you purchase your products from is equally if not more important. The DEMAND side of economics is the driver of all the economy. So while we may be looking for the Made in American label for the cheapest price, shopping at Wal-Mart pretty much makes this a pointless endeavor. The examples of Vlasic and Levi Strauss tell us the true story and they are only two of many. Being a good corporate citizen means protecting the consumer directly and indirectly.
The “W” in Wal-Mart needs to stand for whirlpool! Enter into any relationship with Wal-Mart as a business or consumer, you will be drug down to the bottom. Isn’t that where the middle-class is? Or for a harsher reality, are we not headed to a two-class economy? We as consumers need to look at our purchasing habits not just for immediate gratification (savings) but what it will mean in the future. The bigger Wal-Mart becomes the more they will dictate to other businesses. Prices will be driven lower and with it jobs will be lost to whoever can produce them the cheapest. Wal-Mart is if not already become a monopoly, their power to control the American economy is handed to them by the people who walk through their doors. We control our future economic power, all we need to do is shop elsewhere.
buy the book at www.walmarteffectbook.com
