Special
report on 'Is Wal-Mart Good for America?' on PBS Frontline,
Nov. 16, 2004
(For
a summary and access to a paid transcript of MSNBC's Nov. 10,
2004 , Wal-Mart documentary that won a George Foster Peabody Award,
click
here.)
By
Alan Lowhorn, fall 2004 graduate assistant, Institute
for Rural Journalism and Community Issues
The story behind Wal-Mart’s unprecedented
growth and power is no mere tale of numbers, but the numbers begin
to tell the tale:
—More than 5,000 stores worldwide
—100 million shoppers per week in the U.S. alone
—$256 billion in sales in 2003
These numbers portray a wildly successful company that has grown
from humble roots as a single store in Bentonville, Ark., to become
the most powerful retailer in the global economy.
In fact, as Nelson Lichtenstein from the University of
California Santa Barbara argues in a recent episode of
the PBS series "Frontline," Wal-Mart
has set a standard for business in the twenty-first century, in
much the same way that U.S. Steel and General Motors epitomized
the twentieth-century corporation. The Frontline episode examines
the origins of Wal-Mart and its worldwide influence while investigating
its title question: “Is Wal-Mart Good for America?”
According to traditional retail distribution models, manufacturers
set the terms of sale for their products — prices, schedules,
quantities, and displays — while retailers accepted these
dictates and managed their inventories as best as possible. Wal-Mart
alone changed this dynamic away from the old “push”
system and toward a “pull” system in which the retailer
tells the manufacturer what to produce and how much.
The “pull” has even lured major multinational manufacturers,
such as Hoover, Kodak, Timex and Kraft, to set up offices in Bentonville,
near the international headquarters of Wal-Mart. As portrayed
on Frontline, Wal-Mart buyers, armed with an overwhelming array
of inventory histories and sales tracking data, tell the representatives
of these and other corporations how many watches or boxes of macaroni
they will buy. The ambassadors from “Vendorville,”
as the rows of corporate offices next to Wal-Mart headquarters
have come to be known, have little room to negotiate. Because
of its inventory system’s unmatched efficiency and accuracy,
Wal-Mart knows exactly what to buy and exactly how much to pay
for it.
Wal-Mart’s vice president for government relations, Bob
McAdam, deems this way of doing business his company’s “motivation”
and its “challenge” to maintain costs “as low
as possible, so that we can provide the customer a value and still
make a reasonable profit for our company.” Shoppers interviewed
during the Frontline special agree with McAdam’s assessment,
offering such praise as “I know I don’t have to look
and see where I can save the most money,” and “Good
prices, good quality of stuff.”
Others are quick to disagree. Alan Tonelson from the U.S.
Business & Industry Council argues, “The lowest
prices have to lead to the lowest wages and to job loss and to
lower living standards.”
The residents of tiny Wooster, Ohio, also felt negative, if indirect,
effects of Wal-Mart’s global reach. Wooster was for decades
the home of Rubbermaid, a household name in storage and trash
containers. In the early 1990s, Rubbermaid changed its business
strategy to reflect the shifting nature of retail sales. It began
selling two thirds of its volume to a half-dozen of America’s
leading giant retailers. When an increase in its raw material
costs forced Rubbermaid to implement a universal retail price
hike, Wal-Mart refused the change and dropped most of its Rubbermaid
orders. Rubbermaid, never to regain its former strength, sold
out to a competitor and closed its Wooster factory once and for
all in 2002, eliminating 1,000 jobs from the rural Ohio town.
“Is Wal-Mart Good for America?” also focuses on the
nation that, though replacing towns like Wooster as the favored
supplier of manufactured goods for multinational retail giants,
has expanded at a rate that parallels Wal-Mart’s astronomical
growth. In China, the city of Shinzen has grown from a state of
non-existence to a population of seven million since the 1980s.
The city’s port has become the world’s fourth largest
since it was constructed a decade ago. Fully 80 percent of Wal-Mart’s
6,000 global suppliers are based in China. Again, the numbers
fail to relate the full story, but they begin to tell the tale.
Duke University’s Gary Gereffi characterizes
the relationship between the nation-state of China and the Wal-Mart
corporation as a “joint venture.” Each partner in
this venture seeks to claim as large a segment of the U.S. economy
as possible, with Wal-Mart on the retail side and China on the
manufacturing side. Although portrayed as the key to opening up
Chinese markets for goods manufactured in America, the move by
Congress and the Clinton administration to normalize trade relations
with China has actually accomplished the opposite, to the tune
of a $124 billion trade deficit in 2003.
Frontline puts the spotlight on another Ohio town, Circleville,
to discuss the further effects of these shifting economic tides.
Circleville, like Wooster, also lost over 1,000 jobs when a long-time
corporate resident closed its doors. Thomson Electronics’
plant supplied televisions to brand-name companies such as Sanyo
to be sold in retail outlets worldwide. Ron Wunsch, former mayor
of Circleville, depicts this golden age for his town as an era
of “good jobs, good living standards, and good people in
the community.”
The good times would not last. According to Randy Strutz, former
manager of the factory, when Wal-Mart cancelled Sanyo orders because
of lower-priced options available from China, Sanyo cancelled
its orders from the Circleville plant in turn. The hit proved
too much for Thomson to absorb, and the company closed its Circleville
location in 2002. In an act of final bitter irony, Wal-Mart recently
announced plans to open a SuperCenter in Circleville within sight
distance of the abandoned shell of the old Thomson plant.
UCSB’s Nelson Lichtenstein borrows a term from Austrian
economist Joseph Schumpeter in describing this effect: “creative
destruction.” Wal-Mart’s newest outlet will create
jobs for Circleville residents, including former Thomson factory
employees who may now find work in the new superstore on the outskirts
of town, ironically next to the shuttered plant. However, according
to several analysts interviewed on Frontline, these new opportunities
will not live up to the old manufacturing jobs in terms of wages
or benefits. As Lichtenstein puts it, “Wal-Mart has…discovered,
with this low-wage model…a sort of new model of world capitalism,
really, beginning in America and the rest of the world. And it
is destroying, creatively, but nevertheless destroying competitors
and, really, other ways of thinking about the way the world works.”
Bob McAdam, the Wal-Mart vice president, says his company is
good for America: “We are raising the standard of living
through lowering the cost of goods for people.”
Larry Mishel of the liberal Economic Policy Institute
disagrees: “Well, if people were only consumers buying things,
lower prices would be just good. But people also are workers who
need to earn a decent standard of living. And the dynamics that
create lower prices at Wal-Mart and other places are also undercutting
the ability of many, many workers to earn decent wages and benefits
and have a stable life.”
The residents of Circleville and Wooster may shop at Wal-Mart
when the giant retailer comes to their respective towns. Those
Ohioans who lost their good-paying jobs with solid benefits, due
at least partly to Wal-Mart’s influence on the global economy,
might answer emphatically that Wal-Mart’s effects on their
families, communities, and nation cannot be excused with any “Always
Low Prices” mantras.
According to Steve Ratcliff, a Circleville resident and former
Thomson employee, the motto “Always Low Prices” and
the philosophy underlying it might allow Wal-Mart customers to
find great deals on toilet paper and radios, but they also undermine
communities like his across the country. The Frontline special
concludes with Ratcliff’s final indictment of Wal-Mart’s
“Always Low Prices” approach: “It’s putting
people out of work, that’s what it’s doing. And it’s
lowering our standard of living. That’s the bottom line.”
