When a business as big as Walmart makes a move, it has the potential to have serious repercussions on both competitor behaviors and the economy at large. This was recently illustrated by the retailer’s pay increases to hourly workers, which was quickly followed by a number of other chains. This may foreshadow a snowballing effect that could circulate a hefty chunk of cash through the economy. Another Walmart initiative, involving efforts to bring manufacturing jobs back to the U.S., could also have a significant economic effect if it inspires other retailers to push reshoring among vendors as well.
Walmart released its “Global Sustainability” report in April, which in part discusses the progress of the company’s reshoring efforts. The initiative, which began in 2013, seeks to source $250 billion worth of products from the U.S. by 2023. The City Wire reports two examples of its relative success. Nuk pacifiers, which with a commitment from Walmart was able to expand its manufacturing in the U.S. while moving some of its production out of Europe. Kent bicycles invested $4.3 million into a new manufacturing facility in South Carolina, onshoring some of its operations formerly located in China.
Companies that reshore can take advantage of local tax incentives for manufacturing in the U.S. and, presumably, also experience a bump in sales volume from getting placement in Walmart.
Source: Walmart
Boston Consulting Group claimed that the initiative should create one million jobs in the U.S. in manufacturing and related industries between 2013 and 2023. However the numbers have fallen far short of that. Reports indicate that only 10,000 jobs have been created, while 100,000 a year would be required to hit one million by 2023.
A Huffington Post article released before the Global Sustainability report suggested the slow growth was due in part to a loss of manufacturing knowledge and infrastructure since the trend of offshoring began.
As with wages, however, there could be a tipping point at which reshoring becomes a major trend, and other retailers join in.
On the other hand, the economic landscape could look quite different by Walmart’s 2023 reshoring deadline. Some fear that the controversial Trans-Pacific Partnership Agreement could pave the way for more offshoring, and it’s unclear what effect such an agreement would have on Walmart’s incipient attempts at reshoring.
- Walmart updates progress on manufacturing, veteran hiring – The City Wire
- Walmart Is Having A Hard Time Sticking To Its Made In America Promise – The Huffington Post
- Walmart’s wage hike gets CEOs’ attention – USA Today
- Why The Trans-Pacific Partnership Agreement Is a Pending Disaster – The Huffington Post
- Walmart continues ‘Made in the USA’ push – RetailWire
Source Article from http://www.retailwire.com/news-article/18254/will-walmart-spark-a-reshoring-movement
