Wal-Mart plans $50-bn shopping of US products
The manufacturer 1888 Mills produces most of its sheets and towels overseas, in part to keep costs low for retailers like Wal-Mart. But after Wal-Mart gave 1888 Mills a long-term contract for towels made in the United States, 1888's chief executive said the company expected to produce more goods here.
A wide range of companies, including Apple, General Electric and Brooks Brothers, are experimenting with making more products in the United States. The moves make good public relations, but they also take advantage of cheaper energy costs and transportation benefits in this country.
On Tuesday, Wal-Mart, the largest US retailer, gave suppliers an added incentive, announcing that it would increase sourcing of American-made products by $50 billion over the next 10 years. Wal-Mart said it would buy more goods already produced in the US, like games and paper, as well as help vendors in areas like furniture and textiles return production that had moved overseas.
The company did not disclose the value of the American-made products it already sourced. In its most recent fiscal year, Wal-Mart spent $335 billion buying and transporting merchandise globally. (It does not break out figures for the US and Sam's Club, which represent about 70% of over all sales.) The $50 billion commitment — $5 billion a year — represents about 1.5% of that annual total.
With rising labour and energy costs overseas, "a few manufacturers have even told Wal-Mart privately that they have defined the 'tipping points' at which manufacturing abroad will no longer make sense for them", William S Simon, the Wal-Mart US chief executive, said in making the announcement at the National Retail Federation conference in New York.
Wal-Mart has been under pressure concerning its overseas sourcing because of a deadly fire in November in Bangladesh that killed more than 100 people at a factory used by Wal-Mart suppliers. Wal-Mart has said it did not know the suppliers were using the factory, and a Wal-Mart spokesman, David Tovar, said on Tuesday that the company had been working on the new initiative to buy more American goods for more than a year.
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