Wal-Mart Sends Tennessee Jobs To South Korea

Maybe Mike Seals should have informed himself a little more on how Wal-Mart worked over Rubbermaid and contributed to its demise.  Maybe if he really understood how Wal-Mart “negotiates” with its suppliers, he would have made a hasty retreat back to the hills of Tennessee.

Maybe some of these vendors could tell WM to take a hike.

Guardian was being sold by Mike Seales at his Christian Family Bookstores.  After Walmart examined the product they concluded that in order for Walmart to successfully sell it, they would have to lower the price from $94.95 to $49.  The device was being manufactured for Seales by a manufacturer in Tennessee.  Seales went out for new bids worldwide including the Tennessee manufacturer and they could not match the South Korean price.  Therefore Seales decided on the SK manufacturer.  According to Seales, the effect on the Tennessee manufacturer was minimal, since Guardian was only a small part of their manufacturing output.  Seales also sells Christian T-shirts to Walmart which are manufactured in the US.  Apparently Seales has found a niche market and is able to compete successfully against overseas vendors. 

Walmart pointed out, even though Guardian was patented, other manufacturers would make similar products by slightly redesigning the device and would sell them at a much lower price.  Walmart arranged for Sony to include the device in their TVs and Walmart showed Seales how to minimize the effects of the competition.  Overall, it has been a very profitable move by Seales.

Rubbermaid was doomed as soon as they had to raise prices because of resin price increases.  Competitors from overseas were building cheaper.  If Walmart has stayed with Rubbermaid, customers would have gone to other retailers.  Both Walmart and Rubbermaid would have ended up losing.

Louis in:

You didn’t finish the Rubbermaid story and you make some pretty broad assumptions.  If Wal-Mart would have taken the asked for price increases, customers would not have gone to other retailers because everyone was in the same spot so to speak.  How do you figure Rubbermaid and Wal-Mart would have ended up losing?

First of all...Rubbermaid was named the company of the year in 1994.  They were doing everything right. They employed 1,000 people. They were one of the most respected companies with good quality and good products. But as was pointed out, the price of resins increased dramatically. Rubbermaid went to its customers and told them they would have to pass on this cost.  All of Rubbermaid’s major retail customers agreed to take the cost increase EXCEPT Wal-Mart.

Bill Fields (who is no longer with Wal-Mart) basically told Rubbermaid representatives to take a hike with their price hike...nobody was going to tell Wal-Mart what to do!  In addition to this, Wal-Mart took several Rubbermaid products off its store shelves for a couple of years which impacted Rubbermaid greatly.

In 1999, Rubbermaid was sold to one of its competitors, and eventually all the equipment and machines in its plant in Ohio was liquidated.  Today, you have Wal-Mart company spokesman like Ray Bracy, saying with a straight face: “It is not our intent to be bullies as buyers to our suppliers.”

Screwedby

Notice that Walmart did not cease to sell plastic products.  They bought their plastic products from other vendors just like many others did.  If Walmart had continued to sell Rubbermaid products, people would have bought their plastic products from someone else or bought competitive brands from Walmart.  Rubbermaid would have still lost as would have Walmart.

If Rubbermaid could continue to be competitive, they would have done so with other retailers and Walmart would have lost that segment of the market.  The fact that they did not do so proves that they were doomed.

This case, by the way, has been discussed at a number of business schools.  Although a few have insisted otherwise, the general consensus is that Rubbermaid could not continue to do business as before.

Larry,

I couldn’t agree more. Instead of moving production overseas in order to get around paying their fair share, vendors should refuse to do business with Wal-Mart. Wal-Mart’s market share is 20 to 30 percent. That leaves them with more than 70% of the market to sell their products to other retailers. We do have an alternative folks!

Way to go Wal-Mart Watch. Keep up the fight!

Louis in:

I’m not going to debate you all night point by point because you make no sense.  What makes you such an authority on Wal-Mart? 

In another discussion thread you made the statement that you only buy 10% of your retail items from Wal-Mart, yet you make the claim that their quality “can’t be beat.” How do you know that the 90% you don’t buy from Wal-Mart doesn’t beat their quality?

And what’s your point?  Of course Rubbermaid couldn’t continue to do business the way they were in the mid 90’s.  At one point they were only selling to K-Mart and not Wal-Mart.  That was probably their greatest mistake...dealing with Wal-Mart in the first place.

All of you:

Quit complaining and stop buying anything from Wal-Mart!  Is it really their fault?  If Wal-Mart is such a nuisance, why are their parking lots always full? 

I don’t shop there because I don’t like their business practices.  Unfortunately, it appears to be too late as the customers of the Wal-Marts, Targets, Lowes, Home Depot and other big box stores have forced many manufacturing jobs overseas.  This, as a result of greedy corporate boards, overactive unions, overzealous personal injury lawyers, corrupt politicians, and we consumers who, like lemmings to the sea, seek more and more products to fill our oversized homes.

We have so many problems in this country, we don’t even know where to start.  Blaming Wal-Mart isn’t the answer.

One way to start is to pass the Fair Tax (www.fairtax.org) to try to re-stimulate manufacturing investment in our country once more.  Our courts allowing fewer lawsuits wouldn’t hurt either, along with ending the pervasive “litigation lottery” mentality.  Putting Washington on a pork-free diet would also help - I think this might be achievable with a constitutional amendment limiting Congress to a 120-day session per year. 

I could go on, but you probably won’t read this far anyway.

Ambivalent:

You made many excellent points!  I can see why you are ambivalent though...you can’t seem to be able to make up your mind about Wal-Mart.  I disagree with you Ambivalent...maybe “blaming” isn’t the word to use here.  I think Wal-Mart and all the other companies you mentioned should be held accountable.

You answered your own question as to why Wal-Mart’s parking lots are always full...most consumers are uninformed “lemmings.” They can’t think beyond the end of their shopping cart.

I certainly don’t put all of the “problems in this country” on Wal-Mart alone.  But since they are America’s largest employer, I think many people see Wal-Mart as being symbolic of all that is wrong with this country.

You are also right...not shopping at Wal-Mart is the thing to do, but it doesn’t stop there.  Only “complaining” isn’t good either.  It takes grassroots action...it takes contacting and writing to members of our government...it takes informing others.  This is the mission of this website and others.

I’m always amazed at all the pro Wal-Mart people that come here and “whine.” I never once felt the urge to go to Wal-Mart’s website and “unload.” They would probably ban me for life if I did.

To all the Wal-Mart defenders I just have to say: Enjoy your cheap Fruit of the Loom underwear from Wal-Mart and move on. There is no possible argument you can use to defend Wal-Mart that is going to change my view or the views of the people managing this website.

By the way--- great comments larry and Jean in Atlanta!

ScrewedbyWal-Mart in Anytown, USA-

I know this forum was based on jobs lost but my question to you is that why is the new rubbermaid doing better than the old and why are the still able to successfully do business with Wal-Mart, and others.  Rubbermaid was not sold to a competitor, and if rubbermaid did not have internal problems they would have never been acquired to begin with.
If Mike Seales did not like Wal-Mart’s offer he should have not accepted it.  Wal-Mart was able to guarantee him a certain amount of profit with their mass marketing strategy.  The reason those jobs were sent oversees was because of the number of units produced in the Tennessee would not have kept up with demand for the product.  Kudos to Mike Seales and his product.

Have you noticed that Screwed doesn’t like facts if they expose his outlandish claims, and that once confronted, he tries to re-direct the debate?

Overlooked is the fact that Wal-Mart really did not send jobs to South Korea. The decisions were made by others, especially the Tennessee company which tried to rip people off by overcharging for what it was trying to sell.

truthtelling:

Literally speaking, you are correct in saying that WalMart, did not send the TV Guardian manufacturing jobs to South Korea.  Mr. Seals and others in his company decided to do so, i suspect, in order to retain WM as a buyer...From a business perspective, this clearly makes sense.  A distribution contract with WM is clearly the most lucrative in retail, given WM’s size.

Notwithstanding, WM’s low price demands on suppliers effectively forces companies (TV Guardian, in this case) to drive down production costs in order for them to remail competitive as well as a viable WM client.  A big factor in production costs, is the cost of labor.  With the minimum wage ($5.15, federal), high health care costs, etc. in the US, one of the few ways to significantly bring down labor costs is to outsource manufacturing to a country which has cheaper labor. South Korea, as of 2004, has a minimum wage of $2.21/per hour (http://www.state.gov/g/drl/rls/hrrpt/2004/41647.htm), less than half of the U.S. minimum wage. Do the math…

Maybe WM itself did not send these jobs to South Korea, but I think it can be said that they *strongly* encouraged the company to do so.  “Strong armed”, could even be appropriate here, as a company selling retail products that does not submit to the world’s largest retailer’s price demands, does so at their own peril. 

Do these low price demands put on suppliers by WM, effectively preclude the manufacturing of their products in the U.S.?  I think that is the true argument here...that this is indeed the case, and U.S. jobs are eliminated pretty much at WM’s insistence.

MidwestRust in Midwestern US:

You summed it up nicely!  This is exactly what happens.  Anyone who tries to say otherwise, has never sat in one of those little “conference” rooms down in Bentonville where Wal-Mart “negotiates” with their suppliers.

Rustie described a situation where US wage regulations made alternative places (which has less onerous regulations) much more attractive.

“Strong armed�, could even be appropriate here, “

Entirely inappropriate. No one forced them to do anything.

“as a company selling retail products that does not submit to the world�s largest retailer�s price demands, does so at their own peril.”

Perhaps they could consider working with the 80%+ of other stores which are NOT Wal-Mart??? Did they ever think of that????

“Do these low price demands put on suppliers by WM, effectively preclude the manufacturing of their products in the U.S.?”

Only in situations where the US manufacturers can’t do as good a job at making the products. Sometimes, this is due to regulations. However, the “foreign goods at Wal-Mart” accusation is always significantly trumped up and exaggerated. The last time I was at Wal-Mart, I spent about $40 on about 10 itmes. After I bought them, I checked: every one of them was American made.

“U.S. jobs are eliminated pretty much at WM�s insistence”

The only US jobs eliminated by Wal-Mart are the ones where it fires people. It has nothing to do with others’ decisions of how to run their own business. The firings from Wal-Mart are more than made up by their hirings: the Wal-Mart workforce grows. Wal-mart has nothing but a positive impact on the American employment picture.

truthtelling in America:

WOW!  10 items for $40.  that’s an avereage price of $4.00 each.  What did you buy...toothpaste, toilet paper?

Next time go to men’s clothing department and tell me how many American made shirts you find.

my reasons for not shopping at walmart are relatively simple.  walmart does not use union labor when they build these stores so why shoul i help their bottom line when they do not help my bottom line. cheap prices they may have but at the expense of people who have lost jobs to overseas manufacturing. target, kmart,lowes and the home depot all use union labor. i know because i have worked on construction projects with the above mentioned companies. walmart sucks.

Screwedby, hello again....where was the shirt that you are currently wearing made?  And if you say USA, can that be said about ALL of your clothes?

from mark: “walmart does not use union labor when they build these stores so why shoul i help their bottom line when they do not help my bottom line.”

Union construction means that a project is much more expensive, and is often built shoddily and takes a lot longer to complete. How can that be good? Thanks for giving me a reason to stay away from home depot, lowes, and the others. Don’t want the roof to fall on my head.

Michael D.---hello again to you.  YES, as a matter of fact my shirt does say “Made in USA,” but I have to admit it’s getting harder and harder to find this.  Now who’s fault is that?

Imagine...the country that was the first to land men on the moon...the country that once was talking of building a defense “space shield” to protect the country from incoming missles, the country that is talking about the benefits of stem cell research, can’t make its own clothing anymore.

truthtelling:
(Rustie? Fond of nicknames, are we?)

Can you acknowledge that WalMart ushered in a significant shift in the balance of bargaining power between retailers and manufacturers of retail goods, tipping the scale towards retailers and turning this relationship on its head?  There is plenty of evidence and professional opinion which asserts that this is true.  The fact that a retailer can set the price of goods is a marked shift from traditional retailer/manufacturer relationships, and this is primarily because of WalMart.  Of course, now, this model has been utilized by other “big box” retailers and is not exclusively a WalMart “thing” (Toro & HomeDepot, for example).

Given that, how can you explain the fact that goods manufacturers have not, en masse, avoided contracts with WalMart and other big box retailers?  Don’t you think most companies would recoil from the prospect that WalMart could tell THEM how much to charge for their products, and thereby how they should do business? A change in the price of raw materials should not impact the selling price of the finished product??? What?  Doesn’t that sound a little strange?

I think that this can be explained by WalMart’s (and other big-boxes) massive market share, as well as the fact that this type of bargaining has become more common-and therefore difficult to avoid.  The majority of retail goods are sold in the big box stores, and to be blacklisted from such stores IS perilous for a competitive business.  From the mere marketing standpoint of brand exposure, not having products in the big boxes can severely impact a brand’s image.  “Strong armed” may be a bit strong, but I don’t believe it is “entirely inappropriate.”

Of the companies who have adapted to this new atmosphere, many have done so by offering lower-quality products to meet retailer price demands, AND outsourcing labor to countries like North Korea and China.  For companies whose producta are not flexible enough to produce a lower-quality/lower-priced product (I suspect TV-Defender fits this category), their only option to remain competitive in this brave new retail world is to outsource.

I am not attempting to demonize WalMart, as they aren’t the only ones practicing business in this manner. However, it is important to note that they were the pioneers in this practice and therefore have become the figurehead for this business movement.  It is also important to mention that this pressure on manufacturers has provided gains in productivity and brought down prices- both of which are good for the consumer.  I don’t see WalMart as inherently ‘evil’- they are a business, and a business works to make as much money as possible-nature of the beast.

BUT, many of the consumers buying those goods are also manufacturing laborers who could be impacted by the outsourcing of U.S. manufacturing jobs due to big box pressures.  Furthermore, consumers should be aware that the focus on low price also is translating into low-quality products.  This is not a mischaracterization, and I see no reason why such information can not be provided to consumers.  Is there a problem with an informed consumer???

Finally, I think it is at best-narrow, and at worst-deceptive, not to mention the relative bargaining power of any two contracting parties in question.  On the surface, yes, we are not forced to do anything and we are free to choose whom we would like to deal with, but can you honestly say that that is the complete story?

>>"Only in situations where the US manufacturers can’t do as good a job at making the products. Sometimes, this is due to regulations. However, the “foreign goods at Wal-Mart” accusation is always significantly trumped up and exaggerated.”

All or even a majority of the products at WalMart may not be manufactured overseas (China), but WalMart is extremely dependent on those that are...they are the primary reason for the low low prices which attract consumers to their stores. Furthermore, the number of foreign made goods are destined to rise as more and more companies are outsourcing manufacturing.  Take note of the growing trade deficit. To off-handedly dismiss the role of foreign made products in WalMart’s model is, again, narrow or deceptive.

>>"Wal-mart has nothing but a positive impact on the American employment picture.”

That depends on your point of view.  A dependence on low-wage, low-tenure, part-time, benefit-less labor force (ie low cost labor force) clearly presents a positive employment picture for WalMart.  That’s not necessarily true from the laborer’s point of view.

Sorry for being so long winded…
I can provide sources if you want them....

Let see who can come back on this? Wal-Mart buys most all of their clothes from Saudia Arabia, And Pakistan. People wake up, where did the Terrorist train and originate from that attacked us on 9/11? What country is harboring Osama Bin Laden? Also, who killed Daniel Pearl?

And now Wal-Mart is responsible for the terrorist attacks????  What next?  Hell, we’ve got to blame somebody!!  God forbid that we admit that we in the USA are responsile for our own actions!!  As a matter of fact, I only have three one-dollar bills in my wallet right now.  Let’s see......who can I blame this one today??? 

Bill, I will be back at work later, and I will go through the clothing sections to see how much clothing is purchased from Saudi Arabia.  I will report back, but I am pretty sure I won’t find much.  Pakistan maybe, but Saudi Arabia, I do not know....

Lastly for now, perhaps part of the problem with things coming from overseas is quality.  Heck, look at the auto industry.  Can any of the Big Three auto builders make a car that can compete, quality wise, with cars made in Japan, Germany, or Europe?  If all of you were given $50,000 that you HAD to spend on a car, how many of you would buy an American vehicle??  And, yes, I own a Chrysler 300M, a Ford Ranger, and a Chevrolet Suburban.

Michael
Go back in your stockroom and look at the boxes that say “Bangledesh.” For your informaton, that is in Saudia Arabia. You need to study your geography. Japan, Germany, and Europe does not condone Terrorism.  And yes, these countries do make top-quality vehicles that last.  Furthermore, the reason why you only have three dollars in your pocket is because your company is cheap and does not pay you anyhting.

Bill Sampson,

For your information, Bangladesh is a neighbor to India.  You need to study your geography.

Bill Sampson,

You wrote:  ‘Wal-Mart buys most all of their clothes from Saudia Arabia, And Pakistan.’

Please prove that Wal-Mart buys a significant portion of their clothes stock from Saudi Arabia.  I say you’re full of crap.

Sicko:

The results are in.  It’s a split decision.  The judges say you get 1 point for correctly identifying where Bangladesh is.  However you lose a point, because YOU’RE the one who’s “full of crap.”

Screwed,

Considering your habit is to try and pass off your ignorant opinion as fact, considering that you always refuse to properly address challenges issued to you which include cite and reference.....  The latter part of your latest response, as always, is without foundation.

anti-Wal-Mart hypocrisy and inconsistency in argument:

It’s ok for mom & pop to offer a job at $9/hr with minimal benefits.....

But it’s not ok for Wal-Mart to offer jobs at $9/hr with competitive benefits.......

Basis for argument?  Because Wal-Mart can ‘afford’ it.....

Ok, AWM’s....  I’m going to say that anyone with two TV’s in your house, you need to give one to someone who makes less money than you.  You can ‘afford’ to be without one TV.  As long as we’re at it, that second bathroom?  We’re going to mandate that you open that up to use by homeless people, since you’ve got an extra.......Oh, and that two car garage, one stall will be allocated for storage for whatever cause your neighborhood sees fit.  You will have to be satisfied with one stall. 

You Utopian minded anti-Wal-Mart folks need to review your socialist mindset.  As well intended as you think you might be, your narrow view is counter-productive.  How so?  Just watch how this Maryland legislation plays out, it will end up hurting many more people than it helps, all in the name of ‘fairness’ and ‘corporate citizen,’ naive concepts.......concepts developed with a total disregard and apparent disdain for individual responsibility.

Sicko:

I don’t respond to your “cut and paste opinions” with the source listed as: www.walmartfacts.com It’s that simple!

Bill Sampson, if you so choose, we can compare W-2’s for tax year 2005.  The real reason that I only have $3.00 in my wallet is that I am married!!! 

I am now off to study my geography.  Now, if only I could find the encyclopedia that has Bangladesh as part of Saudi Arabia....

By the way, I couldn’t find any clothes in my store that were made in Saudi Arabia....

MidwestRust...we often forget that any supplier of any goods in the world can always tell WM to pack sand.  No one at Wal-Mart forces any suppliers to buy their goods.  The suppliers choose to do so on their own accord.

Screwedby, when are you going to answer the questions I have repeatedly asked about the kind of car you drive and the kind of comuter you log on to this site with????  I have asked these simple questions of you at least three times.

SOS...keep on, brother.

Screwed wrote: 

I don’t respond to your “cut and paste opinions” with the source listed as: www.walmartfacts.com It’s that simple!

-------------------

Screwed,

Your cop-out is noted.  You have been shown time and again, neutral, third party sourcing as necessary.  Ignoring facts doesn’t make them go away.

SOS, we should continue to reference walmartfacts.com until someone else proves these facts as wrong…

Bill-
“Go back in your stockroom and look at the boxes that say “Bangledesh.” For your informaton, that is in Saudia Arabia. You need to study your geography. Japan, Germany, and Europe does not condone Terrorism.”
Thank you for the laugh, I was wrong you are not worthless. Please continue the humor!!!

Here’s my calculations....none of which come from walmartfacts.com....

2005 US Imports
$1,727,000,000,000 = $1.727 TRILLION
(www.cia.gov/cia/publications/factbook

CHINA 13.8% of US Imports = $238 BILLION
(same source)

Amount of merchandise imported in 2005 from China by Wal-Mart
$18 BILLION(ChinaDaily.com)

That amounts to:
7.563% of imports from China are for Wal-Mart
and…
1.04% of total US imports....

That also means that 98.96% of imports coming into the US have nothing to do with merchandise that Wal-Mart bought from China....

That also means that 92.437% of all imports from China are NOT for Wal-Mart.....

Therefore, I will take credit for only 7.563% of the bitching about Wal-Mart importing goods from China....

Screwedby....how’d I do with my sources? I knew that you would ask if i didn’t put them in there.....

Michael D:

OK...I give you an “A.” You did an impressive job of documenting and calculating.

However, (you knew there would be a however...didn’t you?) I think the 1.04% you list as WM’s percentage of total US imports is a little misleading.  Oil, Natural gas, and things of that nature account for a very significant portion of the total U.S. imports.

I would be curious to know how the numbers would look if you factored these things out and then did the percentage calculations.

Also...you say that WM is responsible for 7.563% of Chinese imports.  That means that EVERYONE else is responsible for the rest.  My question is… are there any other companies that import more more from China and other countries than Wal-Mart? In other words, how does Wal-Mart compare to other major retailers?

Based on my infinit wisdom, I would guess that WM imports more than any retailer because they SELL more than any retailer.

i want to a job in south korea.

Suppliers do in themselves in that they offer growing companies much cheaper wholesale prices than independents. As a result, this furthers the growth and helps the expansion of these companies. Eventually, these companies become big enough and turn away the very suppliers that helped them on the one hand, but screwed the independents on the other.  I am an independent, and this happens to me all the time. My competitors, many of them bigger than me, keep getting these price offers sometimes 20% lower than what I am offered.  On a per store basis, they don’t sell more than I do, simply they form buying groups - sort of like unions, and demand ever cheaper prices.  I absolutely love it when companies like Rubbermaid, who obviously fueled walmart growth at some point, get burned by the very practice that they themselves initiated.  The problem is that suppliers never learn. The next, bigger company that comes along and demands a lower price will get it and the whole cycle will start over again.  Suppliers would be better off having 1000 customers, each with 10 locations, as opposed to one huge customer with 10,000 locations.