Wallmart the Movie! please no flame war..

[Angus]

Is there any objective, scientific proof that Wal-Mart is what you say it is?

Of course. I can once again state the basic problems with low-pay, lack of benefits, and destruction of local community infrastructures for you but for real, in-depth, "objective" statistics we would probably have to access other resources.

As far as low pay and lack of benefits...you could say that about any company in America employing people in relatively unskilled, manual labour jobs.

If there is a problem with behemoths such as WalMart it is that they drive smaller independant producers of goods to the wall because such businesses cannot offer the high volume, ultra-low cost items that WalMart want to sell.

This however generally leads to people who really want high quality goods seeking out specialist retailers.

As an example. If I want to buy a camera I am emphatically NOT going to visit WalMart. I want to handle the item, I want to look at a good range of high end, high quality products and a salesman who knows about them. I am going to visit a camera specialist.

But most people don't care that much about cameras and are happy to buy from Wallyworld. Now if I were buying TV for the bedroom, I'm not too fussed...if I were in the states I'd probably go to WalMart (as, indeed, I did when I lived there).

[JGrube]

what is the community infrastructure that Walmart allegedly dismantles, and how does it occur

OK, at my own risk, I'll do this one. And no, I"m not saying Wal-Mart is evil, I'm just saying this is what I've seen, and I think this is one of the things that Wal-Mart does that upsets some people.

My father is from Ohio, I'm originally from Michigan. In our neck of the woods, the local factory is everything. In Wooster, Ohio, was the original Rubbermaid factory, which operated for decades. They recently had been selling two-thirds of their inventory through big chains like Wal-Mart. When the price of resin rose slightly worldwide, Rubbermaid told Wal-Mart they would have to raise the prices of their product accordingly. Wal-Mart refused and dropped a large number of Rubbermaid products. This drop caused the Wooster plant to go out of business and the loss of 1000 jobs. While this is not huge in the grand scheme of things, in PRINICPLE it looks very ugly, and really leaves a bad taste in the mouth of people who otherwise would be enjoying Wal-Marts low low prices.

Like I said, I'm not saying Wal-Mart is Satan, nor am I saying they're the greatest business ever. I'm just saying, there are some things they do in pursuit of those great deals that could be handled better. I don't want to take sides, cause this Wal-Mart thing can get crazy. But people keep asking for specific reasons why some don't like Wal-Mart, this is one that you hear a lot of talk about in the northern midwest, and the one that I'm the most aware of.

Jason

[JGrube]

Oh, by the way, monobath, I'm not picking on you by quoting from your response, it's just that you phrased the question in the most succinct way that I've seen. Cheers!

Jason

[MovieStuff]

In Wooster, Ohio, was the original Rubbermaid factory, which operated for decades. They recently had been selling two-thirds of their inventory through big chains like Wal-Mart. When the price of resin rose slightly worldwide, Rubbermaid told Wal-Mart they would have to raise the prices of their product accordingly. Wal-Mart refused and dropped a large number of Rubbermaid products. This drop caused the Wooster plant to go out of business and the loss of 1000 jobs.

Thanks for sharing this kind of information because it really helps to humanize and clarify what really happens when Walmart affects the local business scene. Of course, on the surface, it looks like Walmart is the bad guy because they caused the loss of 1000 jobs. But did they? The problem with many Americans is that they operate in the "entitlement" mode and feel that they should not have to sacrifrice when the going gets tough. I seriously doubt that Rubbermaid was operating so close to cost that they could not afford to take the hit in their profit margin to maintain the Walmart contract and the 1000 jobs that they had to know was on the line.

Anytime one of my suppliers tells me that they are going to raise their prices, I am going to look elsewhere for an alternative source for that product, if it is available. Obviously, Walmart excercised that option, which was precipitated by a demand from Rubbermaid for higher prices. It wasn't Rubbermaid's fault that the price of resin rose but the owners of Rubbermaid did have a choice in whether to risk 1000 jobs or take a small hit in profits of the shareholders. Looks like they chose wrong.

Roger

[Evan Kubota]

I have to agree with Roger. This isn't a protectionist state in Central America. Wal-Mart is under no obligation to give Rubbermaid a certain fixed price for their product, and if they were operating so close to cost that they wouldn't have been able to absord a small increase in the cost of resin, then there are other issues that need to be addressed. What if instead of demanding more money from Wal-Mart, they considered lowering salaries across the board, execs included? Normally that would be a somewhat defeatist response, but when a single buyer is absolutely critical to the success of the company, you do what you can.

[Alex]

I have to agree with Roger. This isn't a protectionist state in Central America. Wal-Mart is under no obligation to give Rubbermaid a certain fixed price for their product, and if they were operating so close to cost that they wouldn't have been able to absord a small increase in the cost of resin, then there are other issues that need to be addressed. What if instead of demanding more money from Wal-Mart, they considered lowering salaries across the board, execs included?

Ok, I somewhat agree with that....

Normally that would be a somewhat defeatist response, but when a single buyer is absolutely critical to the success of the company, you do what you can.

But now you bring up a new issue. It's why the U.S. economy allegedly frowns on monopolies in any industry. Wal Mart is so huge now that once you get them as a client for your product, you most likely become enslaved to them no matter how big your company was to begin with.

So it is a dance with the devil if once you hook up, under no circumstance can you ever raise the price you charge them.

[Evan Kubota]

I think Wal-Mart is too diversified to qualify as a monopoly in the strict sense. Anyway, doesn't a monopoly have to be actively enforced? While I'm sure someone will soon post some "evidence" that Wal-Mart breaks the kneecaps of their competitors, their importance to suppliers as a customer is not illegal per se.

Rubbermaid always had the option of not selling their stuff at Wal-Mart - they existed before Wal-Mart did, AFAIK. They chose to deal with Wal-Mart, and should have been more cognizant of the importance of that buyer. I certainly wouldn't have tried to reverse the flow of the river when that river was Wal-Mart and constituted a huge percentage of my sales.

I'm not saying they should never be able to raise their prices - obviously Wal-Mart alone has not kept prices from rising with inflation in all retail sectors - but they should have been able to cope with small increases in material costs without immediately transferring them to their chief buyer. That's just good business, and a sign of a well-run company. Apparently Rubbermaid execs were less than prudent.

[Alex]

I'm not saying they should never be able to raise their prices - obviously Wal-Mart alone has not kept prices from rising with inflation in all retail sectors - but they should have been able to cope with small increases in material costs without immediately transferring them to their chief buyer. That's just good business, and a sign of a well-run company. Apparently Rubbermaid execs were less than prudent.

I don't think it works that way. More likely when Walmart "lets" some one sell a product in their store, they probably invite the seller to a board room meeting, and then no matter what the first price quoted is, the execs all begin laughing boisterously.

Just to get into the store, Rubbermaid probably had to offer them the lowest price to begin with. Yes, Rubbermaid could say no, but then that might not be fair to their investors. Being in Walmart has it's advantages, Rubbermade probably gave them the best terms of any other company.

I would guess what happened was Rubbermaid had the tightest margin at Walmart than any other vendor, so Rubbermaid probably wasn't going to raise their prices elsewhere, only at Walmart, because the margin was so tight to begin with, and when Walmart realized that other outlets weren't getting a price increase, only they were, they got pissed. Total speculation on my part, but plausible.

I would say this level of nitpickiness by Walmart against an American company that is actually employing people in this country is a classic example of capitalism selling rope to the person who wants to hang our economy on the end of that rope.

[ccortez]

Oh, and a current legislative topic for our state is a not so old law created due to walmart gas station pricing. It requires fuel be sold a minimum 8 cents a gallon over wholesale. Walmart had a past history of selling fuel below wholesale to attract business to the store. They were selling fuel at a loss, and it was killing off independent gas station owners that made the majority of income on fuel sales.

Boo. Government-mandated price controls are as anti-competitive as the illegal price-fixing by private business.

I know where you're coming from, but... the price of gas is ALL ABOUT PRICE CONTROLS and has nothing to do with the market. That's why you aren't paying $10 per gallon right this minute.

[Alex]

Oh, and a current legislative topic for our state is a not so old law created due to walmart gas station pricing. It requires fuel be sold a minimum 8 cents a gallon over wholesale. Walmart had a past history of selling fuel below wholesale to attract business to the store. They were selling fuel at a loss, and it was killing off independent gas station owners that made the majority of income on fuel sales.

Boo. Government-mandated price controls are as anti-competitive as the illegal price-fixing by private business.

I know where you're coming from, but... the price of gas is ALL ABOUT PRICE CONTROLS and has nothing to do with the market. That's why you aren't paying $10 per gallon right this minute.

On the other hand, that is why there are so many SUV's getting 10 miles to the gallon as well. We'd actually all be better off paying 6 dollars a gallon but driving cars that got 40-50 miles to the gallon.

Everyone would benefit, including the planet as well, and ultimately, ourselves.

[MovieStuff]

I would say this level of nitpickiness by Walmart against an American company that is actually employing people in this country is a classic example of capitalism selling rope to the person who wants to hang our economy on the end of that rope.

"against an American company"?

Let's be clear about one thing: Walmart didn't fire 1000 Rubbermaid employees. The owners of Rubbermaid did that when the shareholders decided they would risk the jobs of their workers rather than take a potential reduction in profits. Again, voluntary choices were made at the top.

Roger

[monobath]

Oh, by the way, monobath, I'm not picking on you by quoting from your response, it's just that you phrased the question in the most succinct way that I've seen. Cheers!

Jason

Thanks.

I'm sorry to hear of the plight of the Rubbermaid factory and the effect it had on the town and the people who worked there. While such closures are unfortunate, competition is the nature of business. Rubbermaid was faced with a decision based on business circumstances, and the choice they made may or may not have been the one I'd have made. Perhaps they could have found another way to deal with the problem, and perhaps not.

Walmart is not responsible for Rubbermaid's decision to close the factory. Walmart is simply seeking the lowest cost for the type of product that Rubbermaid supplies, and that is a perfectly legitimate thing to seek.

Businesses like Rubbermaid are not owed an existence. They must work hard to survive, and they must be able to offer their customers something they want to buy at a price they are willing to pay. If they cannot or will not, then they will go out of business.

[monobath]

But now you bring up a new issue. It's why the U.S. economy allegedly frowns on monopolies in any industry. Wal Mart is so huge now that once you get them as a client for your product, you most likely become enslaved to them no matter how big your company was to begin with.

So it is a dance with the devil if once you hook up, under no circumstance can you ever raise the price you charge them.

A business that relies on a single customer for its survival is doubtless well aware of their dependency. It's their decision to do so, and they would be well-advised to consider strategies to lessen their dependence and to cope with the loss of the customer, should that come to pass.

Walmart is the largest retailer in the world, but they are nowhere near large enough to monopolize the industry.

[monobath]

I would guess what happened was Rubbermaid had the tightest margin at Walmart than any other vendor, so Rubbermaid probably wasn't going to raise their prices elsewhere, only at Walmart, because the margin was so tight to begin with, and when Walmart realized that other outlets weren't getting a price increase, only they were, they got pissed. Total speculation on my part, but plausible.

I would say this level of nitpickiness by Walmart against an American company that is actually employing people in this country is a classic example of capitalism selling rope to the person who wants to hang our economy on the end of that rope.

Walmart has a choice who to do business with, and whether or not to accept a particular price. Rubbermaid does too. They both exercised their choices. There is nothing about this that is in any way coercive or unfair.

[monobath]

Oh, and a current legislative topic for our state is a not so old law created due to walmart gas station pricing. It requires fuel be sold a minimum 8 cents a gallon over wholesale. Walmart had a past history of selling fuel below wholesale to attract business to the store. They were selling fuel at a loss, and it was killing off independent gas station owners that made the majority of income on fuel sales.

Boo. Government-mandated price controls are as anti-competitive as the illegal price-fixing by private business.

I know where you're coming from, but... the price of gas is ALL ABOUT PRICE CONTROLS and has nothing to do with the market. That's why you aren't paying $10 per gallon right this minute.

My preference would be for a free and unfettered market in oil and related products. I'm not really sure what the price of a gallon of gas would be under such circumstances, but it wouldn't need to be $10 per gallon to make alternatives cost-effective. Reducing our dependency on oil would be far better for our economy and for our planet in the long run than artificial price controls. Of course, the withdrawal will be painful, and people will no doubt complain mightily when it costs millions of jobs around the world.

I believe that it is just as wrong for governments to subsidize businesses as it is to force employers to pay a minimum wage. All such meddling is coercive and is supported by theft.