Wal-Mart Woes

Miami      When you are on a losing streak, it shows and everyone knows, and that’s the story of Wal-Mart these days on many fronts.

Several months ago the behemoth company was forced to pull up stakes in South Korea, and over the last week the news broke that Wal-Mart sold all of its stores in Germany and threw in the towel to its competitors.  It had been out-discounted by the fierce discounters in that company.  This is interesting because it also reveals how much the business model of Wal-Mart relies on squeezing labor costs.  In Germany where many of its stores were unionized and much of the industry is involved in sectoral bargaining around wages and hours, Wal-Mart could not offset its inability to beat on pricing by taking revenues out of the hide of its workers.  In essence Germany may be a case where they were simply met head-to-head and out managed!

In China the All-China Federation of Trade Unions, albeit a large, management supporting union, has finally joined workers who are forming unions in the stores.  Wal-Mart in its new “message” is saying that it obeys the labor laws in all countries and essentially agreeing with union activists that the laws are so bad in the United States for workers and unions that unions are not succeeding in US stores where they are doing so in Argentina, Brazil, Mexico, Britain, and Germany.  Ouch, that hurts, but there is comfort that Wal-Mart has had to adapt its message to meet workers more than half-way.

And, then of course, there still Chicago, where the company is reeling in the wake of the passage of the prevailing wage for big-box retailers.  Today, it appears the Mayor will not even go through the motions of vetoing the bill — heck, there hasn’t been a veto in 45 years, which says something about how tightly controlled the council has been.

Makes me think that Wal-Mart might learn something from all of this, but they probably won’t.  At least not yet.

July 31, 2006

Wal-Mart workers in China are forming unions under the All-China Federation of Trade Unions.
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