Reuters Insider - Walmart CEO: minimum wage hikes "do not solve the problem"

Second Chance Properties

29/01/2014 20:42

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 Source:             Thomson Reuters                                   
                                                                       
 Description:        Walmart CEO Bill Simon, in remarks to U.S. mayors 
                     in Washington, said the current debate over higher 
                     starting wages is "fine", but said the U.S. can't 
                     "spend our way to prosperity in America."         
 
 
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Transcript (May be auto-generated)

 Thank you so much for that very kind introduction. I've been out and about a lot
lately, speaking to pretty much anybody who will listen about the opportunity 
that exist in our country today, about creating opportunity at America. But I've
been really excited about this meeting because it's my chance to talk to the 
mayors. You, the mayors, the problem solvers in our country, the ones who 
educate our kids and build our cities and towns and this week, take care of 
their citizens through a very difficult and devastating snowstorm. As mayors, 
you are closest to the communities you serve and this is our opportunity to help
solve some of those problems. We still live in a country that's full of 
magnificent possibilities but we have challenges that we all have to face, 
challenges that we need to meet. And I'm quite sure we can all agree one of 
those challenges, as we've heard a lot about today, is the need for jobs. And I 
think we are at a pivotal moment in our nation's history. Coming out of a very 
devastating and difficult recession. The recovery has been choppy and uneven and
in spurts. There's been growth, but not nearly enough. And pressure on us as 
businesses, American businesses, there's been pressure on our customers, there's
been pressure on our economy and we've certainly felt it as a country. I made a 
great example, in the service industry we saw people take entry-level jobs 
because those were the only jobs that were available. And here years later, many
of them still find themselves in those jobs, wondering what's next. 

And I think that's why much of the discussion today has been around starting 
wages or entry-level wages and raising those wages. And that's is a very fine 
discussion. We should have that discussion in this country. But I don't think it
captures the whole point nor does it solve the whole problem. See, I think we 
would all agree that most people that are in minimum wage jobs took those jobs 
because they were looking for a future. They don't want to be in those jobs long
term. They want to see that those jobs as a pathway somewhere, an opportunity 
for them to grow, to create a better life for themselves and their families. 
It's not about where you start, it's about where and how far you can go. I think
the last decade has proved to us that neither can we cut our way to prosperity, 
nor can we spend our way to prosperity. In America, we have to grow our way to 
prosperity. If we can do that, we'll have a better life for our kids. And folks,
I think American business needs to lead that initiative and lead that growth, 
working for their cities and towns and states and federal government. But at 
Walmart, we're taking some action in investing in our communities, in investing 
in American jobs. Last January - exactly a year ago today - I challenged the 
audience at the National Retail Federation's conference to join us in a 
commitment to that opportunity - opportunities, we as business can create 
through our own jobs; opportunities that we can provide to those in need of 
jobs, including our veterans; and the incredible opportunity that we have at 
this time, at this moment - and you talked about it some this morning at 
breakfast - to create opportunity through the resurgence of manufacturing in the
United States. And today if I could, I'd like to update you on our progress, 
talk about next steps, and then how we can all work together. At Walmart, as the
mayor said, we serve 140 million customers a week. Your citizens and your towns 
and in your cities. And I'm extremely proud of the people who work for us that 
do those jobs. And these are good jobs. They paying the top path of our 
industry. And contrary to popular belief - and you have read this recently in 
the Examiner - we have benefits, good benefits- The mayor left- but we do offer 
paid sick leave as well to our full- and part-time people. In addition, 401(k) 
plan, a bonus opportunity and even discounts on merchandise. Maybe more so, over
the years, we as a company, have been focused on trying to recognize our people 
and provide them with opportunities. And if you work hard and move forward, 
there's no limit to your opportunity. 

75% of our management teams in our stores started as hourly associates. And each
year, 160,000 people receive promotions at our company, 40% of those go to 
people in their first year. I think that's opportunity. Last year we introduced 
ways for our people to better manage their careers and now we are ready to take 
their career development to the next step. We're offering more pathways, more 
defined pathways for them to success - expanding educational opportunities, 
training, and workforce development. We'll share more details in the coming 
months. 

Second, last year we promised to offer a job to any honorably discharged veteran
in his or her first 12 months off of active duty. Anyone. Thank you. We launched
on Memorial Day, and the commitment we anticipate at that time would result in 
us hiring about 100,000 veterans over five years. Well, I can't tell you how 
proud I am to tell you that in less than a year, we've already hired 30,000 
veterans. It's incredible. Veterans like Shaun Hope. Shaun served as a combat 
medic in Afghanistan. And he heard about our hiring commitment and got a job 
with us as an overnight stocker. Now, hardly his dream job. He started in 
August, but because of his hard work and his medical training in the military, 
within a month, he was promoted and became a pharmacy technician. And now - 
barely six months into his time with our company - he's in training to be an 
assistant manager and Shaun's future is very bright in retail management. Now 
that's opportunity. If you have any veterans in your cities or towns that are 
looking for work, you send them our way. We want to hire them. As a fellow 
veteran, I know these men and women have leadership skills and we want them on 
our team. Lastly - and I want to spend most of my time talking about this 
because it's a hot topic - as you discussed it this morning and it's an 
opportunity for us. An opportunity to help create jobs by expanding American 
manufacturing. Here's why we are doing this. America has been a service economy 
now for far too long. We can't keep this up. We need great cities like 
Pittsburg, making things and growing. We have to make things in America. It's 
part of who we are. 

It's in our DNA. I think we all identify with the things that have been made in 
our hometowns. I grew up in the Hartford, Connecticut area where we proudly make
Pratt & Whitney aircraft engines. We know that and it's a source of pride for 
us. And I guarantee that each and every one of you, and everybody know lives in 
your cities and towns, know what's made in those town - if you're from 
Milwaukee, it's Harley-Davidson; or Easton, Pennsylvania makes Crayola. Making 
things is not only a part of who we are; it is part of who we have to be as a 
country. And folks, I don't think we can afford to wait a minute longer. We 
can't wait to respond to this challenging time, can't wait for things to be 
perfect because the circumstances will never be perfect. But they're improving. 
Today, overseas, the middle class is growing. 

It's driving demand for consumer products that are made in those countries. And 
that's increasing labor costs abroad, making us more competitive. Meanwhile, 
energy costs in the US are relatively less expensive than all around the world- 
other parts of the world. Higher transportation costs in general are 
increasingly making it necessary and efficient to build things closer to the 
point of consumption - Asian production for Asian demand, American production 
for American demand. And America right now is where the innovations happen. The 
time is right for manufacturing resurgence here in the US. 

One analyst, quoted in the Wall Street Journal last month said, "Our favorite 
emerging market is middle America." At Wal-Mart, we believe that too. Just for 
the record, according to our suppliers- data from our suppliers, two-thirds of 
what we buy at Wal-Mart US is made, sourced, or grown here. Don't let this 
surprise you. I hope it doesn't. Remember, we run a very large grocery business.
But we're going to build on that. We're going to do even more. And last year, we
announced that we will buy an additional $50 billion more in American products. 
That's $50 billion more in American products, $50 billion more than we do today,
10 years from now. Let me put that into context for you – thank you - we 
estimate that that $50 billion pledge, by the time we get to the 10th year, will
result in us buying $250 billion, cumulatively, over the next 10 year period - 
$250 billion. 

According to the Boston Consulting Group, that investment of $250 billion will 
create a million jobs, a million jobs when you take those manufacturing jobs and
then the multiplier effect of suppliers and related services around those jobs. 
Let me tell you about a person because people matter. People are already 
benefitting from this investment. David is a father of four. He lives in 
Burlington, North Carolina. He had a job at a printing facility that shut down. 
And he and his wife were about to lose their home when in October he got a job 
with Kayser-Roth, a company that makes socks and legwear for us. They had a 
plant here in the US and in part because of our decision to purchase more US 
made socks, Scott got a job. And already his managers are talking to him about 
further opportunity. In his words- his quote is so great because it captures 
this whole idea, "What this job" for us he said "is opportunity. A chance to 
grow. And that is important." Folks, our suppliers are engaged; they really are.
And those who have taken the risk to expand manufacturing here in the US, they 
tell us that they are experiencing a very significant first-mover advantage in 
market-share and in momentum. And over the past year, we have seen that that 
math works and it works in very, very diverse categories from towels to shoes, 
to curtains, light bulbs, televisions, and toys. It's happening and it's 
happening now. Right now - and these are really interesting numbers – right 
now, 72% of our suppliers at Wal-Mart tell us that they believe that US 
manufacturing will be cost favorable for them within four years. Within four 
years, 72% of them believe they'll have a cost advantage here in the US to 
manufacture again. Now, it takes several years to build a plant. So time for 
action is today. And at this moment, back in our home offices and in the 
conference rooms all around the country, we have our merchants are in 
discussions with over 40 different merchandise categories and departments active
discussions with suppliers about manufacturing products right back here in the 
US. And in August, this past August, we saw how excited they were about it and 
we held a manufacturing summit. And we had nearly 1,500 manufacturers from all 
around the world attend along with representatives from 34 states. Let me tell 
you about one of the first movers. And I'm really pleased to announce today that
Kent Bicycles is bringing production from overseas to Clarendon, South Carolina.
When at full capacity, in 2016, they will make a half-a-million bicycles right 
here in America. And there is a first-mover advantage both for Kent and for the 
community where they've decided to establish because they're already in active 
discussions with many of their suppliers, people who make component parts for 
those bicycles to create a manufacturing hub right there on site. So if you 
move, there's a multiplier effect. Kent's owner, Arnold Kamler, has been 
passionate about making this work. And the economics are different; you have to 
do it end to end because the bikes are going to be made here in the US, the 
shipping costs are less and he can do more with the assembly on his end versus 
at the store in your homes after you both it. And that's clearly good news for 
us in retail. 

But it's really good news for moms and dads who have to put those things 
together in the dark on Christmas Eve, so everybody will benefit from that. But 
this is what's really amazing and exciting. And just think about it. Soon, your 
kids will be riding a bike that's made in America again. That's fantastic. Thank
you. We don't have to celebrate the past in manufacturing and wax nostalgic on 
it. We can create the future and the opportunity right now. And folks, it's very
important to us that we get this word out because we need momentum in 
manufacturing and suppliers, and so we're supporting that initiative with the 
advertising and social media campaign. And I brought an ad with me to show you 
to give you a sneak peek at it and it'll start running next month. If you 
wouldn't mind, folks, please run it now. At one time, I made things and I took 
pride in the things I made. 

And my belts whirled and my engines cranked. I opened my doors to all. And 
together we filled palettes and trucks. I was mighty. And then one day, the 
gears stopped turning. But I am still here, and I believe I will rise again. We 
will build things and build families and dreams. It's time to get back to what 
America does best, because work is a beautiful thing. 

Every time I see those ads as we've been working on them, it's emotional because
everything there was shot in a real factor with real people whose lives have 
been impacted by this resurgence in American manufacturing. And I can't tell you
how proud that makes us. So what's next? I think we've made some pretty progress
in the first year this initiative, but we have to be ready to meet the 
challenges that are on the horizon and they are substantial and significant 
challenges. For example, our suppliers tell us that some categories such as 
textiles or apparel are more difficult to bring back to the US for a lot of 
reasons and we need some innovation in that space. Also, they tell us that there
are crucial components that just aren't made in the US anymore and we have to 
solve for that problem as well. Finally, very high on their list that they need 
assistance from you- assistance in navigating local infrastructures, deciding 
where to site, understanding what the possibilities and the resources are. And 
so we're taking steps to help solve those challenges. Today, we're announcing 
the creation of a $10 million fund to support American manufacturing and 
renewal. Now, this fund will provide grants to innovators in the manufacturing 
sector over the next five years. If we want to grow manufacturing and help 
re-build America's middle class, we need the brightest minds in your 
universities, in our think tanks, and in your towns tackling this issue. They 
could come up with solutions to these problems and help move this forward. 
Wal-Mart and the Wal-Mart Foundation will fund the program and work in 
collaboration with the US Conference of Mayors to identify and award leaders in 
manufacturing innovation. This program seeks to create new processes, ideas, and
jobs that support America's growing manufacturing footprint. Those are great 
words to say. Let's work together to create opportunity. The program will launch
in March and I really look forward to working with you on this. Also, I'd like 
to invite you all to the Second US Manufacturing Summit that'll be held this 
August in Denver, Colorado. And you cities and towns- you may have some 
flourishing businesses but there may also be factories that aren't operating at 
full capacity and need some help. At our summit, one of the things we'll be 
doing is connect manufacturers, our suppliers who are in need of those component
parts to factories that I talked about with factories in your cities or towns 
that may have excess capacity. Please help us identify them and bring them to 
Denver and we'll help connect them with the opportunity to produce more. 
Together, we have an opportunity to re-purpose or help add production to some of
these factories. This will help rebuild that American supply chain that we 
desperately need to support this manufacturing initiative. Together, we can get 
this done. I know we can. And if you have any questions about it at all, you 
give us a call, we'll be happy to engage with you. I've been working with a lot 
leaders all across the country on this initiative. And I have to tell you the 
most successful are the ones that are personally involved and who believe that 
this as an imperative. And I find it pretty interesting as I was thinking about 
it that the most successful governors that I've been able to work with were 
former mayors. And that's why I've been so excited to be here at the US 
Conference to get things done. As you try to bring these businesses to your 
cities and towns, there's a couple of questions that you need to ask yourselves 
and be prepared to answer. First, can you provide the workforce, the training, 
the apprenticeships, the educational opportunities to build the town and the 
work- the employees that these new factories will need. Second, what's the 
business climate in your city? Are there good tax policies? And is your local 
team established and aggressively working with these manufacturers? It's turned 
into a bit of a competition I have to tell you. But just think the rewards are 
absolutely incredible. If you bring a factory to your city or town, it'll be 
there for a generation potentially. Generations- and that's a long, long-term 
win the ability to build a legacy for community. Thomas Edison famously said 
that "opportunity looks a lot like hard work." Well, it sure does and it sure 
is. This won't be easy, it's going to take all of us working together- industry,
government at every level with a level of trust that I think we're going to need
to build upon. If we do this though, we will remember this as the time that we 
came together to help our country. I believe nothing less than our future is at 
stake. This is not a Republican or Democrat issue. This is not even a Wal-Mart 
issue. This is an American issue. And it's one that we need to tackle and we 
need to move now. Let's bring the jobs back. Let's bring opportunity back. Let's
bring the pride back. I look forward to working with you all on this. Thank you 
very much