With a goal of revitalizing U.S. manufacturing, the world’s largest retailer convened a domestic sourcing summit Thursday.
Not only was the event a first for Bentonville, Ark.-based Walmart, it was also unlike anything the retail industry has ever seen.
Roughly 1,500 supplier company representatives, government and economic development officials, Walmart’s top executives and dozens of senior merchants participated in the three-hour summit held at the Orange County Convention Center in Orlando.
“It sounds dramatic, but nothing less than the future of our country is a stake,” Walmart U.S. president and CEO Bill Simon said. “We can’t be just a service economy. We have to make stuff.”
The summit was held Thursday afternoon and on Friday a day of meeting was planned between supplier company attendees and economic development representatives from 30 states. Walmart and the National Retail Federation served as matchmakers. Simon emerged as a champion for domestic sourcing earlier this year when he was a featured speaker at the NRF’s annual convention. At that meeting he unveiled Walmart’s plan to spend an additional $50 billion on domestic sourcing during the next 10 years. It sounded like an audacious goal at the time, but Simon now contends that figure will be a “lay up,” because of the momentum that is quickly gathering and was evident at the summit. Combined with the growing recognition of the benefits of making products closer to the point of consumption, Simon said he now expects Walmart to blow by that $50 billion figure.
Rising wage rates in previously low wage rate countries such as China, energy costs and other supply chain considerations are just a few of the reasons why Simon contends the global economy is entering a transition where a strong business case can be made for manufacturing to be located closer to the end consumer.
Taking that assertion a step further, U.S. Secretary of Commerce Penny Pritzker pointed to the stabilized banking and housing sectors, abundant and affordable energy, great universities, a vibrant culture of entrepreneurship and strong intellectual property protections as reason why companies should increase their domestic manufacturing.
“We are entering a new era of opportunity to boost American manufacturing,” Pritzker said. “The time to build and hire in America is now.” To help make that case, Walmart enlisted the aid of governors from nine different states who participated in panel presentations or made individual remarks. Governors have a strong interest in promoting economic development within their states and each used their participation in the event to tout their state’s key benefits and engage in some good natured ribbing of their peers.
For example, South Carolina governor Nikki Haley described her state’s dislike of unions. Mississippi governor Phil Bryant said his state doesn’t over-regulate or over tax and makes sure it gets out of the way of entrepreneurs. West Virginia governor Earl Ray Tomblin touted his state’s abundant natural gas. Maine governor Paul LePage said his state got rid of red tape.
While the governors cited the ease of doing business in their states, Richard Fisher, president and CEO of the Federal Reserve Bank of Dallas, suggested regulations and uncertainty are major impediments holding back the creation of domestic manufacturing jobs that could help restore the middle class.
The fiscal and regulatory policies in Washington are what is holding the country back, according to Fisher. He derided lawmakers for their cavalier approach to fiscal matters and spending and regulating with abandon, but stopped short of singling out the beleaguered Affordable Care Act, also known as Obamacare.
“Businesses cannot operate in a fog of uncertainty about how they will be regulated and taxed,” Fisher said.
Walmart can’t fix Washington gridlock or ill-conceived mandates, but as Wal-Mart Stores, Inc., president and CEO Mike Duke noted, the intent of the summit was to begin a journey.
“Sometimes getting started can be the hardest part,” Duke said. “We wanted to help ignite and create the desire to get momentum going.”