So WalMart bringing a few hundred jobs to one area is really affecting 1000's of jobs elsewhere.
Well, there's a lot to respond to in your post. WalMart got to where they are today because they do the most important thing in retail better than anyone else: distribution. They are masters of distribution and have earned their status simply based on that factor alone.
The economics of the situation are interesting and certainly there are winners and losers. The argument that there are more losers than winners due to lost wages and lost jobs isn't all inclusive IMO. The consumer gets a better deal, which makes for a lot of (admittedly small) winners. Some desperately poor people in a land far away get a little money to make some goods which makes them a little less desperately poor. Some (by contrast quite wealthy) Americans loose their jobs or take lower paying jobs. All true.
But that's capitalism: free thinking people acting freely to persue their best interest. Consumers seeking lower prices, producers seeking places to build their products at a low wage, retailers paying as little as possible for labor. Winners and losers abound in that environment. The net effect, however is a vastly better place for everyone.
The key to surviving the WalMart invasion is competition. Yes, smaller retailers can survive when WalMart comes in to town. How? Well, you don't compete head to head with them on consumer goods. Instead you offer products more tailored to your local customers, things which don't have enough appeal worldwide for WalMart to flex its distribution chain for.
For manufacturers the key is reducing costs. And not labor costs. Jobs move offshore because US manufacturers are incompetent. Low labor cost is a pretence (though the execs at those companies don't know it). The truth is that US labor can produce low cost goods at just as low a cost as those folks in low cost geographies. How? Simple. The same way Sony, etc make bargin bin priced electronics in Japan (Japan's labor rate is similar or higher than it is in the 'States and Europe).
Consider this: typical costs for a manufacturing plant are 85% material, 5% labor, 10% other stuff. Companies focus on that 5% and move stuff off shore. Then they need to have more inventory (because now a bunch of inventory is in transit). The labor rate goes down, but the material cost goes up. The net is a lower cost. But they COULD have kept the plant right were it was, and focused on reducing that 85% material cost.
That's why so many Japaneese automakers have plants in the US. You don't need to build as many cars for the US market when you don't have to ship 'em across the Pacific. The material cost goes down, and the automaker pockets the mountains of cash they saved on the transaction. That's why Toyota (the masters of this kind of thing) has enough cash to BUY, that's right BUY General Motors.
by Hagar » Sat Dec 11, 2004 9:36 am 
