Newsweek Columnist on WalMart

Kirk, you are placing the blame on unions without truly understanding the issue with the American Auto Industry.

First, look into Visteon a little bit. See how they played a role in Ford's quality.

Second, look into the mid to late '90s SUV boom and the American automaker's push in that market, especially in regards to marketing.

Third, look into the fuel efficiency of the American automaker's vehicles during a time when fuel prices are at their highest. Last quarter American auto-sales were, as a whole, down 17% while Toyota's were up 17%. You might be able to argue that cost of a vehicle is associated, but that is only until you recognize that fuel efficiency was the number 1 reason on the majority of buyer's lists.

The wages paid are way down on the list of reasons that the American automaker is struggling.

 

good PR? progressive by paying a bit more than minimum wage?

I've seen some inane statements on this site over the years--I think we may have another qualifier

If this is what you truly believe, good on you, but it just isn't representative of the economic reality.

 

You were the one who started dropping platitudes about how the marketplace determines wages, which in this case is demonstrably not true. Not even close. Wal-Mart, through sheer economic clout sets the wage level at whatever they want it to be.

Wal-Mart has a serious PR problem and part of it is the perception that they're screwing their employees (which they are, but that's the subject of another thread).

You deflect that by making small concessions which you can then use to show how progressive you are and then drone on and on how your clerks are "associates", another great weaselword.

 

Not placing all the blame on unions; just saying they are a part of the puzzle.

Quality is definitely another factor. No doubt the US automakers lost share to foreign companies because the Accords of the world lasted twice as long with fewer repairs than the Tauruses.

And while the SUV issue may be something they are grappling with currently in light of the last year's gas price surge, let's not forget they made a ton of their revenue with those vehicles when gas prices were less of an impact, so one could say they actual hit their market with those models.

 

No one forced people to buy SUV's. The auto industry filled a demand. The profits made just allowed Ford and GM to postpone a decision that sooner or later needed to be made.

 

What? When to go bankrupt?

 

Union wages are definitely involved with the whole puzzle, but they are far too small of a piece. As a whole, the American auto industry failed to recognize the changing marketplace.

The SUVs did peak, but think about the length of their peaks. So, for that period, they were riding the wave but failed to position themselves for what could be.

Do you think the Dodge Neon would be outsold by the Toyota Corolla if they had the same fuel efficiency? Hell, I am not certain if the Corolla would sell half as much as the Neon if they had the same fuel efficiency.

 

Higher wages won't in and of itself bring down Main Street, no, but it provides momentum. If, using purely hypothetical numbers for the sake of similicity, Wal-Mart pays $12 an hour and Ma Kettle's 5-and-Dime pays $7.50, then what's going to happen is you run the risk of getting a lower class of workers at the 5-and-Dime, a group that couldn't win jobs at the higher wage Wal-Mart would be paying. You're also looking at a lower level of job contentment and loyalty, because your workers are casting an eye towards the $4-6/hr raise they'd get when Wally World has their next opening. I don't know how much of an analogy this is, so everyone forgive me if it's way off, but Starbucks pays decent wages and provides unusually good benefits for a wage-jockey drive, they have great employee loyalty ... and they're also panned for overwhelming The Bean Bag's family-owned coffeehouse on the town square.

Not to be crass (even though it's fair game now that you've exised it from your screenname), but isn't that part and parcel with free-market economics? The more you buy, the lower a price you get. Even if Wal-Mart were America's foremost corporate citizen, there'd still be a pretty big gap betwen what Wal-Mart can charge for its products and what Ma Kettle's has to charge. They could inflate their own prices so as not to have an advantage, I suppose, but they'd probably still get a good chunk of the buying public's dinero because of selection and convenience, and they'd get people pissed off at them for record earnings and wide profit margins on their products.

Now I WILL ask this about Wally World: I read a piece in ... Atlantic Monthly? New Republic? one of those commentary mags ... about Wal-Mart wielding monosopy powers (defined, at least in the article, as having monopoly-like powers of pricing despite not being a legal monopoly). In it, the writer said that Wal-Mart forced Coke to create a new formulation of Diet Coke that used Splenda -- even though Coke was about to unveil Coca-Cola Zero, which was essentially the same drink as Diet Coke w/Splenda, only with one less calorie. Is it really such that big bad Coke can't tell Wal-Mart to shove that smiley face up their collective assholes? Because Pepsi drilled them on an ad a few weeks after Coca Cola Zero came out, and for good reason.

 

Thank you, JR. Beat me to it.

That's one big reason I shop at Costco every chance I get, along with thousands of my "best friends" at our local Costco: good prices, non-censored CDs and DVDs, great variety and they pay their employees well.

Don't see why this can't be a model for WalMart: doing well by doing good. Isn't this what all you unfettered free-marketers keep preaching?

 

I appreciate your point, Hondo. Especially, as a dad, the Christmas part.

I still don't like their business practices, though. And because price isn't the No. 1 factor for me, I choose not to shop there.

 

Yes.

Having driven a Neon, I can report they're a piece of crap. It's like driving a tin can.

Here's the one big difference I've noticed between North American and foreign "entry level' vehicles.

In North America, they scrimp and cut corners on quality to save money. The Toyota Corolla is just as well built with the same solid feeling as a Camry.

 

Just curious:

How many of you are basing your opinions of Wal-Mart on what you read on Web sites, in magazines, what you hear from those of your political bent, etc., as opposed to basing your opinions on seeing firsthand what Wal-Mart has done and knowing many people who work for Wal-Mart, from checkout workers to stockers to warehouse workers to corporate big wigs?

Obviously, any entity the size and scope of Wal-Mart is going to have problems. It is not a perfect company by any means. But over the years, I've known countless numbers of people who have been given jobs, careers, livelihoods on any number of levels by Wal-Mart.

It's easy to attack the corporate giant du jour. But I just know too many people who have benefitted from Wal-Mart to buy into the "they are evil" propoganda.

Just my 2 cents (or 1.67 cents at Wal-Mart's everyday low prices).