Twenty-five years ago, I was a manager at a manufacturer who also distributed a cadre of products to home retailers like Meijer, Home Depot, Lowes, and most notably, Walmart. Walmart was founded by Sam Walton in 1945. He had a savvy for strategically placing his stores across the USA and grew by smart logistics. Walmart was famous for promoting made in the USA and pride in the American Dream. USA flags adorned their advertisements and eager manufacturers knocked at Walmart’s door to be a part of the growing retail chain.
In my role of Materials Manager, I worked with Sales and Marketing to create new items to increase sales. One of the items was a seine twine, tiny, twisted nylon rope, dyed fluorescent colors of pink, orange, and yellow. Bricklayers who used this twine as a guide to level walls with twine dyed so bright it could easily be seen. Crafty moms and teachers used it for macaroni necklaces and more. It became a six-figure hot seller.
To develop this item, we started with the retail price point and worked backward. I teamed up with Enrique, my colleague in Mexico, and together we found a tiny garage of willing workers that could take nylon threads shipped from the United States, and in Mexico, it would be dyed, twisted into yarn, and packaged in this tiny building tucked along with concrete garages on a small street. I felt good about the endeavor, we were using material no American worker wanted to deal with, and the poor Mexican workers were grateful for the income. The operation was small and since it was one item type, not difficult to manage the supply chain. Our sales team promoted this item and because of its popularity, it inevitably ended up in most home improvement stores, and I still see it today.
Walmart grew, and to some of their vendors, at an alarming rate, as it is not healthy to rely on one customer for the financial security of the company. In time, Walmart became the largest customer for many, and after Sam Walton died, Walmart switched to a cost-cutting model that put many Made in USA business owners – out of business.
Textile manufacturers in the USA nicknamed Walmart “Mill Killers” referencing their ability to ultimately shut down a textile mill. Walmart would become a large customer to the USA company, then Walmart would receive price quotes from China or elsewhere and demand the same cost from the USA manufacturer, which was not remotely possible. In doing so, Walmart began importing their products from across the globe, most USA manufacturers could not compete with the labor rates found in Mexico and China and nearly all of the affiliated USA textile companies closed permanently.
A year into the fluorescent twine operation, my phone rang, it was Enrique “Miss Denise Walmart is here, and they want to know if it is ok for them to buy this product directly.” Walmart wanted to cut my company out of the equation. Since my team had developed the operation and we supplied the raw materials for it, my answer was a simple no. Walmart ultimately found someone else and sourced it elsewhere…. they killed my vibe.
Today Walmart is the largest corporation in the world, and its business acumen is undeniable. However, my experience left me wondering, could China do likewise to Walmart? As our world globalizes our economy we could as consumers ultimately buy direct from the manufacturers themselves. My friends’ children already think sneakers come from the UPS truck…..
Denise Grothouse is the President and Founder of Perfect Six Marketing, Vice-President of the Executive Forum of the Lehigh Valley, and Director of Public Relations for the Heroplex Foundation.