Wal-Mart warns suppliers on stricter measures

Made in Bangladesh

Associated Press
This photo illustration made Wednesday, Dec. 12, 2012, shows the label of a garment made in Bangladesh displayed outside the Wal-Mart store where it’s sold, in Atlanta. Wal-Mart Stores Inc. is alerting its global suppliers that it will immediately drop them if they subcontract their work to factories that haven’t been authorized by the discounter. (AP Photo/David Goldman)

By ANNE D’INNOCENZIO The Associated Press

BENTONVILLE, Ark. —

Wal-Mart Stores Inc. has alerted its global suppliers that it will immediately drop them if they subcontract their work to factories that haven’t been authorized by the discounter.

Wal-Mart’s stricter contracting rule, along with other changes to its policy, comes amid increasing calls for better safety oversight after a deadly fire at a Bangladesh factory that supplied clothing to Wal-Mart and other retailers. The fire in late November killed 112 workers at a factory owned by Tazreen Fashions Ltd. Wal-Mart has said the factory wasn’t authorized to make its clothes.

In a letter sent Tuesday to suppliers of its Wal-Mart stores as well as Sam’s Clubs in the U.S., Canada and the United Kingdom, the company says it will adopt a “zero tolerance” policy on subcontracting without the company’s knowledge, effective March. 1. Previously, suppliers had three chances to rectify mistakes.

Wal-Mart also said it plans to publish on its corporate website a list of factories that haven’t been authorized to manufacture goods for Wal-Mart.

Also, starting June 1, suppliers must have an employee stationed in countries where they subcontract to ensure compliance, rather than relying on third-party agents.

“We want the right accountability and ownership to be in the hands of the suppliers,” said Rajan Kamalanathan, Wal-Mart’s vice president of ethical sourcing, said in an interview with The Associated Press. “We are placing our orders in good faith.”

Wal-Mart will hold a meeting for clothing suppliers from the U.S. and Canada on Thursday to explain the new policy changes.

Kamalanathan said Wal-Mart is looking to create a fund that factories can tao to improve safety, but that is still in discussion. But he also said local governments and other suppliers and retailers have to do their part in boosting factory safety.

Critics quickly dismissed Wal-Mart’s moves as inadequate and said that the retailer needs to do more.

“It shows that Wal-Mart is feeling a great deal of pressure in the wake of public scrutiny,” said Scott Nova, executive director at Workers’ Rights Consortium, a labor-backed advocacy group. But he noted the company’s response isn’t adequate unless Wal-Mart and others pay their suppliers more so they can cover the costs of repairs.

“The upfront commitment from brands and retailers is essential if we are going to see real change,” Nova added.

Nova’s group is one of several organizations trying to get retailers and brands to sign a first-of-its-kind contract that would govern fire-safety inspections at thousands of Bangladeshi factories making T-shirts, blazers, and other clothes Americans covet.

The contract would call for companies to publicly report fire hazards at factories, pay factory owners more to make repairs and provide at least $500,000 over two years for the effort. They would also sign a legally binding agreement that would make them liable when there’s a factory fire.

PVH Corp., a New York City-based company that sells the Calvin Klein and Tommy Hilfiger brands, last March signed the agreement after a national TV news report that chronicled the dangerous conditions in one of its Bangladesh factories. But PVH pledged to start the program only if at least three other major retailers sign on. So far, only one has: A German coffee chain named Tchibo that also sells clothes. Nova said that his organization is in discussion with other retailers.

Wal-Mart says it has no plans to sign on to the contract. Brooke Buchanan, a Wal-Mart spokeswoman, says that the company can make a “positive impact on our global supply chain by both by raising our own standards and by partnering with other stakeholders to improve the standards for workers across the industry.”

Nova also noted that Wal-Mart needs to disclose a list of all the suppliers it currently works with so they can be monitored by independent groups. It also needs to disclose the results of all its factory inspections.

Richard Locke, head of political science at MIT and an expert in global supply chains, said that Wal-Mart also needs to re-evaluate its purchasing practices so its demands are not putting excessive pressure on factories to cut corners on safety. It also needs to provide better technical assistant training for factories so they can run their businesses better.

Wal-Mart ranks second behind Swedish fast fashion retailer H&M in the number of clothing orders it places in Bangladesh. Before the fatal fire there, Wal-Mart had taken steps to address safety, such as mandating fire safety training for all levels of factory management.

Building fires have led to more than 600 garment work deaths in Bangladesh since 2005, according to research by the advocacy group International Labor Rights Forum.

Copyright The Associated Press

Is The U.S. Really Losing Its Innovative Edge?

Guest post written by Gerard J. Tellis

Gerard J. Tellis is Neely Chair of American Enterprise, Director of the Center for Global Innovation, and Professor of Marketing, Management and Organization at the USC Marshall School of Business. His forthcoming book is Unrelenting Innovation: How to Create a Culture of Market Dominance.

Gerard J. Tellis

Innovation is critical for the improvement in consumer living standards, the growth and success of firms, and the wealth of nations. In the late 19th and early 20th centuries, the U.S. surpassed Great Britain as the world’s premier economy on the strength of its innovations. These innovations spanned a wide spectrum of industries. Innovations flourished in a variety of heavy industries such as aeronautics, automobiles, defense, communications, electricity and power generation. Innovations likewise blossomed in consumer goods and services such as soap, photography, shaving and entertainment. The U.S. also pioneered innovations in university education, land ownership, home ownership and individual rights. The U.S. lead in innovation lasted through most of the 20th century.

 

 

Is the U.S. now losing its edge in innovation?

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Disney, Sears, Wal-Mart, Sean Combs used factory in Horrific Bangladesh fire

Bangladeshi women watch the bodies of some of the victims of Saturday’s fire in a garment factory being prepared to be buried, in Dhaka, Bangladesh

AP Exclusive

DHAKA, Bangladesh (AP) — Amid the ash, broken glass and melted sewing machines at what is left of the Tazreen Fashions Ltd.factory, there are piles of blue, red and off-white children’s shorts bearing Wal-Mart’s Faded Glory brand. Shorts from hip-hop star Sean Combs’ ENYCE label lay on the floor and are stacked in cartons.

An Associated Press reporter searching the factory Wednesday found these and other clothes, including sweaters from the French company Teddy Smith, among the equipment charred in the fire that killed 112 workers Saturday. He also found entries in account books indicating that the factory took orders to produce clothes for Disney, Sears and other Western brands.

Garments and documents left behind in the factory show it was used by a host of major American and European retailers, though at least one of them — Wal-Mart — had been aware of safety problems. Wal-Mart blames a supplier for using Tazreen Fashions without its knowledge.

The fire has elevated awareness of something labor groups, retailers and governments have known for years: Bangladesh’s fast-growing garment industry — second only to China’s in exports — is rife with dangerous workplaces. More than 300 workers there have died in fires since 2006.

Police on Wednesday arrested three factory officials suspected of locking in the workers who died in Saturday’s fire, the deadliest in the South Asian country’s less than 35-year history of exporting clothing.

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Seven Reasons Outsourced U.S. Bank IT Jobs Are Heading Back Onshore

Some bank IT jobs that have been outsourced for the past 10 years or so are coming back stateside, at least according to one expert. “A number of banks have told me they’re pulling back work from offshore, particularly from India but not only India,” says Harley Lippman, founder and chief executive of Genesis10, an IT consulting and staffing firm based in New York. “India is still the epicenter of IT work for major banks, although some work has gone to China, Eastern Brazil and other locations.”

Lippman doesn’t have numbers to back this observation. “I’m gathering that as we speak,” he says. “A lot of people are interested in that.”

Lippman’s own company has benefited from this trend, although he declined to name any bank clients. His firm is hiring in Troy, Michigan; Atlanta (where it just opened a new facility); Grand Rapids, Mich.; and Kansas City, Mo. “That’s all driven by bank client demand,” Lippman says.

Some banks are bringing the work back in house, but the majority are finding an onshore outsourcing provider, Lippman says. “In all banks there’s head-count pressure; there continues to be cost pressure, there’s pressure on execution and delivery for all the major banks,” he says. Outsourcing offers variable costs and the flexibility to ramp up and down as the volume of work fluctuates.

Offshoring made sense 10 years ago, when a New York City programmer might have cost $100 an hour, versus $15 an hour for a worker with similar skills in India, Lippman says. “Today it’s very different, the world is more flat,” he says. “Jeffrey Immelt,” the General Electric chief executive, “said there’s no more cheap labor; I found that quite significant.” Inflation is over 20% in India.

Why are banks turning from offshoring to onshoring? Lippman offers several reasons:

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High hopes for jobs and TV’s ‘Made in the USA’

By Hal Weitzman in Chicago Financial Times
Much of Element Electronics’ factory in Canton, a suburb west of Detroit, is empty. But on a single production line, about 45 workers are assembling the first televisions made in the US by an American company in decades.

So far, it is a small operation, but Element’s attempt to bring TV manufacturing back from Asia to the heart of America’s rust belt is a powerful example of reshoring, the trend of jobs once outsourced to low-cost emerging economies being brought back to the US.

Reshoring is causing great excitement in the US. Companies such as General Electric and Caterpillar have been touted as high-profile examples of the trend. Since 2009 GE has announced plans to create 11,000 manufacturing jobs.

In an election year, reshoring has also become a potent political symbol, a counterweight to those who say the US is in decline or that current economic policies are not working.

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U.S. Market Shines Brighter

Manufacturers Look Homeward, Boosting Domestic Production and Spending as Overseas Gains Overseas

By KATE LINEBAUGH And JAMES R. HAGERTY

U.S. companies, facing slowing markets and rising costs around the world, are taking a new look at their home market.

With growth slowing in China and a slump gripping much of Europe, companies are adding capacity in the U.S., replacing aging equipment and even moving overseas production back from low-cost labor markets, a sign that corporate America could be poised to take a bigger role in the economic recovery.

[USEARNS_FPO]Christoph HitzUnion Pacific expects to buy twice as many locomotives this year, spending upward of $400 million.

The pace of earnings growth at companies slowed in the fourth quarter, and there are signs that profitability is falling. That is prompting companies ranging from beverage maker Coca-Cola Co. to industrial supplier Emerson ElectricCo. to disclose cost cuts. But after keeping a tight lid on costs for the past few years, many other companies are expanding capacity to meet rising demand.

WSJ’s Bob Hagerty has the story of companies bringing staff and equipment back to the U.S. in the face of economic uncertainty in Asia and Europe. AP Photo/Damian Dovarganes

United Rentals Inc., the world’s largest equipment rental company, plans to increase its capital spending by about a third, to $1 billion, this year as more construction and industrial companies opt to rent rather than own equipment like elevated forklifts and backhoe loaders.Cummins Inc., which makes engines for trucks and heavy equipment, is boosting its capital spending to more than double the rate of two years ago.

Carlisle Companies, a small conglomerate that makes insulation, tires and restaurant supplies, plans to open two new plants in the U.S. and bring tire production back to the U.S. from China.Union Pacific Co. expects to buy twice as many locomotives this year, spending upward of $400 million. The auto industry is dusting off idled U.S. factories, adding work shifts and expanding production from Chattanooga, Tenn., to Belvidere, Ill., on rebounding car and truck sales. Some auto makers even hope to use the U.S. as a manufacturing base to export autos and auto-parts to Latin America and Asia.

“It is an environment that feels like it is building momentum,” William Plummer, United Rentals’ chief financial officer, said in an interview. “We are coming out of the depths of the recession and are starting to build momentum on the upside.”

U.S. businesses increased their investments in December. According to the Commerce Department, new orders for nondefense capital goods excluding aircraft, a proxy for how much companies spend on equipment, climbed 2.9% from November. That ended two months of declines, suggesting businesses are becoming more confident. Compared with a year earlier, companies shipped 9% more.

“Companies have piled a lot of cash on the balance sheet and delayed a lot of purchases,” said Joseph LaVorna, Deutsche Bank‘s chief U.S. economist, who expects capital expenditures, or capex, to grow in excess of 10% this year. “The capex story is very much alive and well, and capex and hiring go hand-in-hand.

There are signs that hiring may be picking up as companies expand facilities. Job growth in January was its highest level since April, with unemployment falling for the fifth consecutive month.

In addition, stubborn construction markets are showing signs of life, and that is helping companies like Caterpillar Inc., according to Andy Kaplowitz, a Barclays Capital analyst. The Peoria, Ill.-based equipment maker notched a 31% increase in its North American construction business, compared with Barclay’s estimate of a 20% gain.

“I’m feeling better about the U.S. economy than I was 12 months ago, for sure,” said Patrick Ward, chief financial officer at Cummins.

Fortune Brands Home & Security Inc., whose products include Master locks and Moen faucets, recently boosted its capital spending plans for 2012 to $80 million, up about 17% from last year, after seeing modest improvement in the U.S. economy, said Chris Klein, CEO of the Deerfield, Ill., company.
“It isn’t off to the races yet,” Mr. Klein said of the economy, “but it is definitely firming up.”

That may not mean major job gains. Most of the capital spending is on equipment that will improve production efficiency. For now, Fortune Brands has plenty of spare capacity and isn’t envisioning new plants. Its 12,000-person U.S. work force probably will expand only slightly this year, with gains mainly in product development and marketing, Mr. Klein said.

USEARNS

On the whole, fourth quarter earnings were weaker than expected amid sluggish growth in Europe and China, and executives voiced caution about 2012. Among the 301 companies in the Standard & Poor’s 500-stock index that have reported their quarterly earnings thus far, 28% missed analyst expectations, a greater proportion than the typical 20%, according to Thomson Reuters.
Companies that are making first-quarter forecasts are striking a mostly downbeat note. Of the 55 that have provided earnings forecasts, 43 said they expect the first quarter to be weaker, according to Thomson Reuters. That is the worst ratio since 2001. Profits for the final quarter of 2011 are up an average of 8.9% from a year earlier, and revenue is up 8.3%.
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Made in USA: 30 Day Journey

"We're willing to DIE for our country, but are we willing to BUY for it?"

"We're willing to DIE for our country, but are we willing to BUY for it?"

Josh Miller of ‘Made in USA: 30 Day Journey‘ is asking us one simple question.

“We’re willing to DIE for our country, but are we willing to BUY for it?”

Josh and his film crew will set out on a journey in which he will live off USA made products for 30 days. During his travels, he will speak and interview business-owners, homeowners, politicians, economists and American consumers to find out, among other things, what ‘Made in America’ means to them.  We will help Josh and his crew verify the made in USA claim with the help and support of Made in USA Certified.

Their goal is to raise $5,000 for the film during this campaign.  A $10 donation will get your name in the rolling credits of the film under “Minutemen”.  How cool will that be!

We believe Josh and his crew are a part of the Made In America Movement.  This film will help gain more exposure for this Movement.  This is why we are asking for your support.

Diane Sawyer & David Muir of World News with Diane Sawyer made everyone across the nation aware of this Movement last year with their ‘Made in America’ segments on ABC News, asking you all if you are “IN”.  Now we are asking you, are you in?

Let’s help Josh Miller on his journey.  Go to the link below. Donate your $10 (or more!) and let them know you are a proud supporter of the Made in America Movement.  Your support and donations really do matter!

Made in USA: 30 day Journey donation page I’M IN!

Come On, China, Buy Our Stuff!

A Gap Inc. store in Shanghai, China.

A Gap Inc. store in Shanghai, China.

By NYT ADAM DAVIDSON    Published: January 25, 2012

The first time I visited China, in 2005, an American businessman living there told me that the country was so huge and was changing so fast that everything you heard about it was true, and so was the opposite. That still seems to be the case. China is the fastest-growing consumer market in the world, and American companies have made billions there. At the same time, Chinese consumers aren’t spending nearly as much as American companies had hoped. China has simultaneously become the greatest boon and the biggest disappointment.

It wasn’t supposed to be this way. In 2000, the United States forged its current economic relationship with China by permanently granting it most-favored-nation trade status and, eventually, helping the country enter the World Trade Organization. The unspoken deal, though, went something like this: China could make a lot of cheap goods, which would benefit U.S. consumers, even if it cost the country countless low-end manufacturing jobs. And rather than, say, fight for an extra bit of market share in Chicago, American multinationals could offset any losses because of competition by entering a country with more than a billion people — including the fastest-growing middle class in history — just about to buy their first refrigerators, TVs and cars. It was as if the United States added a magical 51st state, one that was bigger and grew faster than all the others. We would all be better off.

More than a decade later, many are waiting for the payoff. Certainly, lots of American companies have made money, but many actual workers have paid a real price. What went wrong? In part, American businesses assumed that a wealthier China would look like, well, America, says Paul French, a longtime Shanghai-based analyst with Access Asia-Mintel. He notes that Chinese consumers have spent far less than expected, and the money they do spend is less likely to be spent on American goods. Read more of this post

State Of The Union Speech Text 2012

Below, Obama’s prepared remarks as released by the White House.

As Prepared for Delivery –Mr. Speaker, Mr. Vice President, members of Congress, distinguished guests, and fellow Americans:

Last month, I went to Andrews Air Force Base and welcomed home some of our last troops to serve in Iraq. Together, we offered a final, proud salute to the colors under which more than a million of our fellow citizens fought — and several thousand gave their lives.

We gather tonight knowing that this generation of heroes has made the United States safer and more respected around the world. For the first time in nine years, there are no Americans fighting in Iraq. For the first time in two decades, Osama bin Laden is not a threat to this country. Most of al Qaeda’s top lieutenants have been defeated. The Taliban’s momentum has been broken, and some troops in Afghanistan have begun to come home. Read more of this post

The State of the Union 2012

Watch it here tonight at 9PM ET.  State of The Union Address

“On Tuesday night, I’m going to talk about how we’ll get there. American Manufacturing – with more good jobs and more products stamped with Made in America. American Energy – fueled by homegrown and alternative energy sources. Skills for American Workers – getting people the education and training they need so they’re ready to take on the jobs of today and tomorrow. And most importantly, a Return to American Values – of fairness for all, and responsibility from all.” – POTUS

Kudos to President Obama for promoting manufacturing.  As Scott Paul said in a recent Huffington Post op-ed “now is the ideal time for the president to promote manufacturing: “If the president really wants to see “Made in America” stamped on products shipped all over the world, he needs to be bold. We’ll be watching. And so will voters.”

Will you be watching?

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