Putting on the Brakes on Walmart

[Prosperity]

Putting on the Brakes

http://www.washingtonpost.com/wp-dyn/content/article/2005/05/22/AR2005052200742_pf.html

Local Grocery Workers Union Leads the Fight to Block Wal-Mart's Efforts to Infiltrate Inner Suburbs, District

By Michael Barbaro

Washington Post Staff Writer

Monday, May 23, 2005; E01

At first glance, the numbers seem arbitrary.

Legislation before the D.C. Council would ban new stores with more than 80,000 square feet that devote 15 percent of their space to food and other nontaxable merchandise.

A bill passed by the Maryland General Assembly would require companies with more than 10,000 employees to spend 8 percent of payroll on health care.

A zoning rule approved in Montgomery County restricts the location of outlets larger than 120,000 square feet with a full-service grocery and pharmacy.

But behind the hodgepodge of figures is a very specific goal: Keeping out Wal-Mart Stores Inc. As the discount giant shifts its focus from the Washington region's fast-growing fringes to its dense urban center, it has become locked in a bitter behind-the-scenes struggle with the local unionized grocery industry, which is scrambling to erect legislative barriers to the chain's growth.

The fight is taking on national significance. Wal-Mart, which has conquered rural America with more than 3,000 stores, desperately needs to break into the urban market to maintain its phenomenal growth. So far, it has been rebuffed in Chicago, New York and Los Angeles, and the retailer views Washington as an important frontier for expansion.

The Bentonville, Ark., company has already made strong inroads here. Since its arrival in the region 13 years ago, Wal-Mart has quietly planted 147 stores in Maryland and Virginia, including 32 in the greater Washington area. It is now the No. 1 private employer in Virginia and one of the top 10 in Maryland, with 52,000 workers in both states.

But the company has succeeded in such places as Prince Frederick and La Plata in Maryland, and Warrenton and Burke in Virginia, far from the region's center.

Across the area, big-box stores are facing growing resistance from communities worried about increased traffic and environmental impact. But Wal-Mart's inability to open a store in the inner suburbs is unique. Both Home Depot and Best Buy have stores inside the Beltway and the District. And Target, Wal-Mart's closest competitor, has seven stores inside the Capital Beltway. Its first location in the District is scheduled to open in 2007. "We'd like to be a part of that success," said Mia Masten, Wal-Mart's head of corporate affairs for the East Coast.

Although Target, Home Depot and Best Buy have no union, and Target is moving into the grocery business, local unions are giving those chains a pass to focus their energies, and cash, on a single foe.

"Wal-Mart is the biggest threat to our members' way of life," said C. James Lowthers, president of United Food and Commercial Workers Local 400, which represents local grocery workers at Giant, Safeway and Shoppers Food Warehouse.

Local unionized grocery chains, which dominate the area's closer-in suburbs, fear they cannot compete with Wal-Mart's rock-bottom prices, technology-driven efficiencies and cheaper, non-union labor force. Wal-Mart is now the nation's largest food seller, and although it operates few of its full supermarket formats in the Washington area, the chain says it wants to build the more profitable stores wherever possible.

Giant Foo, Safeway and Shoppers Food control 55 percent of the local grocery market, and their union is relying on its strong political ties and sympathetic shoppers to stop Wal-Mart's expansion. At stake, the union says, is the future of more than 20,000 supermarket jobs that offer a middle-class lifestyle to the region's unskilled workers.

Wal-Mart's opponents, led by Local 400 and Giant Food, have already won several high-profile victories. Six jurisdictions, including Prince William, Calvert and Montgomery counties, have passed zoning rules that make it harder, if not impossible, for the chain to open a supercenter, its most profitable format. Several more jurisdictions, including the District, are considering such rules. And in April, the Maryland General Assembly passed a bill backed by Giant and Local 400 requiring Wal-Mart to spend more on employee health benefits. The governor vetoed the bill, but some legislators have vowed to override it.

"Our goal is to block them out," Lowthers said. The union has circulated sample zoning bills targeting Wal-Mart to local governments, rallied members to speak out against the retailer at public meetings and called on state leaders to support anti-Wal-Mart legislation.

It was a Local 400 official, for example, who first suggested the idea of a big-box bill targeting Wal-Mart in the District, said D.C. Council member David A. Catania (I-At Large), who sponsored the legislation. Catania said he agreed to offer the measure because he believes Wal-Mart's employee health care benefits are inadequate. As the bill was drafted, Catania said, the union was consulted on the language.

Wal-Mart, which has traditionally balked at answering its critics, is fighting back in hopes of showing it can find the formula for moving into urban areas. When Montgomery and Calvert counties recently proposed zoning restrictions, Wal-Mart commissioned opinion polls that showed residents opposed the rules, gathered signatures on petitions supporting the chain and set up meetings with local officials.

Both counties eventually passed the anti-big-box regulations, but that has not stopped Wal-Mart. In Calvert County, the chain proposed splitting one of its large stores into two to skirt a rule banning stores over 75,000 square feet, though it ultimately agreed in the face of community opposition to build a single store within the limit.

In Prince William, the company is negotiating to put a store inside Manassas Mall, which is exempt from the county's big-box bill. In another show of force, the company has threatened to pull plans for a Maryland distribution center that could employ as many as 1,000 workers if the General Assembly overrides the governor's veto and turns the health care legislation into law.

At the same time, Wal-Mart is in talks to build two stores in Prince George's County, one inside the Beltway, and it is scouring the District for potential sites. Wal-Mart came close to selecting a location in the city's Brentwood neighborhood last year but backed out at the last minute, saying the site was too small.

Wal-Mart, which opened its first five-and-dime store in Bentonville, Ark., in 1962, did not arrive in the Washington region until three decades later, when it had already become the nation's largest retailer.

Its first local store, which opened in Prince Frederick in Calvert County in 1991, was the subject of so much consumer curiosity that employees taped paper over the front windows before the grand opening. Over the next 13 years, it continued to nibble at the region's edges, with stores in Waldorf, Bowie, Leesburg and La Plata.

"People did not perceive them as anything but a good thing," said Peter Framson, president of Greenlight Retail, a Bethesda retail brokerage.

That changed in the mid-1990s as Wal-Mart moved nearer to the Beltway and deeper into the supermarket business.

Closer-in communities such as Montgomery County proved a harder sell for the chain. Such communities, dense from decades of development and populated with higher-income shoppers with upscale tastes, began to fight the retailer at zoning meetings and planning sessions. In 1994, Wal-Mart said it hoped to build at least four discount stores in Montgomery. Today there is just one, in Germantown.

Meanwhile, Wal-Mart was realizing that it could increase profit at its stores by carrying a full line of grocery products, housed in a massive facility called a supercenter. Buyers applied the same techniques used throughout the company: purchase in bulk and negotiate the industry's lowest prices.

Unionized grocery chains do the same, but they simply cannot match Wal-Mart's buying power or its lower labor costs. Wal-Mart's hourly wage in the Washington region is $10.08, while Giant's and Safeway's is $13.19, the companies said. With overtime, the figure rises to $16 an hour for the union chains. Giant's and Safeway's health care plans cost the chains $12,249 for every full-time employee, nearly twice what Wal-Mart pays for a typical family plan, the companies said. Wal-Mart's cost for health benefits depend on the plan and deductible chosen by employees. While Wal-Mart workers have a 401(k) plan, with the chain matching up to 4 percent of employee contributions, depending on annual profit, Giant and Safeway are required by the union contract to pay into a more expensive pension plan.

The results can be seen at the cash register. At the Wal-Mart supercenter in Spotsylvania County, which opened in March, a basket of 23 popular household products, including such brands as Jif peanut butter, Maxwell House coffee and Reynolds Wrap aluminum foil, cost $60.37. At the nearby Giant, less than a mile away, the same 23 products cost $75.55, or about 25 percent more.

In the Washington area, Wal-Mart's grocery sales have grown to $442 million in 2004 from $48.4 million a decade ago, according to Food World, a Baltimore trade publication. It now sells nearly 4 percent of all groceries in the area. During that same period, Giant's and Safeway's shares of the local grocery market have fallen 12 percent and 9 percent, respectively.

Grover and Linda Wilson, both self-employed, drive 25 miles to the Spotsylvania supercenter from their home in Rhoadsville, Va., passing both Giant and Safeway on the way. The Wilsons don't mind that Wal-Mart workers have no union.

"You can't pay people $20 an hour and sell bananas for 33 cents a pound," Grover Wilson, 62, said.

In Spotsylvania, population 112,000, business leaders and economic development officials actively courted Wal-Mart. The chain had closed its only county store in 2001, and "we desperately wanted them back," said Bill Vakos III, vice president of Vakos Real Estate, who helped develop the store.

The supercenter employs 500, will generate as much as $1 million a year in county sales tax revenue and has already given $12,000 to local charities, according to the county.

"Having Wal-Mart here," Vakos said, "is a big deal."

Lowthers, the union president, acknowledges that Wal-Mart has lower prices, but he said the union's job is to show consumers there is a cost.

"When Wal-Mart comes to town, good jobs are replaced by bad jobs," he said.

Wal-Mart is unapologetic about its lower labor costs, and its chief executive, H. Lee Scott Jr., believes it is the unionized grocery stores that must change.

"If you sell the same product and you sell it for 20 or 30 percent more than your competitor, you've got an issue with your business model, Scott said during a recent interview.

But those lower costs, and the growing belief that Wal-Mart's highly touted efficiency is depressing wages throughout the economy, have snowballed into an image problem that is making it increasingly hard for Wal-Mart to build stores in the Washington region.

"I would not stand up in front of a zoning meeting and say, 'I am here to bring you Wal-Mart,' " said one local developer, who spoke on condition of anonymity for fear of jeopardizing future relations with the company. "This is an anti-Wal-Mart hysteria in this area."

© 2005 The Washington Post Company

[Major Harris]

keep them out. they destroy all other competitive companies in their wake.

[Thiebear]

Don't let the people decide.. legislate it..

people deserve what they get.. I don't shop at Walmart.

They have 1 person doing register and electronics/games/music/movies behind locked glass.. = stupid.

I go to best buy....

But i prefer to let the people decide what they do and don't want to shop in..

Legislating against ONE company is a bad idea... where does it end.. I believe McDee/Hardee/Wendy's pushed out the Mom/Pop diners.. lets get rid of them... Ohh and plastic too cause of the steel workers...

[The Evil Genius]

Best Buy....where $2 bills aren't legal tender...

:laugh:

[Joe Sick]

Originally posted by Thiebear

I don't shop at Walmart.

I just kicked the habit myself.

Just say no to Mall Wart!

[Tarhog]

'Shop smart - shop S-MART!'

[OrangeSkin]

Can't say I support such government intervention, but anything that keeps Wal-Mart under wraps is fine by me. I can't stand the effects they've had on this region.

[portisizzle]

I can't stand waiting in line at one of those union shop grocery stores like Giant. At least at Wl-Mart you get in and get out. You can tell the companies that have union employees with a chip on their shoulder.

[NoCalMike]

I use Wal-Mart as a last resort, when I can't find a product anywhere else, but it is rare enough to where I would not miss them if they were gone.

[NASMTrainer]

They won't be gone, they are to big. Deal with it

[chiefhogskin48]

Why the hate for Walmart? Like it or not, they're increasing the purchasing power of consumers. I've noticed the people that hate Walmart the most are the yuppy snobs (including most of my friends) who'd prefer Whole Foods or Trader Joes, rather than the people who benefit from what they have to offer. Mom and pop stores charge far more for their product... Walmart is much better for poor and working class families on the whole because they can get more for less. The complaints of unions (ie those who use their sheer numbers to artificially inflate wages and make it harder to hire and fire) are trivial. They oppose anything that competes or endangers their attempted labor monopoly.

[Mr. S]

Originally posted by portisizzle

I can't stand waiting in line at one of those union shop grocery stores like Giant. At least at Wl-Mart you get in and get out. You can tell the companies that have union employees with a chip on their shoulder.

you probably have not been to the Super Wal-Mart in Harrisonburg, one of TWO! The one nearest to campus is always crowded, even at 2 in the morning. During the day time, I could easily spend 10 minutes in line, and may have only gone inside for one item. Apparently it is one of the largest wal-marts on the coast or something.

Though I hate its monopolizing tactics, I rely on wal-mart for for food. The prices on all its foods are cheaper, hell even their alcohol is cheaper. I wouldnt buy vegetables and fruits from there though, but frozen, boxed, canned, typical college type food I would. Their bakery offers some decent stuff as well. Besides, major supermarket competition, or department store competition will never go away due to wal-mart, different people will shop at different places. The one thing I hate though is apparently wal-mart is trying to build a Super Wal-Mart for every 20,000 people now. Like I said, there are 2 of them in Harrisonburg alone, and a 3rd is being built just 5 miles down 81.

[luckydevil]

Why the hate for Walmart?

From a libertarian perspective, it's not that black and white

It's hard to defend WalMart when they receive million dollars worth of subsidies and often abuse eminent domain.

[Prosperity]

Originally posted by luckydevil

From a libertarian perspective, it's not that black and white

It's hard to defend WalMart when they receive million dollars worth of subsidies and often abuse eminent domain.

what subsidies?

[codeorama]

I hate walmart as well. At this point, the only reason I go is because they have a particular lo carb wrap that I get. I'll avoid them until I need those wraps.

[75004]

Walmart sucks anyways, yes they have lower prices but they do not have the variety that Giant, Safeway, or Shoppers have.

[Joe Sick]

Originally posted by portisizzle

You can tell the companies that have union employees with a chip on their shoulder.

Yeah, I'd much rather have the minimum wage incompetents that Wal-Mart employs. :doh:

Not sure where your Wal-Mart is, but everytime I go the lines are horrendous.

[Destino]

Originally posted by chiefhogskin48

Why the hate for Walmart? Like it or not, they're increasing the purchasing power of consumers. I've noticed the people that hate Walmart the most are the yuppy snobs (including most of my friends) who'd prefer Whole Foods or Trader Joes, rather than the people who benefit from what they have to offer. Mom and pop stores charge far more for their product... Walmart is much better for poor and working class families on the whole because they can get more for less. The complaints of unions (ie those who use their sheer numbers to artificially inflate wages and make it harder to hire and fire) are trivial. They oppose anything that competes or endangers their attempted labor monopoly.

Increasing the purchasing power of consumers at what cost? They destroy business, eliminate high paying jobs and replace them with part time TRASH, take government money, force people out of thier homes to build more stores, and put up fake company fronts in order to hire illegal aliens.

F*ck Walmart.

[Destino]

Originally posted by Joe Sick

Yeah, I'd much rather have the minimum wage incompetents that Wal-Mart employs. :doh:

Not sure where your Wal-Mart is, but everytime I go the lines are horrendous.

Can't have clerks breaking into the middle class now can we? No no no, those people should be making min wage and be thankful for it!

I feel much better knowing my money goes to places that provide high paying jobs that translate into happy families then I do supporting a life destroying tax payer raping POS like Walmart.

[Thiebear]

Immanent domain is never done by a company.. blame the gov't misuse...

Subsidies?

http://kansascity.bizjournals.com/kansascity/stories/2004/05/24/daily28.html

So they received 1 billion in 10 years in subsidies: Looks like bribes from local gov’ts again…

But have paid back..

Whitcomb said that, in the past 10 years, the company has:

· Collected more than $52 billion in sales taxes, half of which generally stays in local communities and helps finance schools, police and fire departments, libraries and other services.

· Paid $4 billion in local property taxes.

· Remitted $192 million in income taxes, wage withholdings and unemployment taxes to local governments. The figure is for employees' income taxes only, not the company's corporate taxes, Whitcomb said.

_________________________________________

Again, let the consumer decide if its not a monopoly..

[Kilmer17]

Until people want to pay more than 8 dollars a shirt, Wal Mart isnt going anywhere. Fight them all you want, they always win in the end.

I dont like them either, but I certainly dont see how it's my right to tell others they cant shop there.

[Destino]

Originally posted by Kilmer17

Until people want to pay more than 8 dollars a shirt, Wal Mart isnt going anywhere. Fight them all you want, they always win in the end.

I dont like them either, but I certainly dont see how it's my right to tell others they cant shop there.

Normally I'd agree, using the government option is bad. But this case however concerns a company that uses the government itself, so I can't disagree with fighting fire with fire. Sadly most Americans can't be bothered to think about more then their bottom line so Walmart will win....until they piss enough people off and their destruction becomes a campaign issue.

[Kilmer17]

No argument. I do LOATH the fact that Govts give them subsidies and allow that immenant domain crap like in Ala. But that's an issue I have with the local GOVTs, not with Wal Mart.

[SkinsHokieFan]

I am curious why nobody is ever opposed to H and R block taking the business of mom and pop accountants

[bofluid]

Somehow this was emailed to me completely unsolicited. I'm not trying to push an agenda here, but I did find some of this interesting:

Whatever happened to good corporate citizenship?

In America today, a business you might know pays such poor wages its workers have to turn to taxpayers to pay for their health care. The same firm has made China, a totalitarian dictatorship that holds wages down by outlawing unions, its supplier of choice -- the source of 70 percent of its inventory.

And the family that owns this company and has become wildly wealthy? They make sure to invest their money in the Republican Party -- where they know their investment will pay off with tax cuts for the richest few.

What company is this? Wal-Mart -- the largest, richest corporation in the world.

Major organizations we work with -- groups such as the Service Employees International Union, and the United Food and Commercial Workers -- believe America's largest corporation should do better. To make that happen, they've launched a massive campaign to show Americans the massive scale of Wal-Mart's irresponsibility.

Some competitors of Wal-Mart know the value of doing well by doing good. They pay living wages. They offer good benefits. And they earn steady profits -- in part because they attract, and hold onto, high-quality workers. These companies have helped make America the wealthiest nation in the world and they sustain our prosperity.

Wal-Mart takes a radically different approach. For it, every penny is profit -- it fights for every dollar, no matter how it gets it. The result? You pay to make Wal-Mart rich -- through tax benefits and infrastructure bestowed by state and local governments -- even if you never shop there.

Take Georgia, a state where Wal-Mart ranks as the largest private employer. In 2002, state officials there figured out that Wal-Mart employees had some 10,000 children on the rolls of PeachCare, the state's child health care program. No other company's employees had even a thousand children on the rolls -- but Wal-Mart had no qualms about dumping its costs onto Georgia taxpayers.

Wal-Mart used to make a point of keeping jobs in the United States by buying American. Today, though, the company single-handedly accounts for nearly 10 percent of all Chinese goods sold in the United States. Wal-Mart keeps prices low by stocking as much as 70 percent of its products from Chinese suppliers -- suppliers who pay wages kept low by a dictatorial government.

Those policies helped Wal-Mart's owners, the Walton family, build a fortune worth tens of billions. That money makes the company a major force in Washington. And the family uses its wealth to bankroll the radical right -- it spent millions last year to elect candidates devoted to eliminating the estate tax, which affects only the wealthiest of the wealthy. Wal-Mart wealth is also behind Progress for America -- a Republican front group the Waltons have financed to the tune of millions of dollars.

America needs better corporate citizens, and Wal-Mart --the largest company in the world -- has the resources to stand on its own instead of exploiting people overseas and piggybacking on American taxpayers and working families. But making it live up to its responsibilities poses a huge challenge -- because taking on Wal-Mart means going up against the biggest corporation on Earth.