WWD Retail and CEO Summit
Remarks as prepared for delivery
Good morning! I love that ad—some of you may have seen it. It was one of the highest scoring ads that we’ve ever tested with customers. And it shows what I’m here to talk about today: how we can create opportunity across this country by investing in American manufacturing.
But first I’d like to thank Women’s Wear Daily for inviting Walmart to take part in this summit. We’re really honored to be here.
It was two years ago this January that we started on this journey right here in New York at the National Retail Federation’s Big Show. But it was a journey that didn’t take us further from home, as most journeys do, but closer to the heart of America—to places like Winnsboro, SC…Winchester, KY….Circleville, Ohio. We’ve seen jobs created, and factories built. We’ve seen communities revitalized and lives changed.
Here in New York, Walmart announced our commitment to investing an additional $250 billion in products that support American manufacturing. We’re tackling that “large purchase order” in 3 ways:
- Growing our existing U.S. made or assembled products (2/3 or what we receive is made here)
- Finding goods made or assembled here that are new to our shelves and Walmart.com
- Re-shoring products where the economics work
middle class is growing in developing countries and driving demand for consumer
products. Wages have driven some of this growth, and that coupled with fuel
costs make the U.S. a top consideration when deciding where to produce goods.
It makes sense to produce goods closest to where they are consumed. We know
that energy costs in the U.S. are lower and more dependable than in many other
places…this chart shows that the U.S. can indeed compete.
So we got to work. As an organization, we had to evolve—in the way our buyers sourced products and in the way we work with suppliers. The good news is that innovation and risk-taking has always been part of Walmart’s DNA.
I know that many of you are based here in New York and may not have access to a Walmart, so here’s a little background.
We started as one small 5&10 store in northwest Arkansas. That evolved into a chain of discount stores. Next we built Supercenters. Twenty years ago, we got into grocery and are now the world’s largest grocer -- operating in 27 countries.
We have a range of formats today and over 11,000 stores worldwide. We’re expanding our small format Neighborhood Market stores here in the U.S. while being laser focused on the integration of digital and physical retail…everything from shopping on your smartphone to having groceries delivered to your doorstep.
When it comes to our investment in U.S. manufacturing -- we knew it was not only the right thing to do, it’s good for business, good for communities and our customers.
The Boston Consulting Group predicts that our investment of $250 billion over ten years will create 1 million jobs in manufacturing and service-related jobs. This is good for America.
And our consumers love that. We have found that it matters to them where our products are manufactured. And it matters enough to them that it influences where they shop and what they buy. In fact, second to price, 85 % of our customers say it’s important for retailers to carry products assembled or produced in the U.S
While Walmart sells over $470 billion worth of goods globally, it’s important to note that we don’t actually make anything; an important distinction…thus the need to collaborate with our supplier base to meet our goal. Our role is to leverage our scale to remove obstacles, but also to facilitate and accelerate the progress of our suppliers to make or assemble their products here. Yes…we are offering our resources to help. Let me tell you what I mean.
Our suppliers identified two main obstacles and asked for our help. The first was to assist them with navigating state governments—usually that means removing the complexity of finding a site to re-shore or expand their production. Because of our large store and logistics network, we have very established teams in government relations.
The second was navigating the supply chain for component parts and raw materials. Many of our suppliers did the math and saw that while the U.S. was cost-competitive for them, they could not get key component parts or raw materials they needed here. Here’s what we did:
In the summer of 2013 we tackled the first problem and held our first U.S. manufacturing summit in Orlando. We had over 1,500 there, including 34 states, nine governors, and federal leaders. There were over 300 meetings between suppliers and states.
This past August we held our second summit in Denver. This time 42 states came… We arranged over 400 meetings with states and suppliers and also tackled that second obstacle… component parts. We organized a trade show with raw materials and component part suppliers, allowing suppliers looking for parts to “shop.”
Michael Roden, CEO of K’nex, pictured here… makes component parts in addition to iconic toys like Lincoln Logs and Tinker Toys. He called our summit, the “Linked-In for suppliers.”
Also this summer, we held our “Made in the USA Open Call”— which was focused on the second prong of our strategy—working with new suppliers and products. It was the first time we’d done something like this: open our doors and make our buyers available to meet with vendors to buy products made, sourced, or assembled in the United States… without a prior appointment or discussion.
It was a great day for us—with over 800 meetings. About one third of what was presented was committed to or is under consideration now.
While we are making great progress on all three fronts— today I want to drill a little deeper on what is arguably the most difficult to do—and that is re-shoring—bringing production back to America from overseas.
The good news is that interest in re-shoring is the highest it’s been in years. Boston Consulting Group’s third annual survey of U.S. based manufacturing executives—just released last week—shows that the trend of manufactures already ACTIVELY doing this continues to increase year over year. Ask yourself – are you? Or are you one of the ones considering U.S. manufacturing… also a growing list.
This is a big shift and it’s exciting. Here are some details from our own experience:
When we first began this journey, one of the first suppliers we worked with was 1888 Mills, out of Griffin, Georgia. They make towels –mostly overseas—but were doing some runs in their factory in Griffin, Georgia. We decided together, to see what we could make happen.
They invested capital in updates and equipment…hired more workers and began making their Made Here towels. Our long-term commitment gave them the confidence to invest and create jobs.
I’ll never forget my visit to Griffin. The mayor was thrilled that Walmart was helping to revitalize her town. I saw the factory, and the stacks of resumes of people hoping for jobs.
We began with 600 stores selling the towels in six colors. This fall the towels are in over 2,200 Walmart stores, now in eight different colors. 1888 Mills has really benefitted from being a first mover in this area. Sales are strong and 1888 Mills continues to expand.
Let me also tell you about Richelieu -- a Canadian apparel manufacturer founded in Sorel, Quebec in 1934. About three years ago, Richelieu, first invested in the United States to rescue a failing hosiery company in Burke County, North Carolina. Our commitment to sell their U.S.-made socks helps ensure the success of their North Carolina factory.
I love the comment from Mark, one of their master technicians, who said, “We're going to put people back to work that had no jobs, nowhere to go to. Now, they get to come back and start over again and have a life again.”
Today in an area hard-hit by the recession the business is thriving again and when at full capacity, will have created 200 jobs.
Many of you here have had similar experiences. You know what it feels like to bring jobs back to the states. You’ve seen the pride and excitement on the worker’s faces—knowing they are making products here that people love, all while providing for their families.
I’m from Detroit—a city that faces many challenges, so I’m really excited to hear Tom Kartsotis’ presentation about Shinola. We were all so proud to see Ralph Lauren’s uniforms for our Olympic team in Sochi, made were made right here in the U.S.A. Still making headlines… Check out what I saw on my flight!
Karen Kane has a line of made in U.S. clothing for women. Levi’s has their iconic jeans. American Apparel’s entire store is made here. American Eagle Outfitters is launching a line of items made here…from shirts to scarves to hats.
At Walmart we had some early wins. I talked about towels and socks, but I could list items from around the store—candles, light bulbs, bubbles, flamingoes, TVs, curtains, canning jars, resin pots, patio furniture…okay, I’m getting carried away. Let me come back to textiles.
Competing on cost for textile manufacturing in the U.S. is challenging—from spinning to weaving to dyeing to cut and sew. It will take something new.
To spur progress, working with the Walmart Foundation and the U.S. Conference of Mayors, we launched our $10 million U.S. Manufacturing Innovation Fund this past spring-- with a specific goal of making it both easier and more competitive to make household goods in the U.S.
We awarded the first grants in August to seven universities .
The majority of these first grants were focused on textiles -- tackling everything from fabric printing, and dyeing to cut-and-sew automation.
Take a look at this:
It would be really exciting if Texas Tech succeeds! We’ll keep you posted.
The good news is that while we tackle these obstacles, we are still inking deals and pushing towards our $250 billion goal.
Today we’re announcing products that we’ve re-shored from overseas—footwear, bike helmets, bandages, lawn art, baby and pet products. These commitments are creating jobs in in locations across the country including Ohio, Massachusetts, Tennessee, and Kentucky.
Take True Science, for example –which makes quality, all natural, Made in the USA pet products and treats. We started carrying their products in 75 stores in 2012—now they’re in 800 stores. Sales are up. True Science had just 20 employees in 2010, and now employs over 300 in their facilities here.
We’re making progress! But we still have a long way to go – particularly in textiles. But innovation is part of who we are at Walmart so we’re pushing hard and leaning into these challenges. I hope I’ve inspired you to consider the same.
We are thinking BIG…such as… ecosystems of expertise…We already have great hubs to move products (and we do love logistics at Walmart)! What if we could co-locate manufacturing next to logistics hubs? What if we could make component parts next to the buildings where Element Electronics is assembling TVs or where Kent International is building bikes?
Working with our suppliers, universities, government, innovators…maybe with some of you …we believe we can make a difference for our customers… for our communities… and for America. Thank you.
Now I’m happy to
take your questions….