Wal-Mart’s owls have returned to America, but the jobs haven’t
WAL-MART Stores has been good to America’s Great Horned Owl. Not the real bird – the plastic one.
As part of a much-hyped effort to bring factory jobs back to the United States, Wal-Mart persuaded tiny Dalen Products, of Knoxville, Tennessee, to shift production of the garden scarecrow back home from China. The only catch: not many jobs followed.
And that’s often been the story of Wal-Mart’s campaign. As the world’s biggest buyer of thousands of factory items, from hunting rifles to bicycles, it’s in as good a position as any company to influence US manufacturing – for better or worse: The retailer is widely blamed for sending hundreds of thousands of jobs overseas since the 1990s.
So when Wal-Mart announced in 2013 it would spend an extra US$ 250 billion over 10 years on domestically produced goods, it also estimated that the shift would create 250,000 manufacturing jobs. The return so far is a fraction of that – a cautionary tale for Donald Trump, the presidential candidate who’s made even bigger and bolder pledges to bring factory employment back to the US.
“If you bring back a plant you aren’t going to bring back 100 people or 200 people, you will want to automate it so it costs less,” said Gregory Daco, head of US macro- economics at Oxford Economics. “If you do that, there is really no direct benefit for potential employees.”
Something like that happened with the owls. Dalen made a fixed-headed version at its assembly line in Knoxville, but it shifted production of the swivel-headed owl to China in 1997. A previous effort to bring it back came to nothing because the company couldn’t find a way to do it without increasing the price, said Nancy Taylor, director of sales and marketing at Dalen.
Then, in mid-2013, Wal-Mart said it would buy more owls if Dalen could make them in the United States. With a bigger contract from the retailer, Dalen could negotiate a better deal for its raw materials. Add in the savings on shipping costs and the math was starting to make sense – with one rub: The cost of labour.
In China, Dalen had several dozen employees assembling and hand-painting the owls, and it couldn’t afford to do that in the US.
It was the Knoxville employees who came up with a solution for re- engineering the assembly line, Taylor says. One worker developed a new tool to make it easier to mount the head, and others came up with ways to speed up the attachment of eyes and beak (the only parts that still come from outside the US) As a result, Dalen is now making hundreds of thousands more owls with only a couple of additional employees, though Taylor points to other gains: many Dalen staff who used to have a four-month summer layoff now work yearround.
It was a similar story when Wal-Mart approached Precision Thermoplastic Components Inc. in Lima, Ohio.
The manufacturer was keen to join Wal-Mart’s initiative, but as its managers debated what could be made in America they focused on items that would make maximum use of existing machines and avoid hefty labour costs, according to executive Ashley Thompson. They ended up designing a range of mounted water-bottles for cyclists, and setting up a new unit called 50 Strong, headed by Thompson, to make them – but only a few jobs were created. —WP-Bloomberg