Walmart Continues to Boost U.S. Production

Zacks

Retail giant Wal-Mart Stores Inc. (WMT) continues to encourage domestic sourcing of the products it sells in order to fix the economy.

Last week at the U.S. Conference of Mayors Meeting, Walmart announced a new fund for innovation in domestic manufacturing and committed to bring production of bikes and jobs to South Carolina.

Fund for Innovation

Walmart announced its decision to invest $10 million for a period of five years in order to find innovative solutions in the manufacturing sector to encourage U.S. manufacturing and create jobs.

We note that last year Walmart had announced that it will spend $50 billion to buy more American-made merchandise in the next 10 years.

Walmart believes that majority of the companies in U.S. have been facing macroeconomic headwinds from a long time. Moreover, input costs in the overseas countries are very high, which limit U.S. companies to produce goods outside the U.S. Walmart, therefore, plans to focus on buying more sporting goods, fashion basics, storage products, and games and paper products to revive the sluggish U.S. economy.

Walmart estimates that its $50 billion spending will result in the company buying an additional $250 billion cumulatively over the next 10 years. Further, this $250 billion investment will create one million jobs, including the jobs in manufacturing and related services.

Production of Bikes

Inspired from Walmart, Kent Bicycles has also shifted its bikes production from overseas to South Carolina to encourage domestic manufacturing. Kent Bicycles, based in Parsippany, N.J., expects to start production in the fall of 2014 and expects to produce 500,000 bikes annually and add at least 175 jobs by 2016.

Walmart also announced that it will host its second U.S. manufacturing summit in Aug 2014, which will focus on connecting manufacturers in need of component parts to factories with excess capacity. Walmart believes that this initiative will help companies to operate at full capacity and thus rebuild the American supply chain and create more jobs.

The above mentioned commitments to increase domestic sourcing of the products it sells and create jobs shows Walmart’s dedication to find innovative solutions to fix the economy. Walmart currently carries a Zacks Rank #4 (Sell).

Other better ranked retailers include Conn’s Inc (CONN), Etablissements Delhaize Fr (DEG) and Haverty Furniture Co. Inc. (HVT). While Conn’s carries a Zacks Rank #1 (Strong Buy), Establissements and Haverty carry a Zacks Rank #2 (Buy).

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