Wal-Mart’s “Buy American” program proved to be “a public relations coup historic in its dimensions,” rued Discount Store News, reflecting the chagrin of the Bentonville retailer’s competitors. By 1986, Wal-Mart stores were festooned with red-white-and-blue “Buy American” banners and counter signs proclaiming: THIS ITEM, FORMERLY IMPORTED, IS NOW BEING PURCHASED BY WAL-MART IN THE U.S.A. AND IS CREATING OR RETAINING-JOBS FOR AMERICANS! Even today, long after the company’s formal abandonment of this campaign, Wal-Mart is thought of as a more “American” firm than some of its competitors, even though they actually import fewer goods. Wal-Mart never released firm figures on the proportion of its product costs coming from overseas, but Asian procurement rose steadily during the heyday of the “Buy American” program, as the corporate buying staff in East Asia more than doubled in size.
The real import of the “Buy American” campaign lies elsewhere. Wal-Mart would increase domestic purchasing, but the company used the prospect of such procurement as a hammer to drive down supplier costs, including wages and profits, and to transform these vendors into Bentonville pawns. “One of our big objectives” in the “Buy American” program, a Wal-Mart board member told Walton biographer Bob Ortega, “was to put the heat on American manufacturers to lower their prices.” Wal-Mart recognized that labor costs were much higher in the United States than in Central America or East Asia, but it sought to make up the difference by freezing wages and forcing logistic and production efficiencies on its suppliers. “Our American suppliers,” said Sam Walton, “must commit to improving their facilities and machinery, remain financially conservative and work to fill our requirements, and most importantly, strive to improve employee productivity.”
Thus an embittered spokesman for the National Knitwear and Sportswear Association complained that Wal-Mart used its “flag-waving” “Buy American” campaign “as a negotiating club that forces domestic manufacturers to compete, often unrealistically, with foreign suppliers who pay their help pennies an hour. As a result vendors see their gross sales skyrocket and their net profits plunge.”