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Walmart convenes domestic sourcing summit in effort to help revitalize U.S. manufacturing

BY Mike Troy

ORLANDO, Fla. — Walmart displayed a powerful commitment to revitalizing U.S. manufacturing in front of roughly 1,500 supplier company representatives, government and economic development officials, dozens of senior merchants and the company’s top executives as they convened Thursday for its first-ever domestic sourcing summit at the Orange County Convention Center in Orlando, Fla.

“It sounds dramatic, but nothing less than the future of our country is a stake,” Walmart U.S. president and CEO Bill Simon said. “We can’t be just a service economy. We have to make stuff.”

The summit was held Thursday afternoon and on Friday a day of meeting was planned between supplier company attendees and economic development representatives from 30 states. Walmart and the National Retail Federation served as matchmakers. Simon emerged as a champion for domestic sourcing earlier this year when he was a featured speaker at the NRF’s annual convention. At that meeting he unveiled Walmart’s plan to spend an additional $50 billion on domestic sourcing during the next 10 years. It sounded like an audacious goal at the time, but Simon now contends that figure will be a “lay up,” because of the momentum that is quickly gathering and was evident at the summit. Combined with the growing recognition of the benefits of making products closer to the point of consumption, Simon said he now expects Walmart to blow by that $50 billion figure.

Rising wage rates in previously low wage rate countries such as China, energy costs and other supply chain considerations are just a few of the reasons why Simon contends the global economy is entering a transition where a strong business case can be made for manufacturing to be located closer to the end consumer.

Taking that assertion a step further, U.S. Secretary of Commerce Penny Pritzker pointed to the stabilized banking and housing sectors, abundant and affordable energy, great universities, a vibrant culture of entrepreneurship and strong intellectual property protections as reason why companies should increase their domestic manufacturing.

“We are entering a new era of opportunity to boost American manufacturing,” Pritzker said. “The time to build and hire in America is now.”

To help make that case, Walmart enlisted the aid of governors from nine different states who participated in panel presentations or made individual remarks. Governors have a strong interest in promoting economic development within their states and each used their participation in the event to tout their state’s key benefits and engage in some good natured ribbing of their peers.

For example, South Carolina governor Nikki Haley described her state’s dislike of unions. Mississippi governor Phil Bryant said his state doesn’t over-regulate or over tax and makes sure it gets out of the way of entrepreneurs. West Virginia governor Earl Ray Tomblin touted his state’s abundant natural gas. Maine governor Paul LePage said his state got rid of red tape.

While the governors cited the ease of doing business in their states, Richard Fisher, president and CEO of the Federal Reserve Bank of Dallas, suggested regulations and uncertainty are major impediments holding back the creation of domestic manufacturing jobs that could help restore the middle class.

The fiscal and regulatory policies in Washington are what is holding the country back, according to Fisher. He derided lawmakers for their cavalier approach to fiscal matters and spending and regulating with abandon, but stopped short of singling out the beleaguered Affordable Care Act, also known as Obamacare.

“Businesses cannot operate in a fog of uncertainty about how they will be regulated and taxed,” Fisher said.

Walmart can’t fix Washington gridlock or ill-conceived mandates, but as Wal-Mart Stores, Inc., president and CEO Mike Duke noted, the intent of the summit was to begin a journey.

“Sometimes getting started can be the hardest part,” Duke said. “We wanted to help ignite and create the desire to get momentum going.”

 

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ERSP asks online supplier to tone down advertising on immune-system booster without substantiation

BY Michael Johnsen

NEW YORK — The Electronic Retailing Self-Regulation Program on Thursday recommended that Lonza America modify certain “clinically” proven claims for the company’s Alomune dietary supplement.

Specifically, ERSP recommended that the marketer modify the claim that, “A clinical trial on healthy adults suggested that people taking Alomune were 57% more likely to stay healthy on primary health measurements vs. placebo,” to more accurately describe the one study outcome measurement that served as the basis for the claim. And ERSP noted in its decision the omission of any reference on the marketer’s website to the source of the specific studies which Lonza relied on for its claims.

However, ERSP found that the marketer provided a reasonable basis for general performance claims, an exclusivity claim and claims made through an expert’s endorsement. Following its review of Lonza America’s evidence, ERSP concluded that Lonza America provided a reasonable basis for claims that use of the product will help keep the immune system “strong.”

Lonza explained that the active ingredient in Alomune is a proprietary form of larch tree arabinogalactan called ResistAid, introduced to the market on Oct. 1, 2012. 

“Lonza appreciates ERSP’s detailed review and its conclusions that Alomune is supported by valid scientific testing and other evidence demonstrating the benefits of Alomune," the company stated as part of its marketer’s statement. "We will modify the Alomune website in accordance with ERSP’s recommendations, including adding a third party literature section to our website, posting clinical studies on Alomune and its active ingredient in that section, and providing references to relevant clinical data with our claims. We also will take the recommendations into account when designing future advertising communications.”

ERSP is an investigative unit of the advertising industry’s system of self-regulation and is administered by the Council of Better Business Bureaus. The marketer’s advertising came to the attention of ERSP pursuant to its ongoing monitoring program.


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Dollar Tree posts second-quarter same-store sales lift of 3.7%

BY Michael Johnsen

CHESAPEAKE, Va. — Dollar Tree generated 3.7% in same-store sales for its second quarter ended Aug. 3, beating analyst estimates, and recorded $1.9 billion in consolidated net sales, an 8.8% increase. 

Shares of Dollar Tree closed Thursday at $53.13, 88 cents higher than the previous close. 

"I am pleased with our second-quarter performance," stated Bob Sasser, Dollar Tree CEO. "Sales, customer traffic, average ticket, earnings and operating margin all continue to grow. Customers are responding in record numbers to our outstanding values in both discretionary and consumable merchandise categories. Our stores are well-stocked with a terrific merchandise presentation for back-to-school and the fall selling season."

Over the course of the second quarter, Dollar Tree opened 81 stores, expanded or relocated 32 stores, and closed 2 stores. Retail selling square footage increased 7% compared to a year ago, to 41.9 million square feet.


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