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Maple Street Co-op News Articles of Particular Relevance

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From Maple Street Coop News, Oct/Nov 2006 issue
Published by Maple Street Co-op, 37 Maple Street, Maleny Qld 4552
Tel 5494 2088, email maplest.coop@serv.net.au



The High Cost of Low Prices
by Lori Sturtz

Black-and-white film footage of abandoned American main streets is accompanied by Bruce Springsteen's haunting rendition of Woody Guthrie's song "This Land Is Your Land".  This is only one of the heartbreaking scenes in Robert Greenwald's latest documentary Wal-Mart: The High Cost of Low Prices (see www.walmartmovie.com). 

Greenwald relies on current and former employees (Wal-Mart calls them "associates") to tell their stories.  Many of these people are deeply patriotic, conservative Republicans who swear by the capitalist system.  They are not rabble-rousing anarchists (Maleny anti-Woolworths protesters may remember this epithet) but people who feel that Wal-Mart's size and power give it unfair leverage in the marketplace.  Weldon Nicholson, a Wal-Mart store-manager trainer for 17 years, tells how whenever a Wal-Mart came to a new town the management would make a game of predicting how long it would take for each local business to close. 

Wal-Mart also manipulates development subsidies from communities where it plans to build and then occasionally moves just outside the city limits when the time comes to pay its revenues.  So, in 2005 there were 356 empty Wal-Mart stores in the US up for sale or lease.  One resident says in the film that after Wal-Mart comes to a town it looks "like a neutron bomb hit it".  A displaced store owner sorrowfully says:  "It becomes a question of cheaper underwear versus quality of life.  Once they steal that from you, you can't get it back at any price."

Wal-Mart virtually enslaves its workers in Third World sweatshops while overworking and underpaying its US employees.  This enables it to undersell all competitors and create a marketplace where low wages and low prices become mutually necessary. 

One critic calls Greenwald's Wal-Mart more effective and impressive then either his Uncovered: The War on Iraq or Outfoxed: Rupert Murdoch's War on Journalism.  He says the target is more elusive, more dangerous and definitely less well understood.  Knowledgeable critics of the Bush or Fox camps are easy to find, but Wal-Mart insiders willing to talk are much harder to pin down.  This film makes you appreciate their courage and convictions.

Greenwald's film accuses Wal-Mart of encouraging workers to get healthcare from state and local welfare systems, saying "everyday low prices are based on taxpayer subsidies".  A leaked internal Wal-Mart memo states how 5% of "associates" are on medical welfare (Medicaid) compared to a national 4% employee average.  The Democratic Committee estimates that a 200-employee Wal-Mart can result in a US$420,750 annual cost to federal taxpayers (about US$2,103 per worker). 

The film also shows former managers and workers speaking about how the company pressures them to work unpaid overtime.  Wal-Mart currently faces lawsuits in 31 states for hour and wage abuses, which could involve hundreds of thousands of employees.

Wal-Mart has a long history of breaking environmental laws, a practice described by a top law enforcement official as "widespread, systematic, repeated".  The retailing giant has incurred millions of dollars in fines from US state and federal agencies. 

For every supercentre that Wal-Mart opens, two local supermarkets close.  The corporation also spends almost four times less within local and state economies than do local businesses.  Wal-Mart plans to double its US retail outlets by 2010.  If Wal-Mart were a nation, it would be China's eighth-largest trading partner.  In the US, Wal-Mart opens a new store every 42 hours.  However, with the threat that the US market might become saturated, Wal-Mart started to invade overseas markets.  The push began with Mexico in 1991, and Wal-Mart now controls 50% of Mexican grocery sales.  It now has 2,700 stores in 14 countries, and some analysts believe Australia may be its next target.  Wal-Mart buys existing operations, eliminating a large competitor while gaining real estate and employees.  This also means it can avoid the community opposition such as what it faces with one of three new US stores. 

In May 2006 Wal-Mart announced it was pulling out of South Korea, and then in July it decided it was leaving Germany.  It is believed that the corporation could not crack these markets and so thought it best to pull out and focus on the much more lucrative markets of China and India.  According to Craig Johnson, president of retail consulting group Customer Growth Partners, "Let's fish where the fish are biting" is the new Wal-Mart modus operandi.

Wal-Mart eyes off Australia

So what does this mean for Australia?  The Sydney Morning Herald (31 July 2006) reported that Wal-Mart is close to making an Australian acquisition.  Wal-Mart executives had recently visited Australia to look at possible targets.  Coles Myer, valued at almost $14 billion, and Woolworths, valued at more than $22  billion, were likely candidates.  Coles Myer sources played down recent reports that the company was looking to adopt a Wal-Mart–like strategy, but were not forthcoming about any talks regarding any relationship with Wal-Mart.  Woolworths spokesperson Clare Buchanan did not return the Herald's calls.  Australian investors have not ruled out a Wal-Mart interest in Australia, and it was noted that Woolworths already emulates the Wal-Mart model.

Woolworths' "everyday low prices" is very similar to Wal-Mart's "always low prices" slogan.  According to the Sydney Morning Herald (7 August), Wal-Mart has had a small stake in Woolworths for some time.  Woolworths' retiring CEO Roger Corbett told the Herald:  "I frankly don't know whether Wal-Mart has got a small stake or not; I don't think they have, but it's not beyond the realms of possibility.  Anyone can have a stake in anyone else." 

Coles Myer was subject to speculation because of the timing of reports that Wal-Mart was preparing to come into Australia alongside the release of Coles Myer's strategy review.  However, Coles Myer boss John Fletcher said that he was unaware of any Wal-Mart interest in the company. 

According to the Herald (7 August), speculation turned to Woolworths due to its connections with Wal-Mart.  Mr Corbett agreed that Woolworths has a "very close" relationship with Wal-Mart and this may have fuelled speculation.  Also, Jack Shewmaker, a former head of Wal-Mart's strategic committee, is a Woolies consultant.  Woolworths executives are often trained in the "Wal-Mart University" and the two companies exchange staff.  One source who the Herald said is familiar with the situation noted:  "...a lot of processes and systems have been imported here from Wal-Mart.  Woolies tries to emulate Wal-Mart."

Industry insiders say that the Australian market faces rationalisation from the likes of Wal-Mart which would allow a retailer like Woolworths to follow the US trend of selling everything from liquor to washing machines under the one roof.  Yet investors believe that Coles is the logical target, especially when it integrates its "everyday needs" under one banner.

Growing protests against giant retailers

A Wall Street Journal/NBC poll released on 15 September shows that a majority of Americans have an unfavourable opinion of the nation's largest retailer.  Most respondents also believe that Wal-Mart's employment practices should be "reviewed and regulated".  There is now a movement in the US called "2006 Change Wal-Mart, Change America".  The Wake-Up Wal-Mart group ran a national campaign, driving a decorated bus to 35 cities in 19 states in 35 days.  It held public events and press conferences designed to pressure the company to increase worker wages and benefits as well as change its corporate policies regarding child labour. 

Al Norman, founder of the Sprawl-Busters group (www.sprawl-busters.com), has been described by the US 60 Minutes as "the guru of the anti–Wal-Mart movement".  He said:  "Wal-Mart is Americanising retailing around the world.  It is a really undesirable outcome both culturally and economically for a US company to be exercising so much power." 

Protests against companies like Wal-Mart highlight the incredible power that consumers en masse have in  society.  Choosing where to buy products holds the same power in a capitalist world as voting does in a democracy.  When we exercise that power, it can have tremendous results.  US consumers have blocked Wal-Mart stores across the country.  German and South Korean consumers have refused to succumb to the corporation's "low prices at any cost" philosophy. 

We have been exercising our power here in Maleny by supporting local businesses.  I think that those who did not understand the Maleny Woolworths protest should see the Wal-Mart movie.  They should listen to the sad stories of people being overworked and underpaid – or not paid at all.  They should see the empty streets and imagine that sound of silence that comes when a once-vibrant town ceases to exist, becoming like an old western ghost town.  They should know that you may be able to park a campervan in a Wal-Mart parking lot for 48 hours for free but in doing so you will be in a place not unlike the New Orleans Superdome during hurricane Katrina:  80% of all Wal-Mart crime takes place in its carparks because the corporation refuses to pay for security.  Every silver lining has its dark cloud.

Maleny continues to fight back

There's another film about big corporations coming into communities and it was made here in Maleny.  Local filmmaker Paul Narada Alister's documentary No Woolies in Maleny: The Struggle for Community Empowerment has been selected for screening at the New York International Independent Film and Video Festival in November, and it was shown at the group's Los Angeles festival on 20 September.  Paul told me that three activists from the LA screening took copies home to show in their communities.  He also told me that Channel 10 intends to interview him for an upcoming Sunday program and that Channel 7 wants to meet with him.  (DVDs of No Woolies in Maleny are available at Maple Street Co-op for $30 each, with a 5% discount to members.)

Most Maleny consumers are still not shopping at Woolworths.  Just look at the often near-empty carpark and then visit Maleny's bustling Supa-IGA.  People power can work and is working here. 

As "Drum" columnist Michael Berry confirmed in the Range News (28 September), Woolworths Maleny is not doing very well.  He wrote about empty shelves, rotting food and employee lay-offs.  He also mentioned how Woolworths' head office "has now pressed the attack button".  According to Michael Berry:  "The tight retail grocery grapevine has told Rob Outridge that Woolworths is coming to ‘get' his IGA store.  They are about to launch a price attack."

As consumers, workers and voters, we have incredible power to influence, define and control our world. 

References
• See website www.walmartmovie.com for the quoted Wal-Mart statistics and other source information. 

From Maple Street Co-op News, Oct/Nov 2006 issue
Published by The Maple Street Co-operative Society Ltd,
37 Maple Street, Maleny, Qld 4552,
tel 07 5494 2088, email maplest.coop@serv.net.au
website http://www.maplestreetco-op.com.au

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