Wal-Mart creates $10 million fund to back U.S. manufacturing

WASHINGTON Thu Jan 23, 2014 11:08am EST

A Wal-Mart Stores Inc company distribution center in Bentonville, Arkansas June 6, 2013. REUTERS/Rick Wilking

A Wal-Mart Stores Inc company distribution center in Bentonville, Arkansas June 6, 2013.

Credit: Reuters/Rick Wilking

WASHINGTON (Reuters) - Wal-Mart Stores Inc (WMT.N), the world's largest retailer, said on Thursday it has created a $10 million fund to support manufacturing in the United States, and that one of its bicycle suppliers plans to start production in the U.S. this year.

Bill Simon, Wal-Mart's U.S. president, said at the United States Conference of Mayors' winter meeting in Washington, DC, that Wal-Mart and its philanthropic arm, the Walmart Foundation, will provide the funds for the five-year program, offering grants to innovators in U.S. manufacturing.

The announcement was the latest in Wal-Mart's year-old push to boost U.S. manufacturing. It has vowed to buy an additional $50 billion in U.S.-made products over the next decade.

A number of the company's long-time suppliers are returning production to the United States, as rising wages in China and elsewhere have made offshore production less lucrative.

Kent International, a New Jersey-based bicycle maker, announced with Wal-Mart on Thursday that it will move its production to Clarendon, South Carolina, and create 175 new jobs and assemble 500,000 bicycles annually by 2016.

Kent said it had moved all of its production overseas in 1990s because of lower costs of production abroad. The company's bicycles are sold at Walmart, Target (TGT.N) and a variety of other retailers, according to Kent's website.

Wal-Mart is the largest private employer in the world and employs around 1.3 million people in the United States.

(Reporting by Elvina Nawaguna; Editing by Ros Krasny and Stephen Powell)

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Comments (2)
WAYBUR49 wrote:
This is an interesting article, because in years past, Walmart highly encouraged (almost insistent) that all doing business with them have manufacturing done in china. this lead to any orders being filled by Chinese manufactures almost always needed to be 50% to 60% more than needed. the reason being the rejection rate of products produced was so high, and knowing that it was cheaper to just throw the rejects away then to send them back, further more the questionable materials used seem to make sending manufactured goods here made the us market a good dumping ground for their dangerous waste. thus exposing all who used these products to toxic chemicals and materials.

Jan 23, 2014 12:01pm EST  --  Report as abuse
Reshore wrote:
The Reshoring trend is gathering momentum.

Manufacturing is a key element in solving our nation’s economic problems.

The positive effects of a robust manufacturing sector are measured well beyond manufacturing.

Reports from the National Association of Manufacturing (NAM) indicate every dollar that’s created in manufacturing, has a 1.4 multiplier effect on the entire economy.

Also, two thirds of U.S. research and development is concentrated in manufacturing making it a high-powered economic sector.

The manufacturing multiplier effect drives other sectors, creating jobs and investment in non-manufacturing sectors.

Reshoring U.S. manufacturing is becoming more attractive and a good strategic move for many companies due to rising wages, sourcing risks along complicated supply chains, flexibility to respond to customers changing needs, intellectual property risks, the benefits to innovation and cheap, abundant natural gas.

The not-for-profit Reshoring Initiative’s free Total Cost of Ownership software can help corporations calculate the real P&L impact of reshoring or offshoring.
TCO Estimator http://www.reshorenow.org/TCO_Estimator.cfm

In many cases companies will find that, although the production cost is lower offshore, the total cost is higher.

Current research shows many companies can reshore about 25% of what they have offshored and improve their profitability if they used TCO instead of price to make their decision.

I also recommend reading “ReMaking America” the AAM’s new book on the wealth and growth opportunities of manufacturing in the U.S. Harry Moser, founder of The Reshoring Initiative wrote an excellent chapter on Reshoring. http://americanmanufacturing.org/remake-america/

Jan 27, 2014 8:35am EST  --  Report as abuse
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