At Wal-Mart’s 1992 general meeting, founder Sam Walton asked shareholders to sing God Bless America. The 15,000 Wal-Martians responded to Sam’s call – even though Walton had been dead for two months.
Walton’s request to the shareholder-cum-revival meeting in rural Arkansas – channelled through a spotlit executive crouching on bended knee to speak to the departed Deity of Retail – was scarcely surprising. Wal-Mart is America’s most patriotic, flag-waving company.
But look under the flags. Stores are decked out like a war rally. Stars and Stripes hang from the ceiling. Cardboard eagles shriek ‘Buy America!’ But one independent group sampled 105,000 store items and found only 17 per cent of them made in the USA. Indeed some items in trolleys marked Made in America came from elsewhere. So just where does all this stuff come from? Ask avid Wal-Mart shopper Wu Hongda.
‘Harry’ Wu is famous in the States. He escaped from China after 19 years in a prison camp for holding ‘counter-revolutionary’ views, then conned his way back into the prisons to document the misery of forced labour. In 1995, Wu was jailed once more, but not before he had reported the appalling tale of slave labour.
Naturally, Wal-Mart has contracts with suppliers that say none of its merchandise should be made by slaves, prisoners or little children. But among its suppliers is Shantou Garment Trading Company, based in Guandong Province. The Trading Company uses factories in Shantou town: nothing wrong with that. But some of the Trading Company’s manufacturing is also carried out in nearby Jia Yang prison.
Do any of Wal-Mart’s goods come from the prison? The company says it would refuse to handle anything made in a prison, and no one suggests that it knowingly connives in supporting prison labour. Wal-Mart repeats the mantra that its contracts forbid it.
But there is a clear problem here. An associate of Wu helping to investigate the Trading Company was told that Chinese authorities explicitly prohibit the monitoring of production inside the prison. Hence it is virtually impossible for any buyer to establish for certain whether goods from the Trading Company have been made by prisoners or ‘free’ labour.
According to Wal-Mart, it has to rely on the word of suppliers when they say that goods have been made only by ‘free’ workers.
And outside China? Who makes the dirt-cheap clothes that fill Wal-Mart’s shelves? Are the factories that supply the company staffed by properly rewarded adults? This has long been a sensitive topic for Wal-Mart. In 1994, former Wall Street Journal reporter Bob Ortega, author of the fearsome expose, In Sam We Trust, was taken round Guatemalan factories which supplied Wal-Mart. They were filled with smiling adult workers.
But Ortega had arrived secretly two weeks earlier, and managed to speak to the child seamstresses hidden from the official tour. (When the scandal was exposed, Wal-Mart cancelled its contract with the plant.) Furthermore, in 1996, Wendy Diaz of Honduras testified before Congress about the sweatshop where, as a 13-year-old, she earned 18p an hour making Wal-Mart label clothes.
Wal-Mart has been decidedly touchy when questioned about the use of child labor. Do children make its goods? The answer depends on how you define children. When reporters confronted chief executive David Glass in 1992 with photographs of 14-year-old children locked in Bangladeshi factories that supply the company, he replied: ‘Your definition of children may be different from mine.’
But this was in the bad old days, before Wal-Mart published its Code of Conduct, which was meant to end abuses. Since then, the supply chain has been cleaned up.
Or maybe not. The National Labour Committee of New York has given The Observer an advance copy of a yet-unpublished report on manufacturing in Bangladesh. It lists Wal-Mart contractor Beximco as paying teenage seamstresses an hourly rate of 12p and their helpers 5p, both for an 80-hour week – half Bangladesh’s minimum wage and way beyond the country’s maximum 60-hour working week.
Wal-Mart told me this could not happen if contractors stuck to their word.
The Observer last week sought the views of Wal-Mart’s former lawyer, Hillary Clinton, the ‘little lady’ Sam appointed to his board of directors. She did not return our calls to Washington.
Despite the bothersome gripes of a few skinny children from Guatemala – and, as the company is fond of pointing out, this all happened years ago – Wal-Mart maintains a folksy image based on Walton’s aw-shucks Joe Bloke manner. Joyous clerks chant pledges of customer service that end with shouts of: ‘So help me, Sam!’
The multi-billionaire took time to go into his shops and warehouses and chat with employees over doughnuts. In 1982, on his way to becoming America’s richest man, he dropped into an Arkansas distribution center and told the loaders, as one regular guy to another, that if they voted to join a union in a representation ballot, he would fire them all and shut down the center.
The words, corroborated by eight witnesses, were darn effective. The workers voted down the union, keeping Sam’s record perfect. Out of 2,450 stores in America today, not one is unionised.
Who needs a union anyway? Arkansas headquarters would not tell The Observer the company’s wage rate for clerks. So our volunteers called Wal-Mart stores nationwide to apply for cashier jobs. Openings averaged $6.10 an hour, equivalent to 3.59. When we inquired at a store near an Indian reservation, we were told the starting rate was only 3.03.
Wal-Mart offers a pension plan and there is profit-sharing. But remember, Sam Walton invented the disposable workforce. About a third of Wal-Mart’s workers are temporary; working hours are expanded, shifted, contracted at whim. The workforce turns over like the shoe inventory. And the shorter time someone is with the company, of course, the more difficult it is to build up a full pension or qualify for profit shares.
With 780,000 workers, Wal-Mart has the nation’s largest payroll. Many are among the country’s worst-paid employees. But it could have been worse: Walton asked for the company to be exempted from US minimum wage legislation. Courts refused.
Wal-Mart doesn’t completely ignore workers who plead for an extra bowl of porridge. According to Ortega, when Kathleen Baker, a Wal-Mart employee in Minneapolis, handed her store manager a petition from 80 workers hoping for a rise, she was fired on the spot for using the company typewriter to write the petition. The charge ruined her ability to get another job – until Wal-Mart, under government pressure, agreed to clear her name.
In 1994, Linda Regalado was told she would lose her job if she continued to talk to fellow ‘associates’ about their right to join a union. She persevered and Wal-Mart made good its threat. Only when the government intervened did Wal-Mart agree to pay compensation.
And shortly afterwards Linda Regalado found herself at loggerheads with the company, her husband Gilbert, working at the same store, was seriously injured at work. Wal-Mart initially refused to pay for surgery, but later agreed after being sued by the family.
Having conquered America, will Wal-Mart’s megaliths now chew up England’s green belts and bleed high streets dry? A Wal-Marted Britain is not an inevitability. US towns ‘are wising up,’ says Al Norman, head of Sprawl-Busters, which has helped 88 communities slam the door on the Beast in the Box. Near my home, 60 miles from New York City, Wal-Mart has built a Sam’s Club. It is one of the company’s smaller outlets. Yet still, it could accommodate three super-Tescos and a football field. Shoppers are offered 70,000 different lines begging to be bought. Sam’s Club panders to my nastiest human desire for Cheap and Plenty.
But my store-gasm has a cost. I step out of the Big Box and into the Pine Barrens, the last scrap of woodland left on Long Island’s suburban moonscape, which Wal-Mart cut down for its parking lots. So Help Me Sam.
Bob Ortega’s ‘In Sam we trust: How Wal-Mart is devouring America’, Random House 1998.
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Gregory Palast’s column “Inside Corporate America” appears fortnightly in the
Observer’s Business section. Nominated Business Writer of the Year (UK Press
Association – 2000), Investigative Story of the Year (Industrial. Society – 1999), Financial Times David Thomas Prize (1998).