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Wal-Mart influence on its suppliers can be felt in the cheap products it sells and the jobs it drives overseas. To keep prices low, Wal-Mart must source goods from areas of the world where employment standards are severely lacking. In fact, over 80% of Wal-Mart’s suppliers are from China. According to Duke University Professor Gary Gerreffi, “Wal-Mart and China are a joint venture.” Quintessential American businesses like Huffy, Mr. Coffee, and Master Lock have suffered under the weight of Wal-Mart’s pressure. With increased sourcing from India, local suppliers will increasingly have to meet unrealistic prices and quotas to satisfy their demands. Massive Reliance on Imports. Buying American takes second place to the bottom line -- and foreign suppliers benefit: Abandons Buy American Program. In February 1985, Walton wrote 3,000 American manufacturers and wholesalers to announce that the chain wanted to buy more American goods. Walton said: "We cannot continue to be a solvent nation as long as we pursue this current accelerating direction. Our company is firmly committed to the philosophy by buying everything possible from suppliers who manufacture their products in the United States." Today, however, over 80 percent of Wal-Mart's 60,000 global suppliers are based in China. [Wal-Mart Press Release, 3/13/85; Wal-Mart Literature, 1994; PBS Frontline, 11/16/04] Wal-Mart is China's sixth largest export market. In 2006, Wal-Mart imported $27 billion of Chinese goods. Wal-Mart's imports are responsible for 11% of the growth of the total U.S. trade deficit with China between 2001 and 2006. [Time, 6/19/05; EPI Issue Brief #235, 6/27/07] Wal-Mart's imports from China cost American jobs. Wal-Mart's trade deficit with China alone eliminated nearly 200,000 U.S. jobs between 2001 and 2006. On average, 77 U.S. jobs were eliminated for each one of Wal-Mart's 4,022 U.S. stores in 2006. [EPI Issue Brief #235, 6/27/07] Importing Danger: How Wal-Mart's Massive Food Imports Endanger America's Food Suppy In the wake of several recent food recalls, this report examines Wal-Mart's massive dependence on foreign imports for everything from baby bibs to catfish. (PDF) Increasing Dependence on India. In March 2004, Business Line reported that Wal-Mart intends to outsource $11 billion in textile merchandise over the next few years. The company has planned to buy $1.5 billion dollars worth of goods from India in 2006, and has increased operations out of its Bangalore office -- which already employs 80 staffers focused on new outsourcing relationships. [Business Line, 3/26/05; Bloomberg News, 7/11/05; Women's Wear Daily, 3/13/06] More than 60,000 Suppliers in 70 Countries. A Wal-Mart website declares: "As the world's largest retailer, we're in thousands of communities around the USA and 15 other countries. We buy products from more than 60,000 suppliers in 70 countries." [http://walmartfacts.com/newsdesk/statement-speeches.aspx?CategoryID=290#a1822] Buys Local Elsewhere. During discussions about sourcing in other countries, Amy Wyatt of the store's international corporate affairs division said that 90 to 95 percent of products in Wal-Mart's stores outside the United States -- including stores in Argentina, Brazil, Canada, China, Germany, Japan, South Korea, Mexico, Puerto Rico and the United Kingdom -- are generally produced in the region. "In the United States, our local sourcing is not as high as 90 percent," she said. "The manufacturing just doesn't exist." [Tico (Costa Rica) Times, 3/17/06] Internal Report Exposes Wal-Mart's Lack Of Commitment To International Workers Rights. In a 2005 study, Wal-Mart audits its international factory inspection program and the results are not promising. Only 20 percent of inspections are unannounced and 89 percent of all inspections find medium to severe violations. With only 200 associates covering five regions around the globe, it appears workers will have to suffer under poor working conditions for years to come. [Wal-Mart's 2005 Report on Ethical Sourcing, 7/31/06] Hurting American Manufacturers. Wal-Mart works to keep the green flowing -- even if that means red ink for American suppliers: Ruining Rubbermaid. In 1994, Rubbermaid won accolades as the most admired company in the United States -- but five years later, its fortunes fell so hard that the company sold itself to a competitor. When the price of a key component of its products went up, Rubbermaid asked Wal-Mart for a modest price increase -- but Wal-Mart said no, and stopped sales of Rubbermaid products. At a Rubbermaid factory in Wooster, Ohio, that meant the loss of 1,000 jobs. [PBS Frontline, 11/23/04] Advises Supplier: 'Open a Factory in China.' To land a supply contract with Wal-Mart, the Lakewood Engineering and Manufacturing Company -- a Chicago fan manufacturer -- had to locate manufacturing operations in Shenzhen, China. Workers there make $.25 an hour -- while the company's Chicago workforce earned an average hourly $13. [Los Angeles Times, 11/23/03] Advises Mr. Coffee to Move Overseas. Mr. Coffee -- which won awards for moving manufacturing operations back to the United States -- faced pressure to shift production to China even at the height of Wal-Mart's 'Buy American' program. After Wal-Mart demanded a $1 reduction in the wholesale price of a brisk-selling four-cup coffeemaker in 1985, Mr. Coffee executives scouted for factory sites in China -- and executives say Wal-Mart encouraged offshore production even as it promoted its 'Made in the USA' campaign." [The Commercial Appeal, 6/8/01; Cleveland Plain Dealer, 11/14/04] Forces Huffy Bikes to Brake US Production. Despite decades of making bicycles in the United States, Huffy was forced by Wal-Mart price pressures to close three factories and lay off thousands of workers. The mayor of Celina, Ohio -- where Huffy closed a large factory -- said Wal-Mart's "demand for cheaper bicycles drove Huffy out of Celina." [Mansfield News Journal, 12/8/03] Minimal Social Responsibility. Suppliers pay subpar wages -- but Wal-Mart pays little mind: Norway Calls Wal-Mart's Human Rights Violations "Serious" and "Systematic." In 2006, Norway sold its 2.5 billion kroner ($415 million) worth of Wal-Mart, citing "serious" and "systematic" human rights violations in Wal-Mart's supply chain. Norway's federal pension fund - valued at almost $300 billion - is one of the world's largest. ["Norway Dumps Wal-Mart Stock," Aftenposten, 6/6/06; "Norway Backs its Ethics with Cash," New York Times, 5/4/07] Dropped from Socially Responsible Investing Index. In 2001, Wal-Mart was removed from the nation's largest "socially responsible" mutual fund, the Domini 400 Social Index, because of its human rights standards. The Domini Index is described as the "the first benchmark for stock funds to screen for social responsibility." Kyle Johnson, the project manager for the index, stated "Wal-Mart is a market leader in retail, yet has not taken a leadership position on labor issues and has been unresponsive to calls for change from shareholders." [Palm Beach Daily News, 6/12/05; International Shareholder, 4/17/01; The Los Angeles Times, 5/18/01] Wage Violations at Supplier Factories. According to Wal-Mart's own audit, "several serious violations are still found consistently at the factory level, including problems with payment of overtime compensation, coaching of workers for worker interviews, and the use of `double-books' to hide true numbers of hours worked or wages/benefits paid." [Wal-Mart Stores Inc. 2005 Ethical Sourcing Report] Neglects Product Safety. Low prices should not be offered at the expense of consumer safety. Children's Items Sold Exclusively at Wal-Mart Recalled for Lead. Wal-Mart is recalling "Faded Glory" lip gloss and jewelry. The lobster claw clasp on the bracelet contains high levels of lead, which is toxic if ingested and can cause adverse health effects. [Consumer Affairs, 7/10/08] Wal-Mart Bibs Contain Lead. Vinyl (PVC) Baby Bibs at Wal-Mart found contaminated with lead. Wal-Mart recalss a product it sold since 2004 with pressure from Illinois Attorney General Lisa Madigan. [Illinois Attorney General Press Release, 5/2/07] Tainted Pet Food Found in Wal-Mart Stores. The first discovery of hazardous pet food came at a Wal-Mart store. Produced by Menu Foods and containing the harmful chemical melamine, this food resulted in the death of many cats and dogs. Wal-Mart did not immediately pull the pet food from store shelves, and there were reports that Wal-Mart was restocking the contaminated pet food on store shelves at night. [The News and Observer, 4/11/07] Wal-Mart Sells Tainted Peanut Butter. Wal-Mart's Great Value brand of Peanut Butter is found to be contaminated with Salmonella. The Peanut Butter, which was produced by ConAgra foods, sickened hundreds of people - many of them children. [Consumer Affairs, 2/27/07] Supply Chain Fact Sheet Wal-Mart's Global Labor Violations Over the past few years, the retailer has accumulated a bevy of sweatshops to produce cheap goods at the cost of exploited labor. (PDF) Sweatshop Labor. The drive for low prices produces another result: neglected human dignity: Toys Built in South China Sweatshop. A China Labor Watch report detailed the mistreatment of workers in a factory making small toys for Wal-Mart. As of early December 2005, violations against workers at the Lungcheong factory were as follows: the systematic denial of maternity leave, work-related injuries leading to termination, illegally denying health insurance, mandatory overtime work, insane quotas and employing underage workers. [China Labor Watch, December 2005, China Labor Watch Source (PDF)] Factory Inspectors "Coach" Employees to Lie About Working Conditions. A June, 2007 report by Students and Scholars Against Corporate Misbehavior (SACOM) investigating Wal-Mart's auditing procedures of five Chinese toy factories in exporting cities Shenzhen and Zhuhai found that the factories were going to great lengths to conceal labor abuses, in order to continue their ruthless cost-cutting measures. The report noted, "managers conducted ‘training sessions' with workers on how to answer questions from Wal-Mart's auditors in preparation for pre-announced inspections. At these trainings, managers warned workers, ‘If you answer auditors' questions incorrectly, we get to lose orders and you get to lose your job.'" [Students and Scholars Against Corporate Misbehavior, June 2007] Exploiting Child Labor. In 2006, the National Labor Committee uncovered a factory in Bangladesh where an estimated 200 to 300 children were discovered sewing pants for Wal-Mart. They were routinely beaten, forced to work overtime, cheated out of their wages, given phony time cards and told to lie about their age. [National Labor Committee, 2006] Sweatshops for Kathie Lee Gifford Products. Charles Kernaghan, director of the New York-based National Labor Committee, testified before Congress in 1996 that Kathie Lee Gifford's clothing line was being produced in sweatshops around the globe. He reported that Global Fashion Plant in Choloma, Honduras -- a Wal-Mart vendor that produces clothing for the Kathie Lee apparel line -- employed pregnant women and children under harsh conditions and paid only 31 cents an hour. In 2000, The National Labor Committee reported that workers at Qin Shi Handbag factory in Zhongshan, China -- which made handbags for Kathie Lee Gifford's Wal-Mart line -- were forced to work 14-hour shifts, seven days a week for little or no money. [Arkansas-Democrat Gazette, 5/24/96; National Labor Committee, "Made in China: The Role of U.S. Companies in Denying Human and Worker Rights," 5/25/00] Exposed on NBC's Dateline. In 1992, NBC's Dateline reported that 11-year old workers from Bangladesh were making t-shirts for Wal-Mart. [New York Times, 12/24/92] Rock-Bottom Wages. Compared to Wal-Mart's United States workers, laborers for overseas suppliers earn pennies on the dollar: Low Pay Scales. The average full-time United States Wal-Mart employee earns $10.11 per hour. In Swaziland, a worker at a Wal-Mart subcontractor earns 53 cents per hour; in Indonesia, a worker at a Wal-Mart subcontractor earns 46 cents per hour; in Nicaragua, a worker at a Wal-Mart subcontractor earns 23 cents per hour; and in Bangladesh and China, workers at Wal-Mart subcontractors earn 17 cents per hour. [Institute for Policy Studies, "Wal-Mart's Pay Gap," 4/15/05] Missing Overtime Pay. In 2004, the International Labor Rights Fund (ILRF) documented violations of overtime pay rules at Wal-Mart garment supply factories in Nicaragua, Indonesia, Bangladesh and Swaziland. In September 2005, ILRF filed a class-action lawsuit on behalf of workers in China, Bangladesh, Nicaragua, Swaziland, and Indonesia. Workers in these countries complained of being "kicked and beaten, locked in factories, fired for supporting a union and not paid the minimum wage or overtime." [Institute for Policy Studies; New York Times, 9/16/05; Corporate Legal Times, 11/05] Chinese Workers Earning Too Little to Afford Wal-Mart. The influx of cheap labor from the Chinese countryside allows Wal-Mart to produce its goods at extremely low prices. The Pearl River Delta, home to some of China's newest and largest factories, is a breeding ground for poor working conditions, environmental destruction, and inadequate urban planning. With the help of the Chinese government, infrastructure improvements mean more and more workers will descend upon this area to toil away in horrible conditions. With wages around $100 dollars a month, most workers cannot even afford the products they produce. [BusinessWeek, 7/26/05; China Daily, 11/29/04; San Francisco Chronicle, 12/29/04] -------------------------------------------------------------------------------- What You Can Do Ready for Wal-Mart to revive its dedication to buying locally? Join thousands in signing the Handshake with Sam agreement and calling on Wal-Mart to work better with local suppliers Tell friends and family about Wal-Mart's old pledge to have vital relationships with American suppliers -- and explain how today's company falls short Write a letter to the editor of your local newspaper, demanding country of origin labeling on Wal-Mart products FORWARD THIS TO A FRIEND Your Email: Your Name: To: (separate multiple emails with a comma) Subject: Message: I thought you might enjoy this story from Wal-Mart Watch, a group who is starting to expose Wal-Mart for their bad labor standards, political corruptness and overall bad citizenship. It's getting a lot of attention in the press. Take a look. http://walmartwatch.com/home/pages/5521 Supplier Relations Wal-Mart Watch International ActionChina Labor WatchThe National Labor CommitteeUnited Students Against SweatshopsPBS Frontline - Is Wal-Mart Good For America?Wal-Mart's 2005 Ethical Sourcing ReportClean ClothesSEARCH WAL-MART WATCH Enter your search terms below: MAKE A DIFFERENCE WMT STOCK QUOTE 60.71 +0.59 Last Updated: 9/26/2008, 4:02pm Detailed Stock Information
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