Wal-Mart plans $50-bn shopping of US products
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James Cerruti, a senior partner for strategy and research at the consulting firm Brandlogic, said that while Wal-Mart no doubt wanted to get away from recent negative news like the factory fire, gun sales and a Mexico bribery inquiry, "these are real commitments".
One beneficiary of the new effort, 1888 Mills, said an advantage was Wal-Mart's committing to contracts longer than the standard six months to a year. Jonathan R Simon, the 1888 chief executive, said Wal-Mart had given the company a multiyear contract outlining how and when it would buy the American-made towels.
That "allows us to make investments with confidence", he said. "We've been staying with US manufacturing and quite honestly, we're one of the very last producers of terry towels left in the US. It had been quite a challenge, keeping the operation going, but we stuck with it hoping that eventually there would be more opportunity."
Simon said 1888 Mills made about 10% of its products in the US, including towels in Griffin, Georgia. While 1888 Mills had been supplying Wal-Mart with foreign-made products, the retailer recently agreed to carry an American-made towel at 600 of its stores starting this spring.
Executives at Wal-Mart told Simon that "especially in some of the towns where we manufacture that have been hit hard by the economic downturn, that these are Wal-Mart customers and it makes perfect sense to try to support jobs here in the US for people who end up shopping in their stores," he said.
In the last decade or so, American manufacturers have moved operations to China, Bangladesh, Vietnam and other lower-cost countries as they try to meet retailers' strict cost requirements. However, recent consumer interest in American-made goods, rising labour and energy costs overseas, and pressure to get merchandise from the design phase into stores within weeks rather than months have renewed interest in manufacturing in this country.