Walmart Promises Bold Moves to Boost Employment

By Toni Vranjes

February 19, 2013

Retail giant Walmart is moving forward with ambitious plans to increase job opportunities in three areas. Last month, the company announced major plans to hire more veterans and to boost U.S. manufacturing, while promoting advancement opportunities for part-time employees.

The announcements received a lot of publicity because of Walmart’s huge influence – ranking as the largest private employer in the nation. The Arkansas-based company employs 1.4 million people in the United States alone.

Specifically, the retailer announced plans to:

  • hire at least 100,000 veterans in the United States over the next five years
  • buy an additional $50 billion in U.S. products over the next decade, which would create a variety of new jobs
  • help part-time workers move to full-time employment

Walmart

The new initiatives received praise from a number of public figures, veterans groups, and companies. (PDF file) One of them is First Lady Michelle Obama, who said the veteran-hiring plan is a model for others, and challenged other U.S. businesses to follow Walmart’s example. Supporters also say the pledge to buy more American goods can help revive the U.S. manufacturing sector.

Walmart’s critics have their doubts, though, and they claim that these programs will have very limited impact.

Jobs for Veterans

The company’s veteran-hiring initiative kicks off on Memorial Day. The program will be open to veterans who have been honorably discharged from the U.S. military during the past year. They will receive priority status if they apply for jobs in the U.S., as long as they meet the minimum requirements.

Many of the job openings will be at Walmart stores and clubs. The company also will offer some job opportunities at its distribution centers and its corporate office.

For many young veterans, finding work after serving in the military has been a struggle. The unemployment rate for veterans of the post-9/11 generation is 11.7 percent – much higher than the overall jobless rate of 7.9 percent. (For all veterans, however, the jobless rate is 7.6 percent.)

In general, veterans’ skills are a good fit for Walmart’s needs, according to the Institute for Veterans and Military Families (IVMF). The group partners with the Walmart Foundation on various initiatives, including the Entrepreneurship Bootcamp for Veterans with Disabilities program.

Veterans can bring a wide range of skills to the company, notes James Schmeling, the managing director and co-founder of IVMF.

These skills include:

  • the ability to trust and form high-performing teams
  • the ability to transfer skills across various types of work assignments, without need for in-depth retraining, and with the ability to learn quickly
  • advanced technical skills, from working with databases (inventory management systems, transportation logistics) to communication systems
  • strong organizational commitment
  • cross-cultural experiences, working with diverse people

These cross-cultural experiences are important as Walmart expands in many overseas locations, Schmeling said in an email.

“Walmart can benefit from veterans’ management and leadership skills,” he said. “Even very junior military members have experiences leading teams and planning and implementing projects. Walmart can use their advanced technical skills in their sophisticated transportation logistics and supply systems, including those with programming skills, advanced database training, and more.”

Schmeling said that Walmart employment may appeal to veterans for several reasons. For instance, the company has a broad presence in rural areas, and it offers a wide array of job opportunities.

“Many veterans are from rural areas, and return to those rural areas,” Schmeling said. “Employers may be in rural areas, but may not have immediately open jobs, or may prefer to hire people who are already employed, or who have already had a first job out of the military. Walmart is present with varied jobs in most markets, and thus is a readily available opportunity for veterans given this new announcement.”

He added: “Additionally, Walmart has many types of jobs that may meet the varied interests of veterans – from those who want an overnight stocking job to be able to spend daytime with their family or children, to those who want to manage and run departments, work in their warehouses, or in any of the back office functions that exist in all large corporations. While most people are familiar with the public-facing jobs Walmart has, there are also operations, health, pharmacy, risk management, fleet mechanics, facility management, accounting and finance, contracting, purchasing, training and human resources positions, and many more.”

Walmart critic Nelson Lichtenstein has a different point of view. In an interview, he said that the military and Walmart are both hierarchical organizations with very definitive rules. That’s a key reason why the company wants to hire veterans, said Lichtenstein, a history professor at the University of California, Santa Barbara.

“They like military people because they follow orders,” said Lichtenstein, director of the university’s Center for the Study of Work, Labor, and Democracy.

However, Walmart spokesman Randy Hargrove said that’s an inaccurate characterization, and that veterans have many impressive traits.

In a speech at the annual National Retail Federation convention last month, Walmart U.S. President and CEO Bill Simon discussed these traits. He said said that veterans have a record of “performance under pressure.”

“They’re quick learners, and they’re team players,” he said. “These are leaders with discipline, training, and a passion for service.  There is a seriousness and sense of purpose that the military instills, and we need it today more than ever.  We believe Walmart is already the largest private employer of veterans in the country. And we want to hire more.”

In an e-mail, Hargrove added: “We’re not aware of any other retailer that has made a commitment to hire 100,000 veterans, which is a projection that could be higher.”

One open question: how many veterans actually will apply for Walmart jobs? Over the years, critics have insisted that pay and benefits are inadequate.

Schmeling said that his group has heard from veterans about the company’s hiring pledge – and the comments vary.

“Some are negative, having the perception that Walmart jobs only include low-wage, part-time jobs,” Schmeling said. “Those commenters don’t necessarily have broad views of Walmart, their commitment to veterans, or their workforce.

“Others have been positive in that there are jobs available anywhere Walmart has a presence, that they allow flexibility, and that they provide career opportunities for those who want to make a career with Walmart.”

American-Made Goods

Over the years, Walmart has faced criticism for importing many products from overseas. Lichtenstein and other critics insist that the company’s practices are hurting U.S. companies.

Now, Walmart is touting its new initiative as a huge boost for U.S. manufacturing. The company’s plan amounts to $5 billion of additional U.S.-made products each year.

Under the new program, Walmart will provide manufacturers with long-term demand forecasts. The company also intends to make long-term product commitments on basic goods, and connect manufacturers with needed resources.

Walmart is examining how state governments, retailers and manufacturers can work together. For instance, the company has discussed the issue with Gov. Mary Fallin of Oklahoma, Gov. Nikki Haley in South Carolina, and Gov. Mike Beebe of Arkansas. The company will hold a manufacturing summit this summer to bring all of the parties together.

The company is exploring many topics, like benefits, rebates, training and other programs to attract manufacturing to the United States.

Walmart announced that it will increase purchases in areas where it already buys domestically – for instance, in sporting goods, apparel, storage products, games and paper products. The company also aims to spur American manufacturing in many areas, such as textiles, furniture, pet supplies, some outdoor categories, and higher-end appliances.

The retailer says that this program will create many jobs in manufacturing – and also will indirectly create many more jobs in other parts of the economy.

The manufacturing initiative could boost employment in manufacturing and industrial engineering, shipping and transportation, management, accounting, and equipment maintenance. Other areas that could benefit include retail stores, restaurants, uniform providers, and medical providers.

During his speech, Simon said retailers can give manufacturers confidence to invest in the United States.

“These factories will have higher tech jobs than those that left, and these jobs will have ripple effects in their communities,” he said in the speech. “Factories need raw materials to supply them, trucks to deliver to them, restaurants and – yes – retail to serve them.”

Critics say that this move simply reflects a broader trend that’s underway to bring manufacturing back to the U.S. This movement – known as “insourcing” – is occurring as manufacturers face higher costs overseas.

As wages in Asia rise and some manufacturing returns to the United States, Walmart is “going with the flow,” Lichtenstein said in an interview.

When describing the new program, Simon discussed patriotic themes – but he also cited higher costs in Asia as a reason. He said that the economics of manufacturing are “changing rapidly.”

“In previous decades, investment mainly went to Asia,” he said at the retail convention. “Wages were low.  The price of oil was low.  And new factories sprung up out of the ground.

“But today, some of those investments are nearing the end of their useful lives, and manufacturers are making decisions about where they will invest next.  Meanwhile, labor costs in Asia are rising.  Oil and transportation costs are high and increasingly uncertain.  The equation is changing.”

During his speech, Simon also highlighted a company that is partnering with Walmart. The company is 1888 Mills, a textile manufacturer based in Oak Brook, Ill.

“Today, most towels are made overseas – because that’s where towels are made today,” he said. “But 1888 Mills also had an underutilized factory in Griffin, Georgia. On the surface, the numbers looked close.  But when we dug into it, line by line, we could see that – with a couple commitments from us … and a couple innovations and a little capital from them…we could actually change the equation…and the numbers would work.  In fact, they looked pretty good.

“So we made a long-term commitment to get this program going,” Simon added. “Today, the factory is hiring again, and the community is thrilled.  The towels will be in 600 of our stores this spring and another 600 stores this fall.  You’ll know them when you see them because they’re called: ‘Made Here.’  And there is much more to come.”

Lichtenstein has a different perspective on Walmart’s partnerships with suppliers.

In his book, “The Retail Revolution: How Wal-Mart Created a Brave New World of Business,” he discusses the story of Farris Fashions, an Arkansas shirt manufacturer. Lichtenstein describes Farris Fashions as the “poster boy” for Walmart’s “Buy American” campaign of the 1980s. In 1985, the company signed a deal with Walmart to produce cotton flannel shirts – a product that the retailer previously had imported from abroad.

While the deal initially seemed positive, it ultimately turned out to be negative for Farris Fashions, according to Lichtenstein. Although employment at the firm increased, the pay was low and the workers lacked health insurance, he wrote. Also, the company faced pressure from Walmart for lower production costs. Farris Fashions was dependent on Walmart for most of sales, so it lacked the money and the flexibility to create new products or diversify its customer base, the book states. Over time, consumer demand for the product dropped, and the plant closed down in 2005.

“That could happen again,” Lichtenstein said in the interview.

Hargrove defended Walmart’s business practices. “We work very hard so we’re not more than a third of a supplier’s total business,” he said in an e-mail.

In an interview, 1888 Mills CEO Jon Simon (no relation to Walmart’s Bill Simon) said the new agreement is a huge boost for its Georgia terry-towel mill. 1888 Mills has been a long-term supplier for Walmart, providing goods made overseas. Now, the companies have a multi-year deal for Walmart to carry its U.S.-made towels. Specific terms weren’t disclosed.

“We are going to be creating jobs, and we’re looking to expand,” he said.

He added that 1888 Mills has a well-rounded customer base. The company has customers in many parts of the world, including the United States, Canada, Europe and Asia.

Globally, about 60 percent of the company’s business is from retail customers – and Walmart is just one of those retail customers. The other 40 percent is from other industries, including hospitality and healthcare.

He also noted that the company makes other products, in addition to terry towels.

“Walmart is certainty an important customer, but we’re well-diversified,” said Simon of 1888 Mills.

Meanwhile, Walmart’s Bill Simon has been challenging the popular belief that the company’s shelves are filled with foreign products. During his speech, he called that “an urban legend.”

He said: “Don’t forget, we run a pretty large grocery business.  According to data from our suppliers, items that are made here, sourced here, or grown here account for about two-thirds of what we spend to buy products at Walmart U.S.  But of course there’s room for more.”

However, Stacy Mitchell, a senior researcher with the Institute for Local Self-Reliance, says that those words raise a number of questions.

According to Mitchell, the statement suggests that an item could be made or grown elsewhere, but still “sourced” in the U.S., possibly from a U.S. importer or distributor. She noted that only Walmart can clarify what the phrasing means. She also said that Walmart has not provided any publicly transparent way to measure its domestic sourcing and track how that changes over time.

“The key to understanding how Walmart can claim that domestic products account for two-thirds of the goods it sells in the U.S. is to remember that more than half of Walmart’s revenue is now in groceries,” Mitchell said in an e-mail. “Groceries are almost entirely made in the U.S., and that’s true for any supermarket chain.”

She added: “Walmart is planning significant growth in its grocery segment.  It is now building Neighborhood Market and Express stores that stock almost exclusively groceries.  So, it will be able to achieve much of its U.S. sourcing pledge simply by expanding the share of its business that consists of groceries.  Other than a few products, we’re not likely to see much of a shift in the manufactured goods sold at Walmart. The vast majority of those items will continue to originate in Asia.”

In response, Hargrove said that the $50 billion committed over 10 years is additional growth — on top of the two-thirds the company is already spending to buy products that are made, sourced or grown in the United States.

“That growth will include dollars that we aren’t currently spending on products that we’re not offering today as well as growth in existing products and shifting existing items to U.S production,” Hargrove said in an e-mail.

He cited Walmart’s partnership with Sleep Studio as an example. As a result of the deal, 20 percent of Walmart’s memory-foam mattress topper business will be manufactured in the United States in 2013. Previously, all of it was produced outside the United States.

Advancement for Part-Time Workers

Meanwhile, Walmart is highlighting the options available for hourly workers. The company announced that it is working on “internal changes” to help part-time workers who want to work full-time.

Over the years, the retailer has had many disputes with labor, although the two sides recently reached a settlement.

While discussing advancement opportunities last month, Bill Simon said that Walmart’s pay and benefits are “in the top half of retail.”

“At Walmart, we offer hourly store associates quarterly cash bonus opportunities, a health care plan that starts at $17 per pay period, a 401k plan with a company match, a discount on merchandise, and, most of all, a chance to move up through the ranks and build a career,” he said during his speech.

“Here’s what many people don’t get: entry-level jobs often lead to bigger jobs.  In retail, you can climb the ladder from a stocker or a cashier to a department manager to a store manager and beyond.”

He said that Walmart promotes about 170,000 people each year.  About 75 percent of store management started as hourly associates, and their average pay is between $50,000 and $170,000 annually.

Walmart is trying to clarify the promotion opportunities it offers, so that all workers know how to move up the corporate ladder. The company is working to ensure that part-time workers are aware of full-time job opportunities in local stores, and that they always have “the first shot at those jobs.” Meanwhile, the company is trying to make its scheduling system more transparent, so that part-time employees can choose more hours for themselves.

Tags: , , , , , ,

Leave a Reply

(required)

(required)