Is Wal-Mart Good for America? (full documentary) | FRONTLINE

[Music] there's never been a company like it walmart is probably the broadest and most powerful company in u.s business history it's everyday low prices benefit millions of americans walmart has really given an increase in income to to every american but some say it's a bad bargain it's putting people out of work that's what it's done unfortunately plants are shut down of this caliper tonight correspondent hedrick smith investigates how walmart is changing the american economy the chinese guys bought the big machine following the trail of low prices in america to low-cost production in china i said hold it hold it hold it the next one's china i've got to get here tracking the nation's growing trade deficit walmart's number one customer walmart to your number one customer number one customer and examining the growing controversy over the walmart way the lowest prices have to lead to the lowest wages into job loss and to lower living standards tonight on frontline is walmart good for america [Music] it's 6 a.m at the university arena in fayetteville arkansas and the faithful are gathering they've come to cheer their home team but this isn't your typical home team [Applause] this is team walmart and this is a shareholders meeting unlike any other [Music] [Applause] [Music] [Applause] [Music] [Applause] and walmart is a company unlike any other your company was the first company on the planet to report one quarter of a trillion dollars in sales 256 billion dollars you know what that is that's one ibm one hewlett packard one dell computer one microsoft and one cisco system and oh by the way after that we've got two billion dollars left over as the world's largest company walmart has tremendous power and influence it is now the model not just for retail but for companies all across the corporate landscape [Music] in the 19th century it was the pennsylvania railroad which called itself the standard of the world early 20th century it might have been u.s steel general motors of course in the mid 20th century but clearly walmart today is is setting a sort of a new standards that other firms have to follow if they hope to compete and more than just other firms it's setting standards for the nation as a whole [Applause] by figuring out how to exploit two powerful forces that converged in the 90s the rise of information technology and the explosion of the global economy walmart has changed the balance of power in the world of business okay it used to be that manufacturers big multinational manufacturers had the most power companies like general motors and general electric today i think that global retailers actually have become the most powerful companies in the global economy [Music] to understand walmart and how a company with such humble roots has managed to build a global empire i headed for bentonville arkansas it's an overgrown crossroads town tucked into the bible and barbecue belt of northwest arkansas here in the heart of the old town sits the five and dime store that sam walton opened in 1950. a few blocks away i found the walmart of today the walmart we've come to know is consumers a cornucopia of thousands of different items all under one roof the epitome of one-stop shopping every week walmart says 100 million american shoppers stream into its 3400 stores it's very convenient for me to be able to get a one-stop shop i know i don't have to look and see where i can save the most money i know when i come in here i can save money good prices good quality stuff i've been thinking about having my social security check direct deposited to walmart since i buy everything at walmart what makes walmart successful what keeps us motivated and what really challenges us every day whether it was from the day one when walmart began or till today i think it's the same that we really strive in everything we do to keep our costs as low as possible so that we can provide the customer a value and still make it a reasonable profit for us for our company that was sam walton's formula buy cheap sell for less than the other guy and make your profit on high volume and fast turnover sounds simple but this super center is a world away from sam's five and dime how do they keep track of it all how do they know what to stock how do they keep prices so low what i'm going to do is show you how we use this telesign unit linda dillman is walmart's chief information officer right and she let me in on one of walmart's most important tools a little gadget called a tells on it tells me the sale price of the item how many i currently have and it knows what the history looks like we're tracking each sale as it occurs we know what we think it'll do going forward based on its trend walmart was one of the first retailers to understand the power of information hidden in the barcode this little barcode here is not just a simple thing it's almost an encyclopedia of information absolutely it allows us to tie this item to a lot of information we know about it that we could only collect because we had that barcode how many items are do you have in a store over 100 000 so close to 120 000 items walmart couldn't manage without the barcode it helps them overcome one of retailing's thorniest problems getting the right mix of products in the store you can track sales on specific items specific weeks specific days specific hours of the day john lehmann worked at walmart for 17 years he managed six different stores disillusioned he quit to go work for a union trying to organize walmart workers track sales uh spikes during the year during certain seasonal periods and clothes sizes sizes colors flavors all of those things it's just it's really incredible with its own supercomputer walmart streamlined its supply chain speeding delivery from plant to store shelf the sales recorded and then an order is automatically generated that evening at midnight and that warehouse fills that order and it's sitting back on the shelf the next night or the the following night walmart became a world leader in logistics and promoted greater efficiency among its suppliers some analysts even credit walmart with increasing u.s productivity walmart as an efficiency machine has just done better than any other u.s retailer or perhaps any other u.s company in history with other mass retail chains like target and kmart walmart generated a revolution in how goods are produced a shift from what's called push production to pull production the push system involves manufacturers deciding what they're going to produce and then trying to get retailers to buy it and sell it for them the pull system involves retailers deciding what is being sold collecting information on what is being sold and then telling manufacturers what to produce and when to produce it based on what is actually being sold walmart's pull is so powerful that here in bentonville manufacturers have set up satellite sales offices in what's now known as vanderville i found a who's who of walmart vendors in one corporate office park i found a sock manufacturer kentucky derby hosiery its ceo is bill nickel yes if you want to sell walmart you know you need to come to bentonville it's been that way for a long time i don't see that that's going to change so people who travel a lot found it maybe more convenient just to have an office here that they were continuously coming to bentonville so a lot of them just moved here or at least opened an office here the suppliers come in droves hungry for big contracts they get herded into little rooms for bargaining sessions with walmart buyers they force all of us by really good business discipline to be sure we're paying attention at all times to what their customers want to buy it serves the purpose of saying this is what they want and they want to buy it at this price therefore that's what we better be doing our little company the focus is on what matters most to walmart prices well it's it's very one-sided there is no negotiation there's not much negotiation at all the manufacturer walks into the room i've been in these little cubicles i've seen it happen buyer says look we want you to sell it to us for five percent on a dollar that cost lower this year than you did last year they know every fact and figure that these manufacturers have they know their books they know their costs they know their business practices everything you know so what's a manufacturer left to do they sit naked in front of walmart you know walmart calls the shots if you want to do business with us if you want to stay in business then you're gonna do it our way and it's all about driving down the cost of goods the power of walmart is such it's reversed a hundred year history in which the manufacturer was powerful and the retailer was sort of the vassal it's changed that turn that around entirely now the retailer the mass global retailer is the that's the center that's the po the power and the manufacturer becomes the surf the vassal the underling who has to do the bidding of the retailer that's a new thing [Music] i wanted to see how this bold new world of retail power had changed the game for established brand name manufacturers so i headed to worcester ohio a small college town and long time home to one of america's best known brands rubbermaid maker of plastic pails garbage cans and all kinds of containers we were one of the best known brand names in america because we were in virtually every home one way or another very very impressive display stanley gault was ceo of rubbermaid through the 1980s and early 90s galt bet rubbermaid's future on supplying big box discount chains like walmart the tea leaf said you better be a part of this growing of these growing new segments they provide a tremendous opportunity for growth and for volume sales and they can take a new product and make it a success overnight one of galt's rising lieutenants was wolfgang schmidt who would later become ceo there was a dramatic shift over a relatively short period of time as we went from thousands of customers that we were selling to to where five or seven of our customers represented two-thirds of our volume these big box retailers the big box mass merchants you have to have a very tight relationship with them and you have to be important to them no customer was more important to galt than walmart when i came to rubbermaid they did not sell walmart they were selling kmart but they wouldn't sell walmart well within a short period of time walmart really within a year they were our largest customer tired of dragging your garbage to the end of the drive then roll it with a rough neck wheeled refuse container from rubbermaid heavy duty construction the walmart account helped fuel rubbermaid's rapid growth sales and profits soared lover made ideas that last its products were so highly regarded for quality that rubbermaid was voted the nation's most admired company in 1994. it's really your peer group the other manufacturers out there in the world saying this is the company that is really doing it they're doing all the things right and they're doing the things that make them very admired our brand name our quality our product development but behind the headlines rubbermaid was struggling to maintain its ambitious growth targets then suddenly it found itself in a showdown with its biggest customer the price of resin skyrocketed and resin is a huge component of any plastic product that you make and when we went out with a price increase across the industry to all retailers saying our raw material costs have increased significantly we have to get a price increase for our products walmart would not take that price increase they flat out refused to take the price increase other mass retailers agreed to a price hike and rubbermaid's ceo flew to arkansas to ask bill fields head of walmart stores to reconsider they were very public in those days as you might recall as were a lot of retailers about saying one of the advantages we as big box retailers have is we can put the hammer to the manufacturers and we can give american consumers lower prices so did fields put the hammer to you oh in his own way certainly i thought it was a vindictive kind of meeting that said yes you may be rubbermaid and you're a big rubbermaid and you've got the great name and all that but you're not going to tell us what to do and we're not going to take your price increase and we really don't care what it does to you so what does it mean to you do you lose shelf space do you lose volume to walmart at that point sure you know when push comes to shove their way of disciplining the supplier is to show that volume can be given or be taken and they dropped a number of our products for a couple years just dropped those products that impacts the company tremendously to me it was one of the first signs of the decline of rubbermaid i asked a walmart spokesman about the clash with rubbermaid because bill fields no longer at walmart didn't answer frontline's inquiries whatever happened there i'm sorry i can't comment because it predates me and i'm not familiar with the specifics but i would just re-emphasize that it is not our intent to be bullies as buyers to our suppliers walmart's pullback was a body blow to rubbermaid coupled with lacks management at rubbermaid it plunged the company into deep trouble in 1999 rubbermaid sold out to newell a major competitor by the time i arrived in worcester five years later it had come to this 25 young man 25 30. rubbermaid auctioning off its birthright [Applause] they're from all over we've got guys from all over the 50 states uh we've got two guys in from south america two guys from italy a guy from spain uh two guys from over in japan or china area we got a guy from a couple of guys from china yeah they're buying here they bought the one big machine today yeah the chinese guys bought the big machine right it's an injection machine they bought i believe for 850 000 so rubbermaid's original plant was closing shop and countries like china were picking up the pieces you know when you think of worcester you think a rubbermaid and you think a made you think of worcester i mean this is what this town is all about so what's it going to be without you move all this stuff out you're going to got a carcass here exactly there's a bionic carcass too well there's about a thousand jobs that were lost here yeah close to a thousand jobs it seemed to me that it wasn't just a plant dying a set of corporate values was passing away ten years ago rubbermaid with its reputation for quality was named most admired last year walmart with its reputation for cost cutting was most admired if you look at the shift from rubbermaid yes as the most admired company in 1994 and walmart as the most admired company today in terms of the larger american economy what does that mean what's that say about the touchstones of success rubbermaid represented an innovation-oriented high road towards u.s competitiveness i think walmart represents a cost driven low price low road towards u.s competitiveness and in a sense there are two dramatically different styles in which the u.s economy can be organized i think the walmart model is winning out morning associates need all available associates all department managers back at the super center in bentonville employees gather for the morning meetings a daily ritual at 5 000 walmart stores all over the world it's part of the walmart culture good morning everybody [Applause] everybody doing all right okay let's talk about sales hey we had a pretty good day yesterday we were up six and a half percent meat was up 19.2 percent yesterday it's a pep rally around sam walton's low cost low price formula for [Applause] success else you got an item 88 cents has an 85.23 mark great item all right they're a dollar and a half for 24 and a 30 mark all right good item pay close attention what they're talking about is how walmart pulls in millions of shoppers by touting what it calls the opening price point then we have simply basic socks for your dollar a buck with 94 cents awesome we sell in all the colors we sell about 60 pairs a week okay opening price points are the rock bottom prices that walmart showcases in special displays the 9.14 saucepan trick-or-treat jack-o-lanterns for 78 cents the opening price point is clearly a foundation of who we are and how we interact with our customers we feel that they need to have the best product the best value at the best price we can achieve it's the heart of walmart's pricing strategy walmart puts tremendous amount of planning organization and thinking into what their opening price points are going to be based on last year's sales based on customer requests every line of goods has an opening price point the cheapest item in the line for example this 29.87 microwave oven it's a good price but it's also the bait to lure customers to that department just to get you in you look at that and you think wow what a great price then they got you because you walk about 10 more feet and you see the item you really want that same category then you buy that item but it's not going to be probably the lowest price intent so are you saying that that the opening price is the lowest price and actually will beat the competition but maybe other items in the same category aren't necessarily the lowest price oh absolutely not once you walk past that opening price point they got you because you've already formed the perception perception that everything in that department is the lowest price in town and maybe it's not no it's not no i can tell you it's not i can tell you from experience it's not back in the 1950s sam walton dreamed up the idea of an eye-popping opening price point sam had a old ford pickup truck and he'd go down the road and buy ladies panties and sell them at a ridiculously low price you know 10 for a buck or something like that and it worked sam got a jump on bigger rivals by targeting territory they ignored building his early stores near small towns in the south one thing you have to think about in history about us is that we're a company that hasn't been that long ago that we were a regional player what we found is we had to compete with as a regional player those that were national players how do we do that we had to go overseas to find products in some cases in the 70s and 80s sam walton would travel overseas looking for goods that would sell in our stores despite walmart's much publicized buy american campaign in the late 80s low-cost imports from asia became a vital component of walmart's low opening price point strategy they were more single-minded in terms of global cost cutting and internal efficiency than any other u.s retailer and that helps us understand how and why they were able to pass companies like kmart and sears that were the early leaders in u.s retailing and offshore sourcing there was a lot of talk about those companies being asleep at the wheel being fat dumb and happy you know and we didn't want to be fat dumb and happy we wanted to be aggressive and they were aggressive from 38 stores in 1970 walmart grew to 276 in 1980 and mushroomed to 1500 in 1990. in 1991 it overtook its long established rivals to become the nation's biggest retailer then surprisingly walmart began having trouble in 1992 sam walton died and a year later with the economy slow and sales sluggish walmart's stock price slumped badly walmart got very nervous it got lower and lower approaching that twenty dollar mark and that twenty dollar mark seemed to be the like the threshold if it gets down below twenty dollars it's going to be a panic walmart's new management needed to crank up sales and profits and they hit on a way to do both i saw this as a store manager an influx a giant influx of imported merchandise coming in the stores were inundated with inventory inundated i mean we had so much of this cheap crap floating around the store we didn't know what to do with it lehman was so overwhelmed with merchandise that he called the vice president at walmart headquarters to ask what was going on he said john you know we got to bring our profit in for the quarter for the month for the year and you know our stock price is declining and you do understand john that these imports have a high margin a high markup and they're going to help your profit loss statement they're going to help the company's profit loss statement the impact was dramatic and immediate the margins on the merchandise that were coming in from the walmart import items were incredible yeah 60 70 80 percent you know uh incredible compared with what from american-made items well compare that to a uh electric razor that you might be making 20 percent on or 18 on or 22 so you're saying that walmart is making much bigger profits on these items that are made in china or or these low-wage countries is that right that's absolutely right by the late 90s walmart was dependent on low-cost asian imports and it began pushing its american suppliers to follow walmart to asia their message to us surprisingly is there's a broad market out there if you want to focus on the lowest cost part of the market it's obvious that you can't do that in the united states so if you want to play in that 25 of the walmart market you got to be in a very low cost place china or someplace like china that's correct but china practically speaking is it and a number of suppliers have told us that they have felt real strong particularly opening price point pressure from walmart that has effectively forced them to make decisions to move overseas specifically to china i don't know that that is a common practice i don't know i can't even confirm that that happened i suspect that um this is a legitimate um occurrence that you're citing um and and there may be some validity to that the sad truth is because of perhaps the pressure on price because of this opening price point initiative that we and others have and because the pressure of costs on the other side that it's difficult to make that make make ends meet if you're a business by staying here you as a producer of socks for 30 40 years are you now going to find that you need to put a production facility in china absolutely for us to remain a viable company over the long run we know we have to compete walmart basically tells its suppliers we need to get those products at 30 lower price you need to move to asia you need to move to china because that will meet our bottom line price figures walmart was capitalizing on a watershed moment on the world stage america's embrace of trade with china in the late 90s with corporate america hailing china as the new economic frontier president clinton signed a permanent trade agreement with the chinese our administration has negotiated an agreement which will open china's markets to american products made on american soil everything from corn to chemicals to computers the picture painted was that china was a big emerging market for u.s exports and that u.s workers and also u.s companies companies that made their products here could profit tremendously from the opening of trade flows with such an enormous country like china after all it had 1.2 billion people [Music] to see firsthand how the promise of a vast new market for america was playing out i headed for china and the heart of its new industrial revolution shenzhen south china's miracle city [Music] 20 years ago this was all rice fields today it's a sophisticated city of 7 million it's astonishing rise orchestrated by china's leaders and ignited by a chinese currency devaluation in the mid 90s that dramatically lowered its export prices it's the opening of china china is a communist country and for the longest time they had closed doors and when they opened up to western businesses the floodgates opened basically and it's something that you just can't stop the boom seemed endless north of shenzhen i found an entrepreneur who was among the first to spot opportunity in the new china well these are the products we make this gives you some idea of australian donald haye came to south china 20 years ago i was in this part of the world and i could see i saw the the cheap products come out of japan and i saw then that that market went to korea and then it went to taiwan i said hold it hold it hold it the next one's china i've got to get here the backbone of china's new industrial might is the flood of young chinese pouring into this industrial province an area no bigger than missouri now teaming with more than 40 million migrant workers they come to work and live at the factories at hayes company heico they make a hundred dollars a month or about 50 cents an hour other companies pay as little as 25 or 30 cents an hour they want to work they want to earn the money they want to get forward and they will do anything to move forward today heco supplies electric toothbrushes and home cleaning products to big american companies like 3m procter gamble and walmart what's happened is the world has come here as a marketplace it's like a supermarket for manufacturing today and the quality is up to world standards in a long way past world standards and that's just what's happened in southern china all across the region i saw evidence of the mass corporate migration into china highways lined with factories like airport hangars hundreds of billions of dollars in western investment have poured into china in the past 20 years and walmart is here too it has 35 super centers in china and behind one of them here in shenzhen i found walmart's global procurement center a huge buying operation tapping directly into china's new workshop of the world i interviewed people in walmart's global procurement center in shenzhen and i asked them about the total number of walmart suppliers and i was told that walmart has 6 000 global suppliers 80 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 a sense chinese suppliers learn how to export to the us market through large retailers like walmart the chinese suppliers also learned just how tough walmart can be walmart is uh they're very shrewd people they know that they have the the volume orders behind them and they can go into a factory in almost demand these are my list of demands this is what i need kenneth chan is a hong kong entrepreneur who used to supply walmart i've even heard sometimes that they will call in three or four manufacturers into one of their little negotiating booths and auction them off say this is what we want the big reverse auction kind of thing where they they bid the price as low as possible what do they do basically they bring people into their offices and just put product in front of you and ask you to everybody that did the uh their costs on the product and it's very uh [Music] high pressure have you ever been in that situation where you had a bid three or four people in the same room yeah i have all of the things that i was involved in they're very very inexpensive lesson like they're probably uh at the most maybe less than less than a dollar so they're pounding for a few pennies they're only pounding for in a lot of cases it's just one penny in fact now the argument is that this is getting a better deal for the consumer do you buy that or do you say it's getting a better deal for the uh for the retailer or the importer for the walmart yeah for the walmart for the targets whoever does it 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 tvs and maybe bought them market it under brand names like phillips nrca 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 electronics giant thompson together they're now the largest tv maker in the world we need to fulfill the demand of our foreign customers and only one u.s customer it turns out really matters to tcl selling to walmart accounts for almost all our sales to the u.s market walmart keeps a very low inventory and a fast turnaround which forces us to speed up our production to catch up with the international market it was a familiar refrain i heard it everywhere ramping up production supplying walmart shipping to america and at shenzhen's main port i saw a river of exports ten years ago this was all barren land today shenzhen is on the verge of becoming the third busiest port in the world and walmart is one of its biggest customers walmart has a very close relationship with china china is the largest exporter to the u.s economy in virtually all consumer goods categories walmart is the largest retailer in the u.s economy and virtually all consumer goods categories it sounds like a commercial marriage made in heaven walmart and china are a joint venture and both are determined to dominate the u.s economy as much as they can walmart estimates that it imports 15 billion dollars of chinese goods every year and maybe a lot more you've mentioned a figure of 15 billion direct and indirect imports others have given us higher estimates so well into the 20s and maybe 30 billion dollars is that possible i think it could it's possible it could be higher and could be lower the uh the other thing you have to remember is that we're growing pretty significantly in terms of sales so next year it will be higher and the year after that is likely to be higher as well 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 is unprecedented costco that's chinese and japanese ship here but they're all carrying chinese cargo at the other end of the pipeline i visited the port of long beach in california i wanted to see how washington's promise of massive american-made exports to china was working out the port's communications director is yvonne smith what are they shipping in and what are we shipping back well we're bringing in consumer products we're bringing in about 36 billion dollars worth of machinery toys clothing footwear 36 billion right here in long beach 36 billion dollars comes through long beach from china alone consumer products and what are we shipping back we're shipping out about three billion 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 so they're doing all we're like a third world country we're exporting uh waste paper containers full of waste paper we bring back cardboard boxes with products inside added all up and the us had a record 120 billion dollar trade deficit with china last year and it's headed even higher this year 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 the reason was china would always be able to sell the united states much more goods than americans could sell to chinese because americans had the incomes that are needed to buy chinese products chinese consumers overwhelmingly don't have the incomes needed to buy american products so the whole idea was was wrong it was completely wrong when you look at the growth of the trade deficit with china you can say that a very conservative estimate is that we have lost more than a million jobs to china since the early 1990s i think it's impossible to say that we've lost a million jobs to china trade policy or trade flows one way or another don't have an effect on overall employment numbers they affect the kinds of jobs we have and so some number of jobs have definitely been eliminated because of chinese competition another elsewhere in the economy other jobs have been created because of chinese competition because american consumers have saved at walmart buying chinese goods they've got more money in their pocket to buy something else which creates business opportunities for those other businesses which means they hire workers they would not have hired otherwise the net effect most economists think is a wash theoretically the gains from trade offset the losses from trade but nothing says that there are more winners than losers and nothing says that for the bottom three-fourths of america that they are net gainers in fact i believe that most people have been losers from trade the impact of china's export boom has been felt all across the us [Music] in towns like circleville ohio population 13 000 a norman rockwell kind of town with its farms and factories a solid citadel of middle class america former republican mayor ron wanch has lived in circleville all his adult life the community basically generated its livelihood off of the industry that came into the uh community came in in the 1940s and 1950s thompson consumer electronics was the last large organization to join that came in the 1970s so you had good living standard good jobs good jobs good living standards and good people in the community the french firm thompson which manufactures tv sets had the largest plant in town and it was a top performer the circle plant in its heyday probably around 1999 2000 was producing about 10 million pieces a year for uh the production of television sets they made the glass components about a thousand workers highly motivated highly productive very efficient plant and at the time it was one of the most profitable contributors to thompson's corporate bottom line steve ratcliffe was among the thousand workers who rode the economic wave with thompson as a machine operator he made up to 59 000 a year with overtime i've done this job for the last 30 almost 31 years and it's become my life and it's the only thing i've ever known in my adult working career was that job but from 2002 onward the tide went out plants in circleville started closing and the big thompson plant suddenly faced sharp foreign competition 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 the us and they're being sold at the same place we all buy tvs best buy circuit city walmart and sears and you know all of a sudden you have this end pressure on the retail price driven largely by the chinese producers and oddly mayor winch says the thompson plant ran into big trouble not just because of the chinese but also an american company in 2003 they lost a sizable portion of their total production orders from a particular customer sonya sanyo i believe they lost the sanyo contract because of what 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 and who was that retailer my understanding is that that was walmart walmart's gonna say if you want our space you're gonna have to match the price or figure something else to do and so it forces us a supplier like sanji to go back upstream to the tube and in our case glass manufacturers to look for price concessions but sometimes they're not there so if they're not there then they go to china then they go to china or wherever they can to compete [Music] foreign competition hit other tv makers too in east tennessee i came across the very last american-owned tv maker desperately fighting to hang on well it's a constant struggle to to survive i mean it's a very competitive market right now we've got about 750. tom hopson is president of five rivers electronics an assembler of brand names like philips samsung nrca with foreign imports dominating the small tv market hobson concentrated on high-end big screen sets but even that was no protection from the chinese by the year 2003 they were like increased 1100 percent in imports so they just grew at an amazing rate all of a sudden they weren't here they were shipping you know maybe a hundred thousand now they're shipping millions and millions of televisions all of a sudden from china in three short years chinese tv makers had grabbed one-third of the high-end market about 350 million dollars of business but hopson was convinced he was up against more than just free trade you know we're here to create jobs for our people in greenville tennessee and on a fair level playing field if we can't compete then we go out of business like anyone else but if it's unfair and it's illegal and someone's doing something to damage and put these people out of a job we're going to try to do something to keep these jobs hobson turned to washington he filed a trade complaint charging the chinese with dumping high-end tvs onto the american market selling it below free market cost it's not fair trade it's not free trade the chinese are pricing their products in a manner contrary to the obligations they undertook when they joined the world trade organization a few years ago the chinese system has built-in advantages that no one else in the world has their currency is undervalued by we estimate about 40 percent 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 chinese tv makers vigorously fought the case including tcl tom hopson was prepared to take on the chinese but stunned at whom else he had to fight what side did walmart come down on well walmart chose the side of the chinese and basically walmart spent a lot of time and effort at the international trade commission hearings testifying against us and in our case when i asked a walmart spokesman he said he could not address this specific case the question of dumping does walmart have a position on dumping cases i think we should weigh in if we feel a need if there is an issue that we see that perhaps needs a perspective from the retail trade ourselves or if we're asked to and do you see walmart's position weighing in on behalf of the american manufacturers or behalf of the foreign companies that are supplying it i think it has to be a case-by-case basis why would an american company fight american companies in american jobs unless it was for their own profit i don't i don't understand that why would walmart and other companies actually testify to support jobs in china instead of american jobs unless there was some benefit to them last april five rivers won its case the international trade commission determined that chinese producers were illegally dumping high-end tvs on the u.s market it imposed new import duties effectively raising chinese prices and making five rivers more competitive if you had a bad case or you'd lost this case would you shut down absolutely there's no doubt in my mind that if we had lost this case this factory would not be in business but it was already too late for other u.s based tv suppliers like that thompson plant in circleville ohio last may the plant was finally shut down did thompson say that it was shutting the plant down because of competition from china exactly they basically told us that they could buy the glass from their competitors coming out of china cheaper than what we could actually make it for at our plant suddenly a thousand workers like steve ratcliffe lost the jobs of a lifetime you kind of feel like you've been a failure in a way you worry a lot like i said i worry about whether or not i'll be able to find work with you know comparable wages and benefits and just what the future will be job opportunities for the kids coming out of high school in this area today are very much lower than they were 10 years ago there are a lot of people in this community who have families that the father worked 30 or 40 years at the plant then the son got employed and the third generation has been employed some of the plants and those are gone now and there's no opportunity for that what are those what are those high school kids gonna do we don't know we don't know [Applause] ironically it may be walmart to the rescue one new job opportunity in circleville will soon be a new walmart super center that just broke ground on a patch of ohio farmland right next door to the now vacant thompson tv plant how would you feel about working for walmart uh i don't know well i'd really want to work for walmart or not to be honest walmart's a big contributor as far as bringing in a lot of the foreign products the cheaper made products and so forth and quite frankly that's that's some of the what's going on right now with what put us out of business is the foreign competition and for those who lost jobs at thompson walmart jobs represent a steep cut in pay almost half of the fifteen to sixteen dollars an hour they made it thompson and a far cry from the pension health care and job security benefits long the norm in u.s industry what joseph schumpeter who was an austrian economist famous used the phrase creative destruction what he meant was that one mode of production one form of capitalist economics comes to the fore it's more efficient it's more powerful it destroys literally other forms of production other other firms and that's what walmart has done it has it is discovered with this with this low wage model with a technologically proficient its global reach it is a sort of new model of world capitalism really beginning in america the rest of the world and it is destroying creatively but nevertheless destroying competitors and really other ways of thinking about the way the world works [Music] i guess my question for you is is walmart good for america is this strategy of walmart good for america i think walmart is good for america walmart is uh doing what america is all about the american market economy is all about which is producing things consumers want to buy and walmart is is offering consumers a wide range of goods at rock bottom prices and therefore it is meeting the market tests [Applause] well if people were only consumers buying things lower prices would be just good but people also are workers who need to earn a decent standard of living and the dynamics that create lower prices at walmart and other places are also undercutting the ability of many many workers to earn decent wages and benefits and have a stable life we absolutely believe that we are raising the standard of living through lowering the cost of goods for people there are those who criticize us and and and make assertions that there is somehow a negative to that um and it's a it's a print it's a it's a premise that i simply reject [Music] in the end is walmart good for america if you want these low prices then you go buy your products from walmart but what does that actually do for this country it's putting people out of work that's what it's done and it's lowering our standard of living that's that's that's the bottom line [Music] [Applause] [Music] next time on frontline i got the world on a string americans with credit cards 185 million interest and fees paid to the credit card companies 101 billion big banks holding all the cards priceless some things money and power can buy for everything else you want to know about credit cards there's frontline [Music] to order front lines is walmart good for america on videocassette or dvd call pbs home video at 1-800 play pbs [Music] partial funding for this program was provided by the nathan cummings foundation frontline is made possible by contributions to your pbs station from viewers like you thank you [Music] you

Channel: FRONTLINE PBS | Official

Views: 4,152,519

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Id: n224P8snMkA

Length: 54min 56sec (3296 seconds)

Published: Tue Jul 05 2022