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Walmart Outlines Plan to Boost American Production

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The Made in America conversation is in full swing across retail tiers. And Walmart has just added its voice with a report that outlines how to get U.S. manufacturing back on track.

On Wednesday the low-price chain detailed practical ways in which the government (federal, state and local), the manufacturing sector and the retail industry can work together to get more products made here.

It’s not the first time the retailer has addressed American production. In 2013, the company committed to sourcing an additional $250 billion in goods that support American jobs over 10 years. The goal is to support the communities where Walmart stores are based and create a positive ripple effect for overall employment and the economy.

“According to data from our suppliers, items that are made, assembled, sourced, or grown in the U.S. account for about two-thirds of what we spend to buy products at Walmart U.S.,” the retailer said.

And while that may be true, Walmart has recently started allowing foreign companies to sell on its marketplace. The move is an effort by the mass merchant to compete with other marketplaces like Amazon in terms of the breadth of product offered. Walmart vice president of partner services Michael Trembley told CNBC the Chinese, British and Canadian sellers make up less than 5% of its sellers. Further, the company requires these sellers to use U.S. warehouses and return centers, he said. Vendor reaction has been swift and largely negative.

Though it has had to reach beyond the U.S. to populate its marketplace, Walmart continues to work with companies that produce here, which has taught the company a lot about the challenges facing U.S. businesses. Through this report, it is using that awareness to try to facilitate change. “Our ongoing domestic sourcing efforts and results to date, and our scale and market share in consumer goods, provide us with a unique perspective not only on how various business challenges can be overcome, but also as a convener and facilitator for broader systemic changes that must occur,” the company said in the report.

The Policy Roadmap combines insights from Boston Consulting Group as well as Walmart’s own sourcing data, merchandising information and supplier knowledge. BCG says the U.S. has the capability of slashing consumer goods imports nearly in half—$300 billion of the $650 billion—by ramping up the manufacturing sector. It estimates that this would translate into 1.5 million direct manufacturing jobs and 4.5 million indirect jobs.

To realize these results, Walmart said, four areas must be addressed: workforce, coordination and financing, regulation and tax and trade.

Workforce

Here, Walmart calls upon all levels of  government and the manufacturing industry to fund curriculum development that addresses the current skills gap; facilitates cooperation between the industry and educational facilities; and funds academic efforts and apprenticeships. Additionally, the retail industry is asked to coordinate with these groups in an effort to put a more positive, appealing face on the manufacturing sector, making it a job path people aspire to and can be proud of.

[Read more about how U.S. manufacturing is viewed here at home: Deloitte: American Manufacturing Has a Major Image Problem]

Coordination & financing

In this area, Walmart is looking to the Federal government to support state and local efforts to identify and nurture targeted industries by ensuring taxes and incentives are in alignment with these efforts, streamlining the foreign direct investment process and providing better foreign market access for U.S. goods. Meanwhile, manufacturers are expected to work more closely together to close gaps in the supply chain here and—along with retailers—support R&D projects.

Tax & trade

Walmart’s suggestions here include switching to a territorial tax, lowering corporate tax rates, reviewing tax credits to ensure they’re having the desired effect on U.S. manufacturing and creating credits for training and capital investment. On trade, Walmart is seeking trade agreements that boost market access for U.S. goods and expand tariff relief for inputs required to make goods in America.

[Read how the White House plans to tackle tax reform: Pence Promises Fair, Swift Tax Reform That Will Benefit U.S. Businesses]

Regulation

In this case, Walmart calls for a common-sense approach to regulations. The report says the government must identify and eliminate redundant regulations, listen to the industry to determine what’s critical, reasonable and feasible, and create a different scale for small businesses.

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