Is Walmart’s Buy American/Hire Veterans Initiative Anything More Than a PR Stunt?

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FREDERIC J. BROWN / AFP / Getty Images

Bill Simon, president and CEO of Walmart U.S., made a big splash yesterday when he announced two new initiatives the firm will launch this year: One focusing on putting returning veterans to work, with a promise to hire 100,000 veterans over the next five years, as well as a push to increase the dollar amount of American-made products the firm purchases by $50 billion over ten years.

The programs received praise from the likes of First Lady Michelle Obama; Jim Knotts, CEO of the veteran-support group Operation Homefront; as well as Scott Paul, president of the Alliance for American Manufacturing. But before we fall over each other to join these luminaries in their praise of the world’s biggest retailer, it’s worth taking a moment to dig deeper into the numbers.

First, though, let it be said that the goal of hiring veterans is a noble one, and one that should in many cases make business sense as well. As Simon said yesterday in his speech announcing the initiative, “Veterans have a record of performance under pressure. They’re quick learners, and they’re team players.” But many veterans have struggled to find work in a tough economy. Though the overall employment rate for veterans is below the national average, the unemployment rate for post-9/11 vets sits at 10.8%, versus 7.9% for the nation as a whole, according to the Department of Veterans Affairs. Especially for this group, Simon’s pledge to, “offer a job to any honorably discharged veteran within his or her first twelve months off active duty” must sound like a good deal.

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But what exactly is Simon promising, and will he be helping veterans in a big way by fulfilling it? Walmart employs 1.3 million sales associates in the U.S. and claims an average annual turnover rate of 37%. At that rate, the company has to hire some 480,000 sales associates in the U.S. per year. If Walmart ends up hiring 100,000 veterans over five years, or 20,000 per year, that would account for only 4.2% of its total hiring. But according to the Veterans Administration and the Labor Department, veterans make up 9.3% of the civilian working population. To actually make a dent in veteran unemployment, Walmart would have to increase its annual hiring of veterans to 65,000, or 325,000 over five years — and hope other employers in the U.S. adopt similar hiring policies.

What about Walmart’s new efforts to “buy American”? Surely the American manufacturing sector could use a boost from the world’s largest retailer making a concerted effort to spend more on its products. And $50 billion over ten years probably sounds pretty concerted to most ears. But in Walmartland, most numbers are large and impressive. And when you compare that $5 billion per year in additional product purchases to what Walmart would likely be doing anyway, it’s reasonable to wonder whether it represents any special effort on behalf of veterans at all.

According to Walmart’s 2012 annual report, the firm increased its cost of sales (an accounting term that basically tells you what it pays its suppliers for products) by more than $21 billion from 2011 to 2012. This figure is more or less in line with annual increases in Walmart’s recent history. In other words, in a typical year of late, Walmart buys $21 billion more products than it did the previous year. Walmart doesn’t break out what percentage of these incremental costs are attributed to Walmart U.S., Walmart International, or Sam’s Club, but if we assume that the proportions mirror those of the firm’s operating profits, that would mean Walmart U.S. spends about $15 billion more each year on products than it did the year before.

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So by promising to buy $5 billion more each year in U.S. sourced products, Walmart is promising to spend one-third of its annual new spending on U.S.-sourced products. Not bad, right? But Simon claimed in his speech yesterday that “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.” If this is true, then shouldn’t Walmart promise — at the very least — to maintain that two-thirds proportion in its new spending?

This is just back-of-the-envelope number crunching, but these calculations suggest that rather than creating new initatives to help solve social problems, Walmart is merely dressing up what it already planned to do. Perhaps that’s why the firm is obviously underestimating itself when it set these goals. In all likelihood, Walmart will end up surpassing these benchmarks by a large margin as the U.S. economy improves and more manufacturing comes back to America due to higher fuel costs and rising labor costs abroad. And then it will be in a position to drive home it’s PR coup by bragging about how the firm greatly exceeded its goals for hiring veterans and increasing its purchases of U.S.-sourced products.

Walmart tried something like this before, in fact — and it didn’t end particularly well. The company launched a “Buy American” campaign in 1985, but ended it after Dateline NBC discovered that some Walmart stores were advertising clothing made in Bangladesh as American-made.

When I presented these figures to Walmart spokesperson Randy Hargrove, he said that these goals of $50 billion in new buying of U.S.-sourced products and 100,000 new veterans are floors, not ceilings, and that in each case the numbers could go higher. But he was unable to say whether $5 billion per year in new spending on U.S.-sourced products represents an increase from what it’s done in previous years because the company “doesn’t break out those numbers.”

In Walmart’s defense, we perhaps should not expect the company to tackle social problems in a meaningful way. Walmart is good at doing a lot of things, but above all else it excels at offering products to the American public at ridiculously low prices, and thereby raising our standard of living. But private corporations aren’t all that great at solving social problems. That’s because curing social problems more often than not involves sacrificing something of value. And what does Walmart value more than anything else? Low prices for its customers. And Walmart won’t give up those low prices for anything, not the American manufacturing sector, the environment, or even veterans employment.

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26 comments
gaf3
gaf3

I cannot see that 50 Billion dollars in US purchases spent over a 10 year period as any more than a ploy to gain goodwill through the media. To put it into perspective, Walmart a company with annual sales topping 400 Billion dollars offering to spend 5 Billion dollars domestically does not demonstrate a significant dedication to the earlier philosophy of Sam Walton to BUY AMERICAN.  If Walmart does in fact spend 5 Billion with US manufactures how many BILLIONS does that leave Walmart spending with foreign manufacturing companies?  That's not being a very good steward of the American way of life, that is unless your a Walton.

RachelRitchie
RachelRitchie

Nope not full time or medical. I've currently been working for Walmart for the last 2 years, it wasn't until I hit my year anniversary that I was allowed to receive benefits (crappy as they are, but benefits nonetheless). I'm also a front end manager...who conveniently enough is still PART TIME...I've been receiving full time hours for a while off and on, but still I'm still a part-timer like how I started almost 2 years ago. I'm still not sure how they believe anyone is supposed to survive with a baby on the way at $10/hr when they feel compelled to cut down your hours from 35 down to 24...

KerryMoran
KerryMoran

They didn't say the word FULL TIME did they or Medical?

MikeDelarosa
MikeDelarosa

Wait, I am a Veteran and I just got back from submitting my resume to 3 Wal Mart locations in California and all 3 managers told me " sorry, we are on a hiring freeze". So what is the deal? I'm serious.

lvh44leo
lvh44leo

Wal mart is now trying to clean up the huge mess in its internal business  practices whicch when made public makes millions of shoppers sick of WalMart and they shop elsewhere . Shoppers want integerty and honesty from  the stores they shop at and shoppers know Wal Mart is now too big and are hurting workers at other stores with less houres and store closeings. Wal Mart is a needed retailer but over 4000 stores in America is enough! We need the competitors to SURVIVE too! There are good prices at Wal Marts competition but a lot of shoppers just assume Wal Mart has the lowest prices.

JohnConnor
JohnConnor

It just might be a stunt, or they might be trying to get out in front of a trend that is turning into a movement. Brooks Brothers and Saks are also making the same sounds and they are at the other end of the shopping spectrum from Walmart. Sometimes you know you are being heard because the other person starts talking to you and not just talking at you. FOCUSED shopping for Made in the USA products gets attention. Find it, buy it and send a message that we want it to be made right here at home. John Connor UnitedAmericanConsumer dot com 

shookerhead
shookerhead

Why would ANY prideful veteran like myself  want to work at Walmart for $7.50 an hour??......Right,...go fight for your country, get out of the military and make 900-1,000 dollars a month. I'm sure veterans are just chomping at the bit for the opportunity to work for Walmart....LOL!!

williamambrosia
williamambrosia

These high consumption low cost business models are nothing short of tragic, not only to irreparable damage to the environment but more importantly the devastating impact on healthy human development. The mystical horn of plenty is not infinite, innovation has a back side , a tempered rather than an unfettered application to capitalism may offer many new insightful horizons.

JohnConnor
JohnConnor

It may not be (probably is not) possible to change Walmart's image but it is curious that they are trying to change their image. Who we purchase from is the only real deciding factor, everything else will follow. If we decide that we are going to “Buy American” then the quality and price will be decided by market competitiveness, if we only focus on the price, then cheapest labor will rule the day and we will have to join in the race to the bottom in order to have a job. Find what you are looking for from a list of American manufacturers and when that is the norm, then every manufacturer will need to be on that list

John C unitedamericanconsumer dot com

aurorafisher64
aurorafisher64

Do you realize you really can make $2000 per week trading? I would have never believed it until I saw it for myself or I started doing it. And that's exactly what happened to me because now I'm making that much money. You just need to know the right place to learn and where I went to is a website called Traders Superstore, you should be able to find them on Google or just search for them. Their support is the best I've ever seen on any website before and they helped me to learn to trade, and it was nowhere near as hard as I thought it would be.

dobermanmacleod
dobermanmacleod

The Walmart business model is going to radically change soon, because the cost of energy is going to dramatically fall, changing a fundamental factor in their business calculus:

"A volume about the size of a #2 pencil eraser of water provides as much energy as two 48-gallon drums of gasoline. That is 355,000 times the amount of energy per volume – five orders of magnitude." ( http://oilprice.com/Energy/Energy-General/New-LENR-Machine-is-the-Best-Yet.html ).


This phenomenon (LENR) has been confirmed in hundreds of published scientific papers: http://lenr-canr.org/acrobat/RothwellJtallyofcol.pdf


"Over 2 decades with over 100 experiments worldwide indicate LENR is real, much greater than chemical..." --Dennis M. Bushnell, Chief Scientist, NASA Langley Research Center


"Total replacement of fossil fuels for everything but synthetic organic chemistry." --Dr. Joseph M. Zawodny, NASA


By the way, here is a survey of some of the companies that are bringing LENR to commercialization: http://www.cleantechblog.com/2011/08/the-new-breed-of-energy-catalyzers-ready-for-commercialization.html


For those who still aren't convinced, here is a paper I wrote that contains some pretty convincing evidence: http://coldfusionnow.org/the-evidence-for-lenr/

mrxexon
mrxexon

They may be able to hire more vets, but to buy American would spell economic disaster for Walmart. We all know most everything in there is made in China by poor SOB's who make chickenfeed for wages. Hence, cheap retail prices.

American made products are expensive. Even Walmart can't work it's discount magic on that cold, hard fact.

x

lvh44leo
lvh44leo

Wal Mart is just cleaning ut their act before they lose more customers.  Millons of Americans are fed up with Wal Mart and are going back to other stores and thats what will stop Wal Mart and they know it.

ruraynor
ruraynor

Heard a great podcast about Walmart's product sourcing in the USA putting pickle companies out of business by bullying them into unsustainable pricing. If the company didn't fulfill the order, Walmart would drop them, if they did, they were losing money on each jar because of the low price Walmart demanded.

Walmart will almost certainly do the same with other things made in the USA. Their insistence on low prices will force manufacturers to cut costs by firing people or lowering their wages. Hooray for corporate greed.

reubenr
reubenr

As others have already asked, I am sure, what will they be giving as an hourly wage and how many hours will they give them a week? But I will say, that now they have said this, I will follow up and find out. If it is not an honest and good thing for veterans, it will just be one more reason never to shop at WalMarts ever again. It is just really wrong how these people manage their business. I would gladly pay more per shopping cart, if they just treated their employees better. In the mean time, I'm on vacation from them.

kuscorporation
kuscorporation

Why doesn't Walmart buy all it's products from America?

Even what it does buy from "American" manufacturers will be made with parts from other countries and put together by illegal aliens, because those will be the places that can offer the cheapest prices.

SmoothEdward1
SmoothEdward1

The writer states Walmart raises our standard of living by offering products at the lowest possible prices. How does sourcing products from overseas manufactures, destroying jobs here, raise our standard of living? I emphasize the word “our” in standard of living. Getting an item at the cheapest possible price is often a personal benefit to someone, not to American society on the whole. For a long time, the jobs we’ve been replacing the lost manufacturing jobs are lowering paying and without many benefits. That has caused downward pressure on our standard of living while the multi-national corporations accrue the biggest benefit. I’m glad more veterans may find jobs but they’re certainly won’t be at very good wages.

Brenden
Brenden

Pure PR.  Military applicants must: have a HS diploma, pass the ASVAB test, qualify physically, and pass an extremely rigorous medical exam that rules out all major physical defects and mental illnesses.  Applicants must have no criminal record, and pass a urinalysis routinely and often.  Today, even having too many visible tattoos can be grounds for disqualification.  The entire process of even being accepted/hired by the military for basic training costs thousands.  I am not familiar with WalMart's application process, but I would speculate that having a state ID and a SSN is probably enough. WalMart doesn't need a corporate goal to hire Vets.    Likewise, I seriously doubt that anyone I served with (for 22yrs) needs an edge to get hired at WalMart, if that's the workplace they choose.  So this really doesn't matter to either WalMart, or Veterans.  It's just feelgood press.  Now, if WalMart ups the ante and states that "It is the corporate stance of WalMart to give maximum hiring preference to all veterans", that would be real.

kirads09
kirads09

@MikeDelarosa    I am in Colorado.  Not a veteran, but about 3 weeks ago applied online for hourly positions.   Called to follow up and hopefully talk to a hiring manager.   Was told the same thing about a "hiring freeze".  

alain.coetmeur
alain.coetmeur

@dobermanmacleod  

maybe is it a bit off topic. anyway I would advice people to look at the conference on LENR made during national instruments annual conference, NIWeek2012... see Brillouin, Defkalion, Takahashi of Toyota/Technova, and many other... you could also find data on various blogs about LENr and on lenr-forum wher I do the tech-watch . track us on linked in, viadeo, on g+ too...


It can change the economic model of walmart, but how ? it will have stronger impact on energy providers because there will be a downsizing of energy generators (heat first, then cold, electricity, force), like it happens with micro-computers. grid also will change like it happens withe internet and 3G...

It is possible that company like wallmart or homeDepot begin the new leaders in energy because of their after-sale network. In France I would imagine that Darty could evolve that way. Il will also reduce cost of shipping, but also reduce cost of energy in occidental countries wher carbon tax and pollution regulation cause a disadvantage compared to loose contries.


i expect a change in the economic model, similar to what happens in the 50s-60s in france, from village shops to hypermarket, horst to tractor farming, bike/train to car traveling.


anyway for US, like for Europe, all will happens first in Asia...

NaveedXVO
NaveedXVO

@ruraynor Government mismanagement you mean? If you want to protect US manufacturers than the only way to do that is with protectionist policies. It's not the corporations fault, if they don't offer the best prices they will get out competed by another corporation that will.

Buy american is for saps, does no one realize that free trade is the cause?

shookerhead
shookerhead

Yeah, I'm sure Veterans like myself are just chomping at the bit to work at Walmart for $7.50 an hour.....lol

FbiznotTheanswer
FbiznotTheanswer

@SmoothEdward1

Right you are.  In fact, ever-falling prices lead to a LOWER  standard of living, because everyone from the retailer back to the manufacturer must make do with slimmer margins.  As a pioneer of lower and lower prices, Walmart has directly contributed to our falling standard of living.  In addition, their ruthlessness in entering towns and cities all over our country and putting smaller retailers out of business has ALSO lowered our standard of living.

Anything they do that looks the remotest bit public-minded is a PR stunt.  Like giving every veteran a job?  Yeah right, at minimum wage, non fulltime (to avoid paying benefits).  

Brenden
Brenden

Stack this up against Sears' longstanding Reserve Employee Program. Reservists who work at Sears are guaranteed to have their jobs back after deployment. Sears maintains their benefits while the employee is overseas, and even MAKES UP THE DIFFERENCE IN PAY (if the employee takes a pay cut by serving, Sears continues to pay them). Now THAT is an employer who stands beside our Veterans. 

NaveedXVO
NaveedXVO

@FbiznotTheanswer @SmoothEdward1 It's not wal-marts fault it's the fault of free trade. Mercantilism/Protectionism would solve the problem if that's the problem....of course it would raise prices, but that might raise wages...