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A slow start for Walmart's "re-shoring"

Monday, Jun 16, 2014 - 03:08

June 16 - Walmart's pledge to sell more ''Made in the USA'' products hits hurdles as suppliers contend with deficiencies in U.S. manufacturing. Lily Jamali reports.

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Walmart says it wants more of the products shoppers buy.. to be made in the America. An extra $250 billion in products over ten years. But a year and a half after announcing the initiative, the effort to reshore some products stateside has proved difficult. A Walmart official says some U.S. manufacturers have had a tough time finding raw materials and components also made here. Cindi Marsiglio, Vice President of U.S manufacturing at Walmart, says an August summit in Denver may help change that: SOUNDBITE: CINDI MARSIGLIO, VICE PRESIDENT OF U.S. MANUFACTURING, WALMART (ENGLISH) SAYING: "We'll be inviting factories making U.S. parts and pieces all over the country to join us in Denver. So if our suppliers need a metal part for a grill, a plastic piece for a shower curtain, we're going to help to try to help facilitate finding that." Experts say bringing manufacturing back from places like China makes sense, especially for bulky, heavy products that are expensive to move. The price of oil has quadrupled over the past decade. And then there are labor costs, which have risen 20% a year in China compared to 5% in Mexico and 3% here in the U.S. Other advantages include shorter lead times and, as automation flourishes, a more productive American workforce, says Professor David Simchi-Levi of MIT: SOUNDBITE: DAVID SIMCHI-LEVI, DIRECTOR, MIT FORUM FOR SUPPLY CHAIN INNOVATION (ENGLISH) SAYING: "It's less about low labor costs and more about skills of people that can operate that technology." Walmart says two-thirds of what Walmart sells is grown, sources, or made in the US when food products are included. The company wouldn't provide that figure when food is removed from the equation, but it's far less, according to Scott Paul, Executive Director of the Alliance for American Manufacturing. He's not surprised by the difficulties Walmart has encountered - and says Walmart contributed to the current state of U.S. manufacturing. SOUNDBITE: SCOTT PAUL, EXECUTIVE DIRECTOR, ALLIANCE FOR AMERICAN MANUFACTURING (ENGLISH) SAYING: "I would liken that to Walmart as kind of a forester who went through, clear cut a forest through its sourcing policies over the last 15 or 20 years, is looking around and wondering where all the trees are. Or all the manufacturers are in Walmart's case." To that criticism, Walmart's Cindi Marsiglio has this response: SOUNDBITE: CINDI MARSIGLIO, VICE PRESIDENT OF U.S. MANUFACTURING, WALMART (ENGLISH) SAYING: "I would say to that, that our suppliers at Walmart are - they have a lot of energy behind finding U.S. production opportunities and we as a maker of nothing and a retailer can provide some leadership back in that space." Hal Sirkin of Boston Consulting Group, which has helped Walmart on strategy, says rebuilding long lost corners of U.S. manufacturing will take time, but is very doable: SOUNDBITE: HAL SIRKIN, SENIOR PARTNER & MANAGING DIRECTOR, BOSTON CONSULTING GROUP (ENGLISH) SAYING: "There's some areas where manufacturing isn't as robust. So the U.S. doesn't have much in the way of supplier. So things like blenders and fans and other appliances - we don't have them in the U.S. What companies can do is ship those small motors to the U.S. and then manufacture the product in the U.S." Sirkin expects as other U.S. manufacturers see the demand, they'll start production of those parts here.

A slow start for Walmart's "re-shoring"

Monday, Jun 16, 2014 - 03:08

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