Saturday :: Jan 17, 2004

America's Health--There's a cancer growing

by Duckman GR

No, not George Dubya, he's more like a flesh eating bacteria, devouring us from without. The cancer is called Wal-Mart.

Scanning the headlines the other day, looking for Arnold bashing opportunities, I spotted this nugget. It would seem that the biggest corporation in the world, has, according to an internal audit, violated labor laws. Stop, it cannot be so, you say. Wal-Mart? Violating labor laws? Psshaw. To wit...

[ed note-all italicized text are direct quotes, all bold and underline are mine]

An internal audit now under court seal warned top executives at Wal-Mart Stores three years ago that employee records at 128 stores pointed to extensive violations of child-labor laws and state regulations requiring time for breaks and meals.

The audit of one week's time-clock records for roughly 25,000 employees found 1,371 instances in which minors apparently worked too late at night, worked during school hours or worked too many hours in a day. It also found 60,767 apparent instances of workers not taking breaks, and 15,705 apparent instances of employees working through meal times.

As might be expected, Officials at Wal-Mart, the world's largest retailer, employing 1.2 million people at its 3,500 stores in the United States, insisted that the audit was meaningless, since what looked like violations could simply reflect employees' failure to punch in and out for breaks and meals they took. Hahahahahahahahaha, yeah right, it's those damn employees fault. It's hard to find good help these days, especially at what WM pays.

Please. I work part time in retail in a big department store, selling shoes to the ladies, and that kind of pathetic record keeping would not be tolerated, either in workers or managers. And whatever their record, WM can’t be called incompetent. So it points to something else, at best institutional abuse of their employees. At Wal-Mart, if you can imagine.

WM’s denial is nothing more than spin. WM is too big and powerful, wielding influence and clout far beyond their humble beginnings, their management too successful, to think that this was just a mistake.

But why would I call WM a cancer? Because of the negative impact they have on the economy of this nation, that's why. This article from Charles Fishman (bio) discusses the ways and means of Wal-Mart and accurately describes what they do, and how they do it. Read the whole story here. You might have seen similar stuff on Bill Moyers, but really, it bears repeating.

Mr Fishman makes the point that WM has brought efficiency and low prices to the retail world, things like 2 day delivery instead of 5 day, improved inventory controls, cost efficiencies and so on along the way to their rise to No. 1. And low prices, don't forget. But, at the same time, those low prices and that corporate success has come at a terrible price.

Fishman writes, Wal-Mart has also lulled shoppers into ignoring the difference between the price of something and the cost. Its unending focus on price underscores something that Americans are only starting to realize about globalization: Ever-cheaper prices have consequences. Says Steve Dobbins, president of thread maker Carolina Mills: 'We want clean air, clear water, good living conditions, the best health care in the world--yet we aren't willing to pay for anything manufactured under those restrictions.'

I have a long excerpt from the article in the 'continue reading' section at the end of this rant that illustrates the Wal-Mart story. It's headed "EXCERPT"

Cancer? Take the UFCW grocery store strike, now well into its third month. There are 3 main issues. Two tier wage system, Pension fund contributions, and Healthcare premiums. While the latter gets the most attention, the wage tier and pension funding are by far the most serious issues. Fully funding pension funds an issue? Or a way to transfer more taxpayer funds to big business? A taxpayer bailout would save corporations like WM billions, and what would it do for our economy, other than preventing a preventable disaster? And piling more debt onto the backs of future generations?

A two tiered wage scale, oh yeah, I want one of those. Let's see, which tier do you want? The tier that gets pushed out the door as soon as possible for the cheaper new guy? Or the tier that pays less for the same work and guarantees you'll never realize that great American Dream of owning your own home? Hmmm, decisions, decisions.

These are the choices that the Wal-Mart threat is creating for the grocery store employees. And the stores and their management aren't going to fare any better. If you ask me, the current management strategy just about guarantees Wal-Mart's favored outcome. Instead of working co-operatively; ownership, management, labor, and investors, the grocery stores are creating animosity and division, a poisoned atmosphere not unlike some recent Democratic debates, and inimicable to their business. How many shoppers that have found other stores, smaller markets, specialty shops, that work just as well as the grocery store, are going to come back? I will, but not nearly in the same way or at the previous level. So, when you read that the strike is about paying $5 for their healthcare, think again.

As WM drives wages down, as jobs are pushed overseas to minimize costs, as Wal-Mart's customers earn less and less because of that wage wave of lowered costs and reduced benefits and lost jobs, as the cost of the non-existant benefits WM offers further presses down on the backs of the labor force and the government safety net, as the infrastructure of this country-schools, universities, highways, hospitals, research centers, laws, crumble under the hammer and anvil of overuse and neglect-neglect born from a reduced tax base, a huge debt service burden, and an unending war on Oceania, at what point does Wal-Mart start to consume the life of its host?

Cancer? I'm reminded of Kurt Vonnegut's Player Piano, read, oh so many years ago. Engineers inventing machines that replace engineer inventors, the majority of people working in do nothing jobs or in the military. As Wal-Mart's obsession with lower prices drives jobs overseas, drives wages down, drives people down; as people have less and less marginal income, it all becomes a self perpetuating travesty of greed and failure. Especially of failure. The failure to understand or even consider the consequences of their actions. We're headed for the world of the Reeks and Wrecks and the Waltons will be there right alongside the rest of us. And they're so blind to their corporate raison d'etre they can't see the danger to us all, especially themselves.

The worlds biggest corporation is now writing the laws for itself, just to build a superdupermegawhopper store while avoiding several major obstacles to ... its so-called supercenter: environmental reviews, traffic studies, public hearings and especially obstinate municipal officials who until now had the final say. They're growing remorselessly, their growth forces companies that deal with them to slash through their own goodwill and mission statements to adhere to the Wal-Mart mantra, profit for the sake of profit for the sake of growth. And growth/profit/capitalism for that reason alone, for a slavish obsession with growth and profit for no other reason than that, is indeed, a cancer.


This July, in a mating that had the relieved air of lovers who had too long resisted embracing, Levi Strauss rolled blue jeans into every Wal-Mart doorway in the United States: 2,864 stores. Wal-Mart, seeking to expand its clothing business with more fashionable brands, promoted the clothes on its in-store TV network.....

Levi's launch into Wal-Mart came the same summer the clothes maker celebrated its 150th birthday. For a century and a half, one of the most recognizable names in American commerce had survived without Wal-Mart. But in October 2002…Levi was shrinking rapidly. The pressure on Levi goes back 25 years--well before Wal-Mart was an influence. Between 1981 and 1990, Levi closed 58 U.S. manufacturing plants, sending 25% of its sewing overseas.

Sales for Levi peaked in 1996 at $7.1 billion. By last year, they had spiraled down six years in a row, to $4.1 billion. This one account--selling jeans to Wal-Mart--could almost instantly revive Levi.

Last year, Wal-Mart sold more clothing than any other retailer in the country. It also sold more pairs of jeans than any other store. Wal-Mart's own inexpensive house brand of jeans, Faded Glory, is estimated to do $3 billion in sales a year, a house brand nearly the size of Levi Strauss. Perhaps most revealing in terms of Levi's strategic blunders: In 2002, half the jeans sold in the United States cost less than $20 a pair. That same year, Levi didn't offer jeans for less than $30.

For much of the last decade, Levi couldn't have qualified to sell to Wal-Mart. Its computer systems were antiquated, and it was notorious for delivering clothes late to retailers. Levi admitted its on-time delivery rate was 65%. When it announced the deal with Wal-Mart last year, one fashion-industry analyst bluntly predicted Levi would simply fail to deliver the jeans.


Getting ready for Wal-Mart has been like putting Levi on the Atkins diet. It has helped everything--customer focus, inventory management, speed to market. It has even helped other retailers that buy Levis, because Wal-Mart has forced the company to replenish stores within two days instead of Levi's previous five-day cycle.

And so, Wal-Mart might rescue Levi Strauss. Except for one thing.

Levi didn't actually have any clothes it could sell at Wal-Mart. Everything was too expensive. It had to develop a fresh line for mass retailers: the Levi Strauss Signature brand, featuring Levi Strauss's name on the back of the jeans.
Two months after the launch, Levi basked in the honeymoon glow. Overall sales, after falling for the first six months of 2003, rose 6% in the third quarter; profits in the summer quarter nearly doubled.


But the low-end business isn't a business Levi is known for, or one it had been particularly interested in. It's also a business in which Levi will find itself competing with lean, experienced players such as VF and Faded Glory. Levi's makeover might so improve its performance with its non-Wal-Mart suppliers that its established business will thrive, too. It is just as likely that any gains will be offset by the competitive pressures already dissolving Levi's premium brands, and by the cannibalization of its own sales. "It's hard to see how this relationship will boost Levi's higher-end business," says Paul Farris, a professor at the University of Virginia's Darden Graduate School of Business Administration. "It's easy to see how this will hurt the higher-end business."

If Levi clothing is a runaway hit at Wal-Mart, that may indeed rescue Levi as a business. But what will have been rescued? The Signature line--it includes clothing for girls, boys, men, and women--is an odd departure for a company whose brand has long been an American icon. Some of the jeans have the look, the fingertip feel, of pricier Levis. But much of the clothing has the look and feel it must have, given its price (around $23 for adult pants): cheap. Cheap and disappointing to find labeled with Levi Strauss's name. And just five days before the cheery profit news, Levi had another announcement: It is closing its last two U.S. factories, both in San Antonio, and laying off more than 2,500 workers, or 21% of its workforce. A company that 22 years ago had 60 clothing plants in the United States--and that was known as one of the most socially reponsible corporations on the planet--will, by 2004, not make any clothes at all. It will just import them.

Duckman GR :: 12:01 AM :: Comments (15) :: Digg It!