Excerpts from the Walmart documentaries, "Walmart: The High Cost of Low Price", and "Is Walmart Good for America?"

 

From Dvd, Walmart:  The High Cost of Low Price

 

Lee Scott, CEO of Walmart:   We have a great relationship with the Chinese government.  They have treated us very fairly.  They actually, in what they have done, they actually, much like in the U.S., they hold us to a higher standard.  Higher standard of sanitation, higher standard of employment...

 

Interviews with Walmart factory workers in China.  

 

Girl:  My name is Weng Dupuis. ("Princess"?)  I am 21 years old. I'm from the Shengzai province.  My family plants corn, paddies, and potato.  I wanted to earn some money so that their life could be easier.  At least, I don't want their life to be too hard.  They would work from dawn until night.  They would begin to work on the farm at daybreak, and wouldn't get back until night.  I thought about working in the factory when I was in middle school.  At the time, I thought it would be interesting and exciting to work in the factory.  I left my home town on April 29 of this year, and then began to look for a job in Shengdeng (sp?)  At that time I had a friend working in that factory, who also came from my home town, so I went to see my friend each day at the factory gate, which is just in front of Wung Ni's room.  

 

Man: My name is Weng Ni (Little Bear), and I come from Hunan Province.  

 

Girl: He heard my dialect when I spoke with my friend, and then he spoke to me using the same dialect.  He asked me where I was from.  I didn't tell him the truth (laughs).  I said I was from Shangking area.  He served in the army in Shangking for a couple of years, so he can speak the Shangking dialect.  That's the way we got to know each other.  

 

Another man (washing his girlfriend's hair):  My girlfriend and I work in the same Walmart factory.  She works in the older part, and I work in the new one.  I am on the night shift, and finish work at seven in the morning.  She begins work at 7:30 each morning, and works overtime until 10 PM.  We don't have much time to spend together.  But whenever there is an opportunity, I'll cook some delicious food for her.   

 

Girl:  We like singing karaoke, shopping (they have a partially incomprehensible discussion of what they like to do around town together).  

 

We tend to rent a room outside, and cook by ourselves, because the meals offered by the factory are really disgusting.  However, the dilemma is, whether you live in the housing that is provided by the factory or not, they always deduct the rent from our wages.  You have no choice but to live inside.  If you are going to move out of the dorm, the factory will tell you, you can move out, and we we will not charge you for electricity or water, but rent will still be charged.  You see, if we live in the dorm, we pay not only the rent, but also the utilities, which is charged by how much you use.  

 

There are very few fans installed in my current workshop, it's extremely hot inside.  If they try to install a new fan, then the others will tell us that we can only have one fan, or the fans that are there.  In my working position, there is no wind at all.  Can you imagine?  I'm sitting there, dripping with sweat, all day long.   My body never gets dry.  

 

Man:  Walmart informed the factory that it was going to send people here for the inspection, and they will tell us how to lie for the inspectors.  For instance, the workers must respond that they work six days, when asked how many days they work.  Even though they actually worked for seven days.  

 

Scene showing workers crowding up flights of stairs in identical jeans and light blue tops, hard to understand:  Denghzai workers don't dress the way they want... the managers.

 

... in advance, and has a meeting to teach us how to lie.   If you lie well, you will be rewarded.  If not, you'll be punished.  Or fired.   The worker is given a fake pay slip, and they never let you have a chance to speak out the truth.  But threaten you to deliver false information.   

 

We really work day and night in order to get the wage of less than three dollars a day.  My mom wants me back home because she feels it's too toilsome.  But I don't think so.  Everyone else here has the same situation as me.  If they can do this, I can do it also.   I always think about my mom when I'm very tired.  That would be wonderful, if she could be here with me.  She takes care of me very well when I'm sick.  She lets me have a good rest, and cooks anything that I like to eat.  She's really very nice to me.  

 

Chinese worker number 1: I would respectfully like to ask the boss at Walmart, to give the Chinese workers some consideration.  And a chance for a little time off.  

 

Photo of child's toy car:

Cost for Walmart Factory Worker to assemble;  $0.18

Retail cost at Walmart:  $14.96

 

Walmart imported $18 billion from China in 2004.  

 

Lee Scott, Walmart CEO:  We added a hundred and twenty five thousand new jobs around this world this past year.  Good job!   (Thunderous applause)   Jobs with benefits.  Jobs that will have profit sharing.  Jobs with retirement savings accounts for our associates.  But most of all ... jobs that come with opportunities for personal development.   

 

Switch to Bangladesh, India.

 

Narrator:  A hundred and eighty thousand young women in Bangladesh who are sewing garments for Walmart.  These workers are getting up at 5:30 in the morning, they brush their teeth with their finger using ashes from the fire, because they can't afford a toothbrush.  Forced to work in the factory from 8:00 in the morning until 10:00 at night, fourteen hours a day, seven days a week, on wages of 13 to 17 cents an hour.  These are workers who are hit by their supervisors, trapped in utter misery.   As the largest company in the world, Walmart sets the standards that other companies are going to follow.  So Walmart right now is sucking down standards, all across the world.   These are workers who have no rights.  

 

 

 

Lee Scott:  The outlook for this company today is very positive.  Every country that we operate in, the Walmart model works.  

 

Following is the testimony of a Walmart factory inspector at Latin American plants who was fired by Walmart for consistently reporting truthfully on the shocking conditions.  He said that after several years of inspecting plants and seeing the same thing consistently, it was apparent that these were not isolated problems and the issues were not going to be addressed.   He said that Walmart management is under pressure to keep the goods flowing to America.  His job had been to certify that the workers were treated well.   

 

 

Is Walmart Good for America?

 

To see firsthand, how a promising new market for Walmart is playing out, I headed for China.   In the heart if its new industrial revolution.  Zhian Zhang.  South China's miracle city.   Twenty years ago, this was all rice fields.  Today it's a sophisticated city of seven million.

 

(Photos show a different China than does Walmart: the high cost of low price" or "China from the Inside" - clean buildings, modern ads, with European faces on them, and a Chinese woman in nice modern clothes talking into a cell phone on the street.  It's astonishing rise orchestrated by Chinese leaders, adn fueled by a currency devaluation in the mid 90's that dramatically lowered its export ____.   

 

Hong Kong businessman:  ... China is a Communist country... closed doors... when they opened up to Western businesses, the floodgates opened, basically.  Something that you just can't stop.  

 

The (rows of tall new apartment buildings) seemed endless.

 

North of Shiang Zhang, I found an entrepreneur, who was among the first to spot opportunity in new China.

 

(Shows a European businessman with his showroom of brushes that his factory makes.)

 

The backbone of China's new industrial might, is the flood of young Chinese flowing into this industrial province.  An area no bigger than Missouri.  Now teeming with forty million migrant workers.  They come to work, and live at the factories.  

 

At (the brush factory), they make a hundred dollars a month, or fifty cents an hour.  Other companies pay as little as 25 or 30 cents an hour.  

 

Brush factory owner:  They want to work.  They want to earn the money.  They want to get forward.  And they will do anything to move forward.  

 

Today, Haego supplies electric toothbrushes and cleaning supplies to big companies like 3 M, Proctor and Gamble, and Walmart.  

 

Haego: What's happened is, the world has come here, for ... it's like a supermarket, for manufacturing today.  And the quality is up to world standards, or a way past world standards.  And that's just what's happened in southern China.  

 

All across the region we saw evidence of the mass corporate migration into China.  Highways lined with factories like airport hangers.  Hundreds of billions of dollars on western investment have poured into China in the past 20 years.  

 

And Walmart is here too.  It has 35 supercenters in China.  And behind one of them, here in Sheng Zhian, I found Walmart's global procurement center.  A huge buying center tapping directly into China's new workshop of the world.  

 

Interviewee:  I interviewed people in Walmart's global procurement center in Xiang Zhiang.  And I asked them about the total number of Walmart suppliers, and I was told that Walmart has 6,000 global suppliers.  Eighty percent of those suppliers are in China.   Several hundred employees work at the procurement center, keeping the import pipeline full.   

 

Walmart gives Chinese suppliers the specifications for Walmart products.  And they teach those suppliers how to meet those specifications.  They have to do with price, they have to do with quality, they have to do with delivery schedule.  So in essense, Chinese suppliers learn how to export to the Chinese market, through large retailers like Walmart.  

 

Narrator:  The Chinese suppliers also learn just how tough Walmart can be.   

 

Kenneth John, Hong Kong entrepreneur:  Walmart, they're very shrewd people.  They know that they ahve the volume of orders behind them.  And they can go into a factory and almost demand, these are a list of demands of what I need.  

 

Narrator:  KEnneth John is a Hong Kong entrepreneur, who used to supply Walmart.  

 

Interviewer:  I've even heard that sometimes they will call three for four manufacturers into a booth, and tell tehm this is what I need.

 

John:  In a big reverse auction kind of thing, where they bid the price as low as possible.  Basically tehy bring people people into their offices, and just put a product in front of you, and ask everybody to bid their cost on the product.  And it's very high pressure.  

 

Interviewer:  Have you ever been in that situation, where you have four or five people in the same room?

 

John:  Yeah, I have.  Most of the things I was involved in... they were maybe, at the most, less than a dollar.  

 

Interviewer: So they're pounding for a few pennies.  

 

John: They're pounding, in alot of cases, for just one penny, in fact.  

 

Interviwer:  Now, the argument is, that this is getting a better deal for the consumer.  Do you buy that?

 

John:  No, they're getting a better deal for the retailer or the importer.  ... for the Walmarts, for the Targets, whoever does it.   

 

Narrator:  I heard about the Chinese producing cheap, low end consumer goods.  What was striking to me was how many Chinese companies were going high tech.   You may not have heard of TCL.  But you've seen their TV's.  And maybe bought them.  Marketed under brand names like Phillips, and RCA.   And you'll be hearing more from them soon.   They have a wide range of modern electronic products.   And they've just merged with French electronic giant Thompson.  Together they're now the largest TV maker in the world.   

 

Production manager:  19 (90?) percent of our exports are for North America and Europe, where we make a large part of our profit.  We need to fulfill the demand of our foreign customers.  (shows boxes of Magnavox 20" Walmart TV sets)   

 

Narrator:

 

And only one U.S. customer, it turns out, really matters to TCL.   

 

Production manager:  Selling to Walmart, accounts for nearly all our sales to the U.S. market.  Walmart keeps a very low inventory, with a fast turnaround.  Which forces us to speed up our production to catch up with the international market.  

 

(Scene of big trucks with American names in English on a highway in China)

 

Narrator:  It was a familiar refrain.   I heard it everywhere.  Ramping up production, supplying Walmart, shipping to America.  And at Xiang-Zhen's main port, I saw a river of exports.  Ten years ago, this was all barren land.  Today Shiang-Zhen is on the verge of becoming the third busiest port in the world, and Walmart is one of its biggest customers.  

 

Interviewee from above:  Walmart has a very close relationship with China. China is the largest exporter in the U.S. economy in virtually all consumer goods categories Walmart is the largest retailer in the U.S. economy in virtually all consumer goods categories.  

 

Interviewer:  Sounds like a commercial marriage made in heaven.

 

Interviewee:  Walmart and China are a joint venture.  And both are determined to dominate teh U.S. economy as much as they can.

 

Interviewer:  Walmart estimates that it imports 15 billion dollars worth of Chinese goods every year.   It may be alot more.  

 

Interviewer, with different interviewee:  We mentioned a figure of fifteen billion dollars.  Alot of ___ have given us figures far higher, well into the 20 billions and even 30 billions of dollars.  Is that possible:

 

Ray Bracy, Walmart VP (the interviewee):  I think it's possible.  It could be higher, it could be lower.  The other thing you have to remember is that we're growing pretty significantly in terms of sales, so it this year it will be higher, and next year it will likely be higher as well.  

 

Interviewee:  Walmart is providing a gateway into the American economy for overseas suppliers in China and elsewhere, and it's doing it on a scale that has been unprecedented.  

 

Scene of a shop named Cosco, loaded full of truck trailers labelled Cosco.

 

Narrator?: Cosco has a Japanese ship here, and a Chinese ship there.   

 

Yvonne Smith:  But they're all carrying Chinese product.

 

Narrator:  At the other end of the pipeline, I visited teh port of Long Beach, California.  I wanted to see how Washington's promise, of massive exports of U.S. products to China, was working out.   The port's communications director is Yvonne Smith.

 

Interviewer:  What are we shipping in, and what are we shipping back?   

 

Smith:  Well, we're bringing in consumer products.  We're bringing in about thirty six million dollars worth of machinery, toys, clothing, footwear.  ... Thirty-six billion dollars come here to Long Beach in consumer products, from China.

 

Interviewer:  And what are we shipping back?

 

Smith: We're shipping out about three million dollars worth of raw materials.  We export cotton, we bring in clothing.  We export hides, we bring in shoes.  We export scrap metal, we bring back machinery.  

 

Interviewer:  ... it's a third world country!

 

Smith:  We're exporting waste paper, containers full of waste paper, we bring back cardboard boxes, with products inside them.   

 

Narrator:  Add it all up, and the U.S. had a record 20 billion dollar trade deficit with China last year.   And it's headed even higher this year.   

 

Alan Tonelson, US Business and Industry Council:  The myth of an enormous and growing China market, wound up locking the United States into a trading partnership with China, that HAD to benefit China, much more than it could benefit us.  Because, and the reason was, China would always be able to sell the United States much more goods, than Americans could sell to Chinese.  Because Americans have the incomes that are needed to buy Chinese products.  Chinese consumers overwhelmingly don't have the incomes needed to buy American products.  

 

Interviewer:  The whole idea was wrong.

 

Tonelson:  It was completely wrong.

 

Larry Mishel, President, Economic Policy Institute:  When you look at the growth of the trade deficit in China, a very conservative estimate is that we have lost more than a million jobs to China since teh early 1990's.

 

Follows is a short debate in whether there is really a net loss of jobs to China or benefits have been generated somewhere else in the American economy.   Mishel states that he doesn't think that the bottom ranks of the U.S. economy have gained; he thinks they've lost.

 

Narrator:  The impact of Chinese competition is felt all across the U.S.   In towns like Circleville, Ohio.  Population, 13,000.   A Normal Rockwell kind of town, with its farms and factories.  Solid citadel of middle class America.  Former Republican mayor Ron Warnch has lived in Circleville all his adult life.  

 

Warnch: The community basically generated its livlihood off of the industry that came into the community, came in in the 1940's and 1950's.  Consumer electronics was the last large organization to join.  ...

 

Interviewer:  So you had good living standards, good jobs.  

 

Mayor confirms.

 

Narrator:  The French firm, Thompson, which manufactures TV sets, had the largest plant in town.  (The word RCA is also on the building.)  And it was a top performer.  

 

Randy Strutz, former Thomson plant manager:  The Circleville plant, probably in its heyday, in 1989 to 2000, was producing about 10 million pieces a year, for TV sets.  And they did glass components, about a thousand workers, highly motivated, highly productive, very efficient plant, and at the time .. was one of the most profitable contributers to Thomson's bottom line.  

 

Interview of a former worker who worked at the plant for 30 years and made up to $59,000 a year as an equipment operator.  

 

Narrator:  But from 2002 onward, the tide went out.  Plants in Circleville started closing.  And the big Thompson plant suddenly faced sharp foreign competition.   

 

Strutz:  We started to see more finished Chinese components coming into the market.  A few brands come to mind, like Apex, that were selling at prices that most people couldn't even manufacture at in the U.S.   And they're being sold at the same place that we all buy tv's.  Best Buy, Circuit City, Walmart.  And Sears.  And you know, all of a sudden, you have this ... pressure on the retail price, driven largely by Chinese producers.   

 

Narrator:  And oddly, the Circleville mayor said, the Thomson plant ran into serious trouble, not just because of the Chinese, but also, an American company.  

 

Ron Wunsch (correct spelling), mayor:  And in 2003, they lost a major proportion of their total production workers from a particular customer, Sanyung (sp)   

 

Interviewer:  They lost hte Sanyo contract because of what?

 

Wunch:  My understanding, based on what I was told, was that an end use retailer told the Sanyo people what they were going to pay for the TV.   

 

Interviewer:  And who was that retailer?

 

Wunch: My understanding was that that was Walmart.  

 

Strutz:  Walmart's going to say, if you want the space, you're going to have to match the price, or find something else to do.  And so it forces - in our case, Sanyo, to go back upstream to look at tube and glass manufacturers who ... and sometimes they're not there.

 

Interviewer: So if they're not there, then you go to China.  

 

Strutz:  To China, or wherever they can, to compete.  

 

Narrator:  Foreign competition hit other TV makers too.   In East Tennessee, I came across the very last American TV maker, desperately fighting to hang on.  

 

Well it's a constant struggle to survive, I mean, it's a very competitive market.  

 

Tom Hopson is President of Five Rivers Electronics, an assembler of brand names like Phillips, San__, and RCA.   With foreign imports dominating the small TV market, Hopson concentrated on high end, big screen sets.  But even that was no protection from the Chinese.  

 

Hopson:  By the year 2003, they were like, increased 1100 percent,  imports.  So they just grew at an amazing rate. All of a sudden they weren't here, they were shipping a hundred thousand, now they're shipping millions and millions of televisions.   All of a sudden from China.

 

Narrator:  In three short years, Chinese TV makers have grabbed one third of the high end market, about three hundred and fifty million dollars of business.  But Hopson was convinced he was up against more than just free trade.  

 

Hopson filed a free trade lawsuit, charging that the Chinese are dumping large quantities of high end TV sets onto the American market at prices below free market cost.  

 

Skip Hartquist, Five Rivers Attorney, It isn't free trade.   The Chinese are pricing their TV sets below the obigations they undertook when they joined the World Trade Organization a few years ago.   The Chinese system has built in advantages that noone else in the world has.   Their currency is devalued by we estimated 40%.  Their workers are not treated fairly in terms of worker rights.  The government provides subsidies to Chinese producers, at preferential interest rates, that may not even have to be repaid.  It's a rigged system.  

 

Narrator:  Chinese TV makers vigorously fought the case.  Including TCL.  

 

...

 

Hopson:  Well, Walmart chose the side of the Chinese.   (Shows a legal brief filed by Walmart.)  And basically, Walmart spent alot of time and effort.  At the International Trade Commission hearing, testifying against us, and our case.  

 

Narrator:  Last April, Five Rivers plant won its case.  The International Trade Commission concluded that the Chinese were illegally dumping high end TV's on the American market.  It imposed new import duties.  

 

Narrator:  But it was already too late for other U.S. manufacturers, like that Thomson plant in Circleville, Ohio.  Last May, the Thomson plant was finally shut down.  

 

Thomson plant worker:  Exactly.  (Thomson) told us, that they could buy the glass more cheaply from China, than from competitors we could actually make it for, at our plant.

 

Narrator:  Suddenly a thousand workers like Steve Radcliffe lost the jobs of a lifetime.  

 

Discussion of lack of opportunities in Circleville.

 

Narrator:  Ironically, it may be Walmart, to the rescue.  One of the job opportunities in Circleville will soon be a new Walmart Supercenter, that just broke ground on a patch of Ohio farmland right next door to the now vacant Thomson tv plant.  

 

Interviewer to laid off employee:  How would you feel about working for Walmart?

 

Employee, who already said he wants a job for comparable pay and benefits:  Ah, I don't think I'd really want to work for Walmart.  ... Walmart's a big contributor as far as bringing in alot of the foreign products, the cheaper made products adn so forth, and quite frankly, that's alot of what's going on right now, that put us out of business.  

 

Narrator:  And for those that lost jobs at Thomson, Walmart jobs represent a steep cut in pay.  Almost half of the fifteen to sixteen dollars an hour they made at Thomson.  And a far cry from the pension, health care and security benefits that have long been the norm in U.S. industry.    

 

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