Walmart plans to move some manufacturing back to the US

Wal-Mart, the world's largest retailer, is positioned to have a major role in the revival of American manufacturing by committing to buying $50 billion more in U.S.-produced goods for its stores, according to Time magazine. This could help the American manufacturing industry continue to grow and create new jobs.

Wal-Mart was once seen as a pioneer of international sourcing, but higher shipping costs and rising wages overseas have caused the company to reevaluate and bring some of the manufacturing back to the U.S., according to the magazine. Wal-Mart believes this could be a profitable strategy to reduce costs and improve their supply chain.

While the company may be able to purchase an item more cheaply in China, the cost per piece does not always remain low because it incurs high shipping fees along the way to stores. 

"When we buy from overseas, we may buy more than we need to fill the container," Duncan Mac Naughton, chief merchandising and marketing officer for Wal-Mart U.S., told Time. "We're looking at carrying costs through the system in addition to landed costs."

In addition to rising foreign labor costs, Wal-Mart has also had to contend with local demand for goods in locations where they get resources. Many developing countries like India and China have a growing middle class, and demand from suppliers in those countries will continue to increase, according to Time. This has caused the retailer to need American suppliers to supplement their foreign operations to meet U.S. demand.

Impacts for American manufacturing companies
Wal-Mart's first domestic initiative was investing in towels made in Georgia, according to Business Insider. These towels are currently being offered in 600 stores, and Wal-Mart plans to sell them in  600 more by September. The retailer believes making long-term relationships with manufacturers will allow it to offer lower costs to consumers because distribution spend will decrease, Time states. Previous attempts at providing more American goods were not successful because Wal-Mart was unable to sell at low prices, but the company believes the collaboration with manufacturers will aid this process.

Even though the $50 billion represents a fairly small chunk of Wal-Mart's distribution needs, American manufacturing companies could see a rise in production, especially through long-term agreements with suppliers. Time noted Coleman added 160 new jobs in the U.S. after agreeing to supply more to Wal-Mart. Companies could benefit from the services of a manufacturing recruiter to find qualified candidates. 

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