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A Foreign Supply Chain Threat Opening on Walmart Labor Protests?

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It’s too early to tell how effective the Black Friday against Walmart’s low pay and abusive working conditions were. The early reports from management and the organizers are wildly at odds with each other.

However, a new front may open up in the Walmart disputes: that of disruption to its international shipments. It’s too early to tell if this is serious or merely sympathetic window dressing, but the four and a half million strong International Transport Workers’ Federation had cleared its throat. From the Guardian:

Now the International Transport Workers’ Federation (ITF) has written to shipping owners and ship captains who carry Walmart goods and asked them to contact the gigantic global company and express support for the protesting workers. “Walmart workers taking industrial action know that their jobs are at risk. The least we can do to help is use our expertise at sea and relations with the shipping industry to back them in any way we can.”

ITF acting general secretary Steve Cotton told the Guardian: “We’re talking to captains and the ship operators moving Walmart goods, and asking them to register their concerns with the company about its treatment of staff – and the impact that could have on trade.”

As readers no doubt know, Walmart’s business model depends on being able to import cheap goods from overseas. It also uses the “just in time” inventory practices first developed by Japanese automakers, so it does not typically carry large inventory buffers. If international transport workers were to start interfering with or delaying Walmart shipments, it could prove to be disruptive.

The flip side is that the ITF hasn’t taken any serious action yet, nor is it certain that it will. Its polite request of captains and ship owners to lodge concerns isn’t a real protest; indeed, it serves as a low cost way to both make a bit of noise and canvass as to how much sympathy for the Walmart workers there is in the shipping industry ex the union members themselves. In other words, they may also be probing to find out how many chips they’d spend if they were to move into selective action (as in the union as a next step might target a few shipments just to demonstrate they could do real damage, and they could do that at little real cost to themselves if they were to find an ideologically aligned ship owner).

Guardian took note of Walmart’s defensive-looking reactions:

But the protests do appear to have rattled the firm. Walmart has filed a complaint with the labor board asserting that OUR Walmart’s protests violate federal law that prevents 30 days of picketing when a union is seeking recognition. Walmart says the protests fit that description and are actually sponsored by the United Food and Commercial Workers International Union. It has sought an injunction to prohibit the protests. Both OUR Walmart and the UFCW deny those allegations and say that they are not seeking union recognition.

Again, Walmart tends to be aggressive legally, so it isn’t clear that this is anything other than standard operating procedure. But Walmart’s business model is so dependent on super cheap wages that it isn’t clear how far it could go in accommodating workers even if it were to get religion. It would have to radically rethink how it operates, it is unlikely to do so under anything than extreme duress.

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40 comments

  1. bmeisen

    Walmart didn’t leave Germany because of labor costs alone – Aldi and other German discounters also use a low-wage model. Workers for German discounters may be more expensive than American ones and if so that would be because of slightly higher cost of living as well as parental and sick leave laws. Walmart probably negotiates hard with HMO partners. Still I bet that healthcare related costs are lower in Germany – people with truly comprehensive health insurance come back to work.

    Walmart left Germany I believe because of real estate prices and a cultural disconnect. They couldn’t site enough big boxes with 50-acre parking lots and Germans don’t buy gallon jars of pickles. They want to pay the lowest price and they want to pay it for a jar that will fit into their tiny cupboard.

    Industrial action is the way to go, as well as for everyone to stop shopping at Walmart.

      1. psychohistorian

        Walmart hires dicks as store managers just like the global inherited rich hire dicks to run the Fed, their banks and the “elected” officials of many countries.

        The global inherited rich and their dicks have been around a lot longer than Walmart and their’s.

  2. Antifa

    Wal-Mart puts every municipality, county, state and the Federal government itself under extreme and ongoing duress by foisting a huge chunk of its workers food and medical expenses off on them.

    Food stamps, increased homelessness and unemployment, loss of other local small businesses from the tax rolls, emergency rooms as the only available medical care for most Wal-Mart associates, Medicaid and local food banks, hungry children going to school too distracted to learn . . .

    If Wal-Mart were sent a bill for all this on the first of every month by local and state and Federal agencies currently footing these expenses (by taxing the rest of us), there would be some decent changes at their chain stores.

    The smartest thing Wal-Mart could do is hire private doctors to look after the wellness of their employees for free. Preventing disease is a thousand times cheaper than waiting until they fall over to treat people.

    They might as well go all the way and provide 24-hour cafeterias for their associates and their children as well, and build them one-room shacks out back for their families while they’re at it.

    And pay them in Wal-Mart money, good only at the company store. Tht’s the full ‘company store’ employment model. Why stop half way there?

    1. Sharon

      Costco pays middleclass wages and a high percentage of their employees (92%) have benefits and their labor cost is lower than Walmart’s which makes Walmart’s policy of low wages about impoverishing workers not about their cost.

      http://www.d.umn.edu/~epeters5/Cst1201/Articles/The%20Costco%20Challenge.htm

      I worked in the telecom/cable/satellite business for years and looked at labor costs and these companies don’t have a clue. These industries in particular are dependent on the middleclass for their revenue. Indeed over 90% of their revenue is coming from middleclass Americans and when Americans lose their jobs or their wages are decreased guess which companies see their revenues tumble first? Yes, these industries. So why are they outsourcing and lowering wages and benefits? They don’t even know they are cutting off their noses to spite their face. The executives have bought into the past 30 years of the idiotic drum beat of the right-wing spin machine. I think it is we that should be ashamed. Why did it take us 30 years to challenge this propaganda? And why did we go along with it for so long.

      We really have to make it about them before we can change the Walmarts of the world although I think Walmart needs pressure now until we reel in their power and force them to change their Scrooge like worship. It’s a cult for Pete’s sake. So my point is that we have to start with the three industries mentioned above while we force the other ones to follow the leader. We have to change the conversation and make them see the error of their ways and get them to take the Costco v. the Walmart approach to revenue and profit growth. Walmart has a choice, the three industries telecom/cable/satellite they don’t; their revenues and profits are going to continue to decline if they don’t get on board and start acting like good corporate citizens. The one thing that has been absent in the discussion is the fact that we are all in this together and those companies that are being screwed by the banks and the Walmarts need to get on board with the good guys or else.

  3. The Dork of Cork.

    Aldi has destroyed almost all of the Irish market town steets now.
    The only thing that can stop them is real printing by domestic sov governments.
    The Central bankers are the great enablers of this pointless cross border trade that destroys all rational internal commerce.
    For whatever sick reason they want to split open societies and suck the very marrow from their bones.

    Great piece in the Irish ( Cork) examiner
    http://www.irishexaminer.com/lifestyle/features/humaninterest/when-a-town-shuts-up-shop-213167.html#.UJuWmZqteMg.twitter

    Those cheap German supermarkets Aldi and lidl have spread like a pox in this country – closing down the market towns main high streets.

    A devaluation would knock their business model for six as they require cheap energy inputs and a static or declining money / wage supply.
    http://www.lidl.ie/

    1. Jim Tarrant

      My paternal grandfather came from Cork to the US (under duress – 1916). I first visited it in 1974 (it was depressed and poor) and then again later in 1988 (it was prosperous and refurbished) – a great example of how resilient the Irish are as a people.

  4. The Dork of Cork.

    Europe cannot adjust now , it simply has not enough medium of exchange within each former nation state.

    Its the ultimate market state / corporate state nightmare.

    Ireland is becoming a island Warsaw getto with however tonnes of chocolate and no bread.
    Today in Cork there was major traffic jams as people burned / exported fuel and spent very little on internal goods.

    Why do they want to neutron bomb economies ?

    What is their ultimate objective ?
    http://www.bbc.co.uk/news/uk-politics-18519395

  5. Lambert Strether

    So, if a job at Walmart that we have to supplement their Walmart wages with welfare so workers don’t have to sleep in the woods between shifts — it happens! — who’s creating the jobs, anyhow?

  6. Cynndara

    Looks like Wal-Mart’s model could be hit hard by a wide-range dock-worker’s strike such as have become common at the Port of Oakland.

    Whatever the current situation, they are on their way down. Young folks might not realize this, but there’s a cycle in discount retail that I’ve observed since childhood. These mega-stores blossom up like mushrooms during temporarily favorable conditions. But the growth cycle is supported by investment money and leverage, not actual sales profits. When they stop building new stores and opening in new territories, they begin to wither and die. See Kresge’s, Murphy’s, McCrory’s, Rose’s, Zaire’s and K-Mart, just barely hanging on for the last decade.

    Wal-Mart has reached this point already. They’ve pulled out of both Germany and China. They’ve built into every small town in the U.S. and have saturated the urban markets. They can’t move into Canada because union-busting isn’t permitted there. And having recently returned after a decade to an area where I lived when the first Wal-Mart stores went in, I notice that these stores are now dirty, crowded, and poorly-stocked where they used to be clean and full of merchandise.

    Wal-Mart has never succeeded in attracting the kind of upscale customers who have a lot of money to spend. THOSE people use their money to go elsewhere. So Wal-Mart has been forced to move ever-lower in the food-chain, essentially cannibalizing their own low-wage workers. But the poor are poor by definition and stingy by necessity. They can only support the Walton heirs for so long, and they can’t constantly increase that support when their own wages continue to decline.

    Wal-Mart’s on the way down. Within five years, year-over-year same-store profits will be in steady decline, and the investors will begin pulling their money. Then the balloon will burst. The Waltons, of course, will remain filthy rich. But I would start unloading the stock this January if I had any.

    1. ambrit

      I work at a DIY Boxxstore that is now implementing the WM “race to the bottom” strategy. The ‘regular’ customers are noticing the change already. More and more of the merchandise is now obviously cheap junk, and overpriced to boot. The latest rumour in the back room is that the MODs, the second tier store managers, are to be stripped of much of their year end bonus going forward. The cannibalism is ‘starting to bite’ as it were. Several of these second tier managers are leaving our store for greener pastures. If I were a cynic, I’d say that the top management is trying to inflate the stock price short term. I wonder why.

      1. Clive

        You’re not alone ambrit

        Short-termism in all it’s various forms is probably the biggest single cause of the global malaise. I don’t call it a depression (although for a good many, economically that’s exactly what it is) but a malaise because everyone knows what the problem is, just no-one is (yet) sufficiently motivated to really tackle it on anything other than an individual of small group (e.g. Occupy) level.

        I’ve bought more seemingly cheap (actually, sometimes it’s not really been *that* cheap) cr@p from many different retailers including Wal-Mart’s Trojan Horse operation here in England in the past year than at any other time I can remember. Yesterday, literally it was only yesterday, I found out why I’d been getting wet feet while wearing a $75 pair of shoes I purchased from a stalwart of (squeezed) middle-England called Marks and Spencer less than 6 months ago. The soles on both shoes had split. They were hardly worn intensively. Examining the offending articles more closely, the abysmal quality (which hadn’t looked so bad in the store) was obvious. My partner’s $40 Wal-Mart shoes are similarly short-lived. As you say, it’s a race to the bottom and once one player starts, everyone has to react.

        Thinking about where my next shows are coming from, considering all the retailers I know in the mass market, I wouldn’t now trust any of them not to sell similar borderline-rubbish at mid range prices or actual-rubbish at bargain basement prices. The retail environment seems therefore to be stratifying: I might as well pay $30 for really awful shoes and be prepared to throw them away after 6 months (and what a terrible waste of resources that model is and I’d be shocked, just shocked if I found out later that exploitative labour practices up to and including forced and child labour might have been involved in their production) or stump up $200-300 for bespoke which should last five years plus.

        Gosh, I’m just when did we end up with a 99% / 1% market split with nothing in between ?

        1. ambrit

          Clive;
          The stratification extremes are just now coming out from under the rocks they hid under here in the West. Here “Way Down South” that phenomenon was supposedly restricted to N—–s and W—e T—h. As long as it was happening to “those folks, you know, them,” the ‘middle class’ could look the other way and congratulate themselves for being “in that number.” Alas and alack, we’ve found out that we were being played for fools. As I found out many years ago, to my everlasting dismay, the really rich, especially the inherited wealth scions, view the rest of us as slightly questionable characters, at best. So, it’s no wonder the economy begins to reflect an elitist world view. Precisely such people are making the decisions at the top of the economic food pyramid.
          It’s no wonder some wag, at the surrender ceremonies at Yorktown, had the band play “The World Turned Upside Down” as His Majesties forces paraded into ignomy.
          Well, time to get off to work. Early shift for this wage slave, er, ‘enthusiastic supporter of the status quo.’

    2. mack

      You must have missed the news of Walmart’s huge plan to expand on their India operations and stores. Take a guess at India’s (poor) population. Just like tobacco moved major markets to Asia after becoming public enemies in the US, so too will Walmart move major operations into foreign markets. This is why everything is being pushed toward globalization.

    3. JEHR

      You may not be correct in your analysis of Wal-Mart in Canada. I live in a small city (population 57,000) in a small province and we have two, TWO Wal-Marts! One store in Quebec closed because of the employees threatening to form a union. They have busted other unions by getting rid of the troublemakers. Canada is slowly turning its back on unions now.

      1. LucyLulu

        Traditionally, or originally, Walmart in the US limited themselves to locating in small towns and avoided urban areas. Old Sam felt urban real estate and wages were too high for his business model. It was only after Walmart became so popular they decided to infiltrate the urban market. Perhaps you are seeing the first stage of infection with Walmartitis in Canada. Once they get their feet wet and figure out how to play the Canadian system they’ll spread to the larger cities.

        I hate Walmart. Here in the South service is incredible, people are very helpful everywhere you go. Except at Walmart where self-sufficiency rules the day. Last time I was there, I was told they had nobody available to get something for me. I counted six people standing, doing nothing within 30 ft. The way they treat their employees is transferred onto the way their workers treat customers.

    4. Link777

      Cynndara, that is a great point. I live in Seattle and most of the population is quite Walmart averse, politically and culturally. In addition, the cost of living here is stratospheric: food, shelter, utilities, transportation, taxes and most importantly for Walmart, land costs and availability. Seattle real estate has become so dense lately that “infill vultures” are building homes in back yards (infuriating neighbors!)

      For the past 15 years, the local Establishment has relentlessly hounded low and moderate income workers out into the city’s margins (with some even commuting over mountain passes in search of affordable housing). Walmart has erected superstore forts in those far suburbs, with an apparent strategy of laying siege to the pricey chain stores and mega-cooperatives that dominate the city and inner suburbs. A particular thorn in their side is the local market sway of Costco. Costco is local, well regarded, pay their staff very well and are quite profitable.

      I hope the local stores can hold out until Walmart goes into it’s eventual decline. After all, I remember when Zaire’s had full parking lots every day….

      1. different clue

        If . . . Walmart shoppers have a CostCo within reach, and if . . . CostCo charges about the same for things as Walmart, then why do Walmart shoppers not shift over to CostCo?

        1. Link777

          Costco is a membership based warehouse club. Walmart is open to all. Walmart has Sam’s Club, which is structured like Costco, but it does a fraction of Costco’s business locally.

          One reason is the shopping experience at Costco is pretty lively. There are lots of samples to try, people who can help you (still far from full service) and all of the check out stations are staffed and efficient. Walmart and Sam’s Club are pale imitations of Costco.

          Yet, Costco is far from perfect. They fall down in certain ways, too.

  7. diptherio

    Another aspect of Walmart’s unscrupulous practices, that goes mostly unmentioned, is their abuse of their monopsonistic position with regards to suppliers.

    I read an article in Fast Business magazine a number of years ago about how Walmart’s standard contract negotiation tactics are (or at least were) to demand lower prices from their suppliers with every contract renewal. Because Walmart often accounts for a very large percentage of the orders from any given supplier or manufacturer, they are not in a good position to resist. The result of losing the Walmart contract would be too devestating.

    The result is that companies like Vlasic and Rubbermaid (two I remember from the article) have had to increase prices to other retailers in order to make up for the reduced price that Walmart demands.

    The take-away from the article was that business owners should think twice before signing a contract with Wallyworld. It might seem like a great growth opportunity at first, but eventually they will put the squeeze on.

    Another commenter mentioned gallon jars of pickles. Vlasic first made those as strictly promotional advertising items, but then some Walmart exec saw one and asked (demanded) that Vlasic provide a whole bunch to Walmart (at a crazy low price, of course) so that they could stack impressive mountains of gigantic pickle jars in the entryways to their stores, in what Walmart apparently refers to as “abundance of abundance” displays. Vlasic had to struggle to provide the ridiculous numbers of these over-sized jars that Walmart wanted, and then, after the novelty had worn off, no one wanted to buy them, since it’s pretty much impossible to eat a gallon of pickles before they go bad.

    1. Antifa

      That pickle example seems to be the very business model of the Walton’s national chain of Sam’s Club stores:

      1. charge for membership and Premium membership
      2. force low prices from suppliers
      3. sell in bulk only (big boxes, packages, pallets)
      4. self check-out for most customers
      5. drop-ship to local stores for online orders
      6. captured clientele hooked on bargain basement prices

      1. different clue

        I wonder how many of those cheapest-price seekers got hooked on lowest prices when they all boycotted their higher-priced higher-jobdoer-value smaller regional stores into extinction and left WalMart the only store in town? Or in the whole county?

        And how many of them became WalMart poor when they boycotted so many other stores into extinction that they boycotted their own jobs into extinction making stuff for the other stores? Leaving them with nothing but a WalMart wage if any wage at all, which would sure hook them on a WalMart price.

    2. Yves Smith Post author

      An attorney friend who did a lot of business with small manufacturers (skin care and cosmetics) would do everything in her power to tell them not to take orders from Walmart. They’d place large orders so as to become the most important customer, then wring them dry, not caring if they drove them out of business or not.

      1. different clue

        Were the small manufacturers wise enough to avoid WalMart?
        Or did they just have to find out for themselves the hard way?

      2. diptherio

        And, so far as I know anyway, we don’t have any anti-monopsony laws on the books. Not that our anti-monopoly laws are doing a lot of good (e.g. Exxon-Mobil=Standard Oil), but at least people are generally aware of the problems of monopoly. Most people don’t even know what monopsony is, yet it can obviously be just as damaging to the economy as monopoly power.

  8. NOYB NOYB

    Salmonella contamination, pink slime, and now Thanksgiving? Can’t do much to change their behavior, but have already advised HQ that “we’re done”. It’s hard to find alternatives, but we’re doing it.

  9. mack

    I say we find out where the tractor-trailers pick up the merchandise coming from overseas and we all lay down in the access road in front of the trucks. If the ship captains can’t delay shipments, human road obstacles can sure delay delivery to stores.

    1. scraping_by

      It’s not much tractor trailers. Port of Los Angles/Long Beach, onto rail cars, east across Arizona, New Mexico, and Texas.

      Port of Oakland for Japanese manufacture and excess from LA/LB. Korea, also.

      Seattle and Portland for Japan, mostly cars. Korea small goods, some cars.

      Airports all along the West Coast for electronics and other high value goods. Some talk of using Baja, Mexico, but there’s no infrastructure.

  10. different clue

    I believe I have read that CostCo, the “other white meat” err . . . the “other big box” . . . pays and treats its workforce much better than Walmart does. I even remember hearing that Wall Street Analysts tried to extort CostCo management into lowering pay and worsening conditions by veiled threats to down-analyze the value of CostCo stock.

    If that is true, perhaps the extermination of WalMart from existence and its enwipement from the face of the earth, at least in America, might clear space for CostCo to take over that market and all those spaces, and rehire those workers for more and better?

    1. different clue

      And maybe even space for the whole gamut of higher price higher wage better conditions higher jobdoer value mid to small stores to come back into existence?

      1. psychohistorian

        I think you might be forgetting the impact of the internet on consumer shopping and its impact on local/regional shopping.

        I hope that consumption for consumption’s sake dies a permanent death and we figure out how to support everyone other than as slaves for the global inherited rich and their ideas on how society should run.

        1. different clue

          You have a point there. Since I don’t buy online, I am ignorant as to online buying’s impact.

          Production for consumption for use will continue, as it should. People will continue to eat (consume) food to avoid starvation, for example.

    2. diptherio

      It’s true. Costco does actually pay it’s employees a decent wage and offers pretty good benefits too. On the whole, not a bad place to work, so I’m told. Costco also has, from what I could tell, the cheapest, simplest credit card processing service for small businesses. I helped the small Japanese Restaurant I work for switch over to Costco’s Elevon service and it seemed pretty decent (didn’t find a bunch of hidden fees buried in the fine print, unlike most CC processing contracts). All that said, if Costco were to take over from Walmart as unstoppable retail behemoth, we would probably still see monopsonistic and monopolistic abuses from them. The rewards to such behavior are just too big to ignore, even if you are an “ethical” corporation.

      1. different clue

        Would CostCo really be worse? Or even as bad? Maybe not. The experiment deserves to be run.

        WalMart may well be manifesting the voluntary-evil anti-values of its founding family. CostCo may well manifest the different values of its different founders, even if it grows to many times its current size.

  11. Timothy Gawne

    Lenin said that “The Capitalists will sell us the rope with which we will hang them.”

    Lenin was not cynical enough. The Capitalists will buy the rope themselves, if only they can get it at 20% off.

  12. skippy

    India Unit of Wal-Mart Suspends Employees

    This month, Wal-Mart disclosed that it had expanded a bribery investigation that was initially focused on Mexico to India, China and Brazil. In April, The New York Times reported that executives at the company’s Arkansas headquarters had suppressed an internal investigation that found credible evidence that its Mexican subsidiary had paid bribes in an effort to open more stores in that country.

    http://www.nytimes.com/2012/11/24/business/global/wal-marts-india-venture-suspends-executives-as-part-of-bribery-inquiry.html?_r=0

    Skippy… LMAO… what about all the bribery in america too[!], all the town, city, county, state bribery… eh. The leverage applied to the EPA et al… Serfdom neverleft… it was just re-branded… walmart associate is just one, example, citizen is another.

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