Why Walmart is So Important to U.S. Manufacturing
Americans are optimists and have always risen to challenges, and Reshoring is no exception.
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We have been invited to participate in the Walmart U.S. Manufacturing Summit in Bentonville, Arkansas this week. Walmart has taken the lead and has ignited the Reshoring movement in America by committing to spend $250 Billion for products Made in the USA over the next few years.
The annual Summit is an opportunity for suppliers and economic development folks to meet with the Walmart U.S. Manufacturing team.
Walmart estimates that 1 million new US jobs will be created through this initiative, including direct manufacturing job growth of approximately 250,000 and indirect job growth of 750,000 in the support and service sectors.
This alone is important for rebuilding the US economy, but because of Walmart’s size and influence, other retailers are likely to follow Walmart’s lead and establish initiatives of their own that will also result in more job creation in the US. And as we know, Retailers are the “Mothers of all Supply Chains.” These initiatives will affect manufacturers and their global supply chains.
Suppliers, subcontractors, 3PLs, warehousing and distribution companies will all be affected as more manufacturing is brought back to the U.S. and shipping and services patterns change. Some sectors are already feeling the squeeze. Take small motor manufacturers, for example. These small motors are in many consumer products such as lawn mowers, vacuums, hair dryers, and small appliances. Yet most of the small motor production was offshored to China in the early 2000s. Now manufacturers of products using these motors are scrambling to rebuild their supply base in America.
Motors aren’t the only thing in short supply in American manufacturing. Plastic injection molding, cut-and-sew equipment and other component parts cannot be found here. The skills to support all kinds of manufacturing were offshored too, and now skilled labor is in very high demand in America. So the Reshoring movement will drive the redevelopment of these industries and skills in America.
Americans are optimists and have always risen to challenges, and Reshoring is no exception. The federal government is supporting innovation through the bi-partisan Revitalize American Manufacturing Act of 2014 and the establishment of 45 Innovation Institutes, bringing together companies and universities to co-invest in advanced manufacturing technologies. And yet Walmart is the company that will make the difference because it is basing the need for innovation on the demand of its customers, and that is powerful. Based on Walmart’s research and surveys of its customers, Walmart found:
- “Made in USA” is a strong driver of purchase decisions – second only to price
- 85 percent of Moms said it is important for a retailer to sell “Made in the USA” products
- In general, products across all categories are perceived to have higher quality if U.S. Made
Walmart’s U.S. Manufacturing Innovation Fund is supporting R&D at universities across America through major funding grants. Walmart is acting as a catalyst and that is so important to rebuilding manufacturing in America. The evidence is clear. Companies are bringing manufacturing back to the US because consumers want products made here. Walmart is leading the charge with investment dollars and a commitment to buy American-made products.
We’ll see what they have to say at this year’s U.S. Manufacturing Summit in Bentonville.
About the AuthorRosemary Coates Ms. Coates is the Executive Director of the Reshoring Institute and the President of Blue Silk Consulting, a Global Supply Chain consulting firm. She is a best-selling author of: 42 Rules for Sourcing and Manufacturing in China and Legal Blacksmith - How to Avoid and Defend Supply Chain Disputes. Ms. Coates lives in Silicon Valley and has worked with over 80 clients worldwide. She is also an Expert Witness for legal cases involving global supply chain matters. She is passionate about Reshoring.
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