Walmart's Made in America Promise Exposes Sourcing Difficulties

In 2013, Walmart pledged to invest $50 billion in U.S.-made products over 10 years as a way to support American manufacturing and create jobs. Recently, however, the company has run into sourcing issues that are shedding light on longstanding problems in the manufacturing industry.

In the months since the Walmart announcement, company executives have discovered that the "Made in America" promise might be difficult to keep. The once-powerful U.S. manufacturing industry is now a shadow of its former self. The widespread production offshoring of the 1970s and 1980s, along with the recent economic recession, has taken a toll on American manufacturing companies. The workforce is smaller and inexperienced in the latest production techniques. Many factories are working with old equipment and outdated technology.

As it stands, many American manufacturing companies are not equipped to handle Walmart's massive product requirements. Some companies do not have the resources to fill orders; others do not have enough trained employees. One of the most pressing problems for Walmart suppliers is finding American-made components for larger products. Business owners have reported trouble finding small motors and the equipment that is necessary to make plastic injection-molded pieces. The problem runs all the way down the supply chain to raw material sources.

To address the sourcing problem, Walmart has made it the focus of its August 2014 Manufacturing Summit. The company has encouraged all types of American manufacturing companies to attend, even those with no interest in supplying the retail giant. Instead, Walmart hopes to convince businesses to produce the components that are desperately needed by direct suppliers.

In addition to buying more products from existing domestic sources, Walmart has also announced a commitment to investing in the creation of new American manufacturing operations for "high potential" product categories. The process of building a manufacturing facility from the ground up is time consuming—not to mention expensive. Companies that want to move operations to the United States must find land, work within state and federal policy, buy new equipment, source raw materials, hire and train workers and design the most efficient production process.

In order for Walmart to meet both of its goals—to buy more from American companies and build new manufacturing operations—a massive infrastructure investment is required. The government, with its new National Network for Manufacturing Innovation, is doing its part to facilitate the development of more efficient manufacturing technologies. Larger corporations, such as Apple and Generac Power Systems, have also taken steps to reshore a percentage of their production operations. Though the road ahead is long and challenging, most industry experts express a hopeful outlook.

Walmart's difficulty finding domestically produced products has turned the light on the problems with American manufacturing. With continued support from the retail giant, the government and other major businesses, however, the industry is expected to experience a rebirth.

(Image courtesy of Sailom on FreeDigitalPhotos.net)