Retail goliath’s spread meets resistance locally and across the state.

The Associated Press        
June 30, 2003

HILLSBORO — Somewhere in America, a Wal-Mart store opens almost every day. During the next 18 months, the retail giant plans to add eight to the 27 already in Oregon.

Six more Oregon stores are scheduled for expansion.

However, some towns are digging in their heels against the spread, saying the stores are unsightly, add to traffic, are out of character with their communities and run local business out, contributing little but low-paying jobs.

The world’s largest retailer thinks that Northwest consumers want the stores and their low prices.

In four Oregon cities, opponents have won land-use battles or stalled plans for the stores.

Opponents have organized schoolchildren, created Web sites and allied themselves with competing grocers and their unionized workers.

Wal-Mart doubled the size of its store in Woodburn this year, and has plans to do the same to its store on Lancaster Drive NE in Salem. The company also is planning to build a 203,000-square-foot Supercenter next to Lowe’s on Turner Road SE.

In the past two months, planning commissions in Hillsboro and Oregon City have rejected Wal-Mart proposals. In Hood River, opponents have delayed Wal-Mart’s plans and in Lebanon, opponents have taken the company’s plans to the Oregon Land Use Board of Appeals. Wal-Mart also faces opposition in Salem, La Grande and Central Point.

The Arkansas company had nearly $245 billion in worldwide sales last year.

“Wal-Mart is almost like a political party: Either you love them or you hate them,” said Allan Miller, a professor of marketing at Towson University in Maryland.

The Hillsboro store would be 142,865 square feet and could expand to more than 210,000.

Vincent Dimone, whose house backs the property, launched the opposition by going door-to-door with 500 fliers.

Dimone and other opponents got a crash course in Oregon land-use law and found that the loss of their property value was not considered under state law.

Instead, opponents should stress noise, traffic, loss of trees and other development criteria.

Parents, teachers and students of a nearby private school joined the fray against the store, and students picketed.

Wal-Mart sent 30,000 mailers to Washington County residents and hired a public relations firm.

The two major issues for the Hillsboro Planning Commission became compatibility with the neighborhood and traffic.

Commissioners unanimously rejected the plan in May. The retailer has appealed to the city council.

In Hood River, where the company is proposing a 185,000-square-foot Supercenter to replace an existing store, opponents formed the nonprofit Citizens for Responsible Growth.

The store would be the first thing motorists driving from Portland would see of Hood River, the group says.

Kate Huseby, co-chairwoman of the opponents’ group, says she doesn’t want Hood River to lose hometown businesses to an international behemoth. They have raised $53,535 for their struggle.

Wal-Mart wants to build a 188,000-square-foot Supercenter in Lebanon on the Santiam Highway along the Santiam Wagon Road, a pioneer trail.

The owners of two local grocery stores and Friends of Linn County primarily focused their opposition on sprawl and the loss of grocery jobs that pay $13 to $14 per hour to Wal-Mart jobs that pay little more than minimum wage.

The planning commission and city council approved the land-use applications. Opponents have appealed to the state’s Land Use Board of Appeals.

Oregon City opponents included neighborhood associations, the owners of nearby Hilltop Mall and the United Food and Commercial Workers unions. They, too, contended that traffic would flood crowded roads while the city would lose housing, family-wage jobs and livability.

Wal-Mart flooded households with fliers.

The Planning Commission rejected Wal-Mart’s plans, saying that the company failed to show that Oregon City needs the store and had not adequately addressed the traffic question.

Wal-Mart plans an appeal.

As long as Wal-Mart continues to grow in Oregon, legal battles are not likely to stop. Central Point city officials say they feel bullied by Wal-Mart.

“I don’t like being run roughshod by people who think they know what’s best for us,” said Tom Humphrey, city planning director.

Copyright 2003 Statesman Journal, Salem, Oregon. To purchase a back issue (available 30 days after print date), call (503) 399-6769 or go to the StatesmanJournal.com Store.

[back to top]

Women and Wal-Mart

Ruth Rosen                              
Monday, June 30, 2003
(SF Chronicle)

WHEN BETTY DUKES first learned about Sam Walton, the founder of Wal- Mart, in a sociology class, she never imagined she'd become the lead plaintiff in a sex-discrimination suit against the giant retailer. "I learned in that class that Sam Walton had a profound vision and started Wal-Mart on a faith venture. I have always deeply appreciated his visionary spirit and his efforts to reach for the stars." As an employee at the Pittsburg store, Dukes had great dreams for her own future. She would work hard and take seriously the challenge to get "all the training and tools to reach your goals with a great company like Wal-Mart." But that's not what happened. "I was denied the training I requested to obtain promotions within the company. When I complained about unfair treatment, I was unfairly disciplined, demoted and forced to accept a pay cut. Moreover, I observed men receive promotions to positions over and over again." Dukes' name is now associated with what may turn into the largest employment discrimination case ever brought against a private employer, in this case, the world's biggest retailer. On April 29, lawyers for women suing Wal-Mart asked the U.S. District Court in San Francisco to certify the case (Dukes vs. Wal-Mart Stores, No. C-01-2252 MJJ) as a class-action suit that would represent a whopping 1.7 million women who have worked at Wal-Mart since Dec. 26, 1998. A hearing on the motion for class certification is scheduled for July 25. "I am participating in this case," Dukes writes in her sworn testimony, "in order to insure that young women such as my nieces and other women are treated fairly at every Wal-Mart store. The time has surely come for equality for women . . ." Wal-Mart employs more than 1 million people who work in more than 3,400 U.S. stores. Although women make up more than 72 percent of the Wal-Mart sales force, they hold only one-third of the management jobs. Men hold 90 percent of Wal-Mart's store manager positions and only one woman is among Wal-Mart's 20 top officers. Is this just a coincidence? Dukes doesn't think so. Nor do the other 110 women who have contributed sworn statements to the lawsuit and worked in 184 different stores in 30 states. They charge Wal-Mart with systematic discrimination against women in pay, promotion and job assignments. The suit also accuses the giant retailer of paying women 37 cents an hour less than men for identical jobs. Reading these women's complaints is like visiting a corporate culture stuck in the 1950s: Male managers force their female counterparts to attend meetings at strip clubs or Hooters restaurants; they tell female employees they don't need promotions or equal pay because "men need to support their families;" and senior management regularly refers to women employees as "little Janie Qs" and "girls." In keeping with its conservative policies, the health insurance Wal- Mart offers its employees doesn't cover contraception. Women consumers suffer limited choice as well: The store refuses to dispense emergency contraception, or the "morning-after-pill." Fortunately, the women of Wal-Mart have an ally in their battle. On June 22, the National Organization of Women, which has dubbed Wal-Mart a "merchant of shame," kicked off an "adopt a store" campaign to educate shoppers about Wal- Mart's exploitation of its women employees. Thousands of NOW members are visiting stores, wearing buttons that read "Wal-Mart Always Discriminates"-- a play on the retailer's famous slogan, "Wal-Mart -- Always the Lowest Prices." NOW activists are also handing out palm-size cards to shoppers that ask: "Wal- Mart: Always Low Prices, But Who Pays?" Kim Gandy, President of NOW, says, "Consumers across the country need to be able to spend their dollars with a clear conscience. Wal-Mart doesn't afford us this option." Joining NOW is the Coalition of Labor Union Women, which has mobilized its 20,000 members to participate in the campaign. Also involved is the United Food and Commercial Workers' Union, whose members work at competing retail stores and earn $2 to $3 an hour more than Wal-Mart workers with equivalent jobs. The union is all too aware of Wal- Mart's union-busting tactics. During the last four years, the National Labor Relations Board has filed 40 complaints against Wal-Mart, accusing managers in nearly 30 stores of coercing, intimidating and firing employees who showed any interest in joining a union. Susan Phillips, UFCW vice president, calls the women's campaign a "direct way to bring an economic message both to consumers and workers in the stores." That way, "shoppers will make informed choices about whether they want to support that kind of discrimination." For most women, working at Wal-Mart offers a dead-end job that barely covers the necessities of life. On average, a "sales associate" earns $6.10 an hour, or $13,688 annually if she works full time. Not surprisingly, many Wal- Mart workers live below the poverty level, use county pulic health services and -- at least half of them -- qualify for the federal food-stamp program. In other words, taxpayers subsidize Wal-Mart's profits by paying for the federal, state and county assistance that Wal Mart's workers require to survive. Women are not the only workers who are underpaid. Men are, too. With any luck, the growing battle against sex discrimination and for union representation will force the giant retailer to grasp that womens' and workers' rights, are, in the new millennium, called human rights.

E-mail Ruth Rosen at rrosen@sfchronicle.com.

[back to top]

Union Blues at Wal-Mart

By John Dicker, The Nation          
June 28, 2002

"Got any nachos ready?"

That's what Joe Hendrix said to the folks at the Radio Grill, his employer's in-house snack bar. Hendrix was on his way to punch out from his shift in the meat-cutting department at the Wal-Mart Supercenter in Jacksonville, Texas; eight months earlier, in February 2000, he'd voted yes in the first successful election for union representation at a US Wal-Mart store. For failing to pay when placing his nacho order, he was fired.

Seventy-two-year-old Sidney Smith also voted yes; he got axed for eating a pre-weighed banana on the checkout line. Such were the excuses offered by management as union supporters were systematically routed from their jobs. But this was well after the real damage had been done, when Wal-Mart announced two weeks after the Jacksonville vote that it was switching to case-ready, or pre-cut, beef and would be eliminating meat-cutting operations in 180 stores. Wal-Mart claimed its decision had nothing to do with the organizing drive, but the union filed a complaint with the National Labor Relations Board. Although the board ruled in the union's favor, the timing of the news contained a chillingly clear message to Wal-Mart workers nationwide: This is what you can expect if you try to organize.

Wal-Mart's legendary ferocity in such situations has, until recently, kept unions from trying to make inroads in its million-strong work force. But after more than a decade of pussyfooting, the United Food and Commercial Workers union and the Teamsters are gearing up to take on Wal-Mart Stores, Inc., with the former taking the retail stores and the latter handling 100-plus distribution centers. For the UFCW, this undertaking is less the result of newfound militancy than it is about mere survival. Seventy percent of the union's 1.4 million members work for national groceries like Kroger and Safeway, as well as smaller, regional chains. With a strong presence in the top 100, mostly urban, markets, the big chains can hold steady in the face of Wal-Mart encroachment. The regional chains, however, are getting walloped. And with Wal-Mart circling on the fringes of larger markets, its lower wages and benefits will likely erode those enjoyed by UFCW members.

In its 40-year reign Wal-Mart has amassed a jaw-dropping trophy rack of titles – "world's largest retailer," "world's largest private employer" and the recently acquired "world's largest corporation," edging out ExxonMobil for the top spot in this year's Fortune 500. The chain accounts for 6.4 percent of the nation's retail sales. With K-Mart, until recently its closest rival, now in bankruptcy, the path is clear to ever greater domination.

The only Wal-Mart store to unionize successfully was in Ontario, Canada, abetted in no small measure by the province's once-progressive labor laws. But the fledgling union was broken by the company's flat-out refusal to recognize the contract. While a climber at Mount Everest base camp can point to the many individuals who have summited and lived, a Wal-Mart worker trying to join a union knows no such consolation. Two unions, neither a paragon of union democracy or member mobilization, face an employer that has been growing by 15 percent each year, recession and all: In the context of a labor movement that has not been weaker since the 1920s, with a legal system seemingly rigged against it, this is an Everest ascent with no Sherpas in sight.

Wal-Mart manifests itself in three main forms: The traditional Wal-Mart retail store, which peddles everything from panties to Pennzoil and averages about 90,000 square feet; SAM's Club, a warehouse club store where "members" pay an annual fee to receive greater discounts on dry goods and groceries; and Supercenters, the company's biggest growth vehicle, a combination retail and grocery store clocking in at 190,000 square feet. This year, Wal-Mart plans to open a new one every other day.

"Wal-Mart's strategy is very similar to Mao Zedong's," says retail analyst Burt Flickinger. "Conquer the countryside first and take the cities second." If this sounds alarmist, consider the Neighborhood Market. It's a prototype grocery store roughly the size of three 7-Elevens. In the past few years Wal-Mart has deployed them for greater market saturation in its urban strongholds like Oklahoma City and Dallas. While zoning laws and real estate costs impede the development of most forms of Wal-Mart in the larger metro areas, the trim Neighborhood Market might squeeze into places a Supercenter could never dream of occupying.

SAM Walton built his empire on a belief that rural America saw more business than anyone in the corporate world was recognizing. This vision – combined with a zealot's dedication to low overhead, undercutting the competition through lower profit margins and higher sales volumes, investment in technology and aggressive growth-blazed a trail for an imperial corporation that now operates in nine countries.

Walton has been dead for a decade, but he lives on as a deity, the customer-service superego of Wal-Martians nationwide. So entrenched is the myth of "Mr. Sam" as a benign patriarch that rather than contradict it, the UFCW plays along, with campaign messages about "restoring Sam's vision." Unfortunately, Walton's vision never included unions. As Wall Street Journal reporter Bob Ortega chronicles in his book In Sam We Trust, Walton was bent on maintaining low labor costs, paying workers subminimum wages when he could get away with it and showing no qualms about threatening store and warehouse closures to beat back union campaigns. The company's trumpeted profit-sharing plan and "open door policy" for addressing grievances were all born out of the pleading of Walton's unionbusting consigliere, John Tate. Tate believed that Walton could circumvent labor problems by convincing his workers that he was on their side. For Walton, this turned out to be a winning strategy – a full-time union-prevention program.

Sam drove a pickup truck, shot quail and probably spent more time studying KMart than KMart's own executives. He embodied a peculiarly American paradigm that endures at company headquarters in Bentonville, Arkansas, to this day. He was a self-made, rock-em-sock-em, capitalist cowboy in an industry devoted to peddling every fathomable consumer good, and yet he remained puritanically frugal in his personal and corporate expenditures.

Unlike the Gap or Starbucks, Wal-Mart is not selling brand lifestyle. Its aesthetics in architecture and advertising are decidedly no-frills, its corporate offices stark. Executives pay for their own coffee, and even CEO Lee Scott has been known to share a hotel room on business trips. Wal-Mart's subordination to the bottom line permeates all levels. For instance, to curtail frivolous energy consumption, lights, heat and air conditioning at all 3,289 US Wal-Marts are controlled from Bentonville. Not surprisingly, this ethos hits those at the bottom of the food chain the hardest.

Managers are under considerable pressure to keep profits up, and one of the few ways they can achieve this is by cutting operational costs, of which labor comprises about 50 percent. Former managers and employees attest to an unofficial policy of putting experienced "associates" – as the Wal-Martian wage slave is eloquently titled – out to pasture through firing for minor infractions or pushing them to quit by other means. Why pay $10.50 an hour when a new hire can be culled from the street for $7?

A perpetually churning work force offers the added benefit, from management's perspective, of keeping the union out. By its own admission, Wal-Mart burns through 70 percent of all new hires each year, a considerable number in a work force of over a million. As Bernie Hesse of UFCW Local 789 in the Twin Cities explains it, the paradox of retail organizing is "I'm working retail, this job sucks. If I don't like it I'll go get another job that pays $6.50 an hour." While many retail workers don't see their jobs as being worth a long, arduous battle for representation, they also cower at the real consequences of supporting a union: demotions, reduction in hours and "got any nachos ready"-style firings.

ALThough the union faces skepticism and fear among workers, it has discovered a few potent organizing issues – most notably, healthcare. Effective January 1, a full-time associate with two children and no spouse would pay $36 a week for basic coverage and $3.50 for dental, in addition to a $350 deductible for each individual on the plan. This tallies out to more than $3,000 a year for someone earning less than $16,000. Should it be any surprise that only 38 percent of Wal-Mart associates elect to have coverage? When the company announced a 30 percent hike in premiums this fall, it gleefully noted that associates had a "CHOICE to elect what will be done with 1/2 of the Wal-Mart contribution to our 401(k) account." One of these so-called choices was to "direct it toward paying health care rates." This change was illuminated in a video so slick that SAM's Club cashier Alan Peto said, "If I didn't know any better I really would have thought they had done me a big favor."

Just for shits and giggles, dial (501) 273-8300. That's Wal-Mart's twenty-four-hour "Union Hotline," designed for store managers to call on the first whiff of union activity. Your kind message will activate the beeper of an associate in Wal-Mart's "People Division." Assuming you are a store manager (and not a pinko prankster), your call will be promptly returned. If your associates are talking union, a flying column of unionbusters will be quickly dispatched to put out the fire.

Since the UFCW began talking to meat-cutters en masse in 1999, the People Division has increased from 12 employees to nearly 70. In terms of preparedness, though, Wal-Mart has always trumped the unions. Before any national campaign was afoot, Wal-Mart was publishing and distributing manuals like "A Manager's Toolbox To Remaining Unionfree," producing videos and running two-day workshops for store managers stressing their role as the "first line of defense" against a union campaign.

On paper Wal-Mart stays within the bounds of how an employer can legally respond to a union drive. "They're cosmetics," says unionbuster-turned-union-adviser Martin Levitt. "The company will wave them like a flag to show that they know the law, but once management and supervisors have been pulled into one-on-one meetings with the unionbusting forces, they are carefully programmed on how to break the law and told clearly that their very job depends on doing so."

While a store manager has likely been briefed on extralegal maneuvers, the dirty work is often delegated to nonsalaried department managers with no knowledge of labor law. Gretchen Adams, a co-manager at a Las Vegas Supercenter, was instructed by her district manager not to hire anyone with union experience, while Stan Fortune, a former department manager and security guard, was told to solicit grievances from union supporters, implementing raises and promotions to buy their loyalty. "I never knew I was breaking the law," he says. Wal-Mart spokeswoman Jessica Moser Eldred said the company follows all state, federal and local labor laws. "In no circumstance do we deviate from them."

Part of Wal-Mart's strategy is to deny contact between workers and the union. When it owns the land on which its store sits, it will invoke trespassing laws. "It got to the point where as soon as the organizers got out of their cars, the security guards would be in the parking lots telling them to leave," says Alan Peto.

In other cases, managers or security guards shadow organizers throughout the store, making it impossible for them to speak to workers. Organizers from the UFCW international staff are currently barred from all Wal-Marts under an injunction that forbids solicitation. The company has infuriated shoppers suspected of being union organizers by ejecting them; they've even booted Girl Scouts and Salvation Army bell ringers for fear that contradicting its no-solicitation policy will give the union an inroad.

Faced with the inevitable litany of unfair-labor-practice charges from the union in response to its illegal maneuverings, Wal-Mart can count on the glacial pace of the labor board to stall the campaign. If the board rules in the union's favor, the company suffers a slap on the wrist, posting a notice of company malfeasance in the break room. This is union organizing still haunted by the ghost of the 1947 Taft-Hartley Act.

The UFCW is now attempting to build a case before the NLRB arguing that Wal-Mart's violations are not the result of a few rogue store managers but part of a systematic policy of illegal intimidation, surveillance and terminations, all designed to keep workers from organizing. The union has filed forty complaints against Wal-Mart in twenty-four states, resulting in forty complaints issued by the NLRB against the company.

The UFCW hopes ultimately to attain remedies like "affirmative workplace access," a corrective ruling from the board that allows organizers to talk to workers in break rooms and to rebut management's captive-audience meetings, where workers are deluged with anti-union speeches and videos. Rulings for affirmative access are rare, and they typically take many years to attain. But they have been delivered with great success to UNITE at Fieldcrest Cannon and SEIU at Beverly Nursing Homes. Given a labor board stacked with Bush appointees and Wal-Mart's legal motto of WDWDW (What did we do wrong?), however, chances of an imminent victory are remote.

IN THE 14 years since Wal-Mart opened its first Supercenter, the UFCW has run a damage-control campaign bent on stemming the tide of expansion and sullying the company's image. The union has helped call attention to Wal-Mart's use of sweatshops and child labor overseas, as well as its bogus "Buy American" program, where the company wrapped itself in a "made in the USA" flag until it was revealed that most of its apparel was made in overseas sweatshops. The union also forged coalitions with antisprawl activists to stem Wal-Mart's growth.

All of these are noble pastimes, but without a strategy to organize workers, about as effective as pummeling the Taliban with passages from The Betty Friedan Reader. Until recently, it was hard to tell if the UFCW was boycotting Wal-Mart, organizing it or simply functioning as a thorn in its side. The mixed messages provide the People Division an opportunity to inoculate its associates with videos like "Wal-Mart Under Attack," which shows footage of UFCW rallies with members chanting "Wal-Mart: Not in My Neighborhood" and highlights various local efforts to get union members to sign pledges not to shop at Wal-Mart. When many associates openly identify with the company, the message that the union is against Wal-Mart packs a punch.

In the past year, however, the UFCW seems to have developed a more focused approach. Their line in the sand is Las Vegas, a city with a strong union presence in the service sector. While unionized groceries enjoy 90 percent of Vegas's market share, Wal-Mart is making headway with five Supercenters, five retail stores and four SAM's Clubs. Since March of last year, the union has been organizing in Las Vegas, with some activity in northeast Ohio and Texas. In Vegas, the UFCW hosts a radio show and maintains a Web site, which chronicles Wal-Mart's anti-union campaign and offers a needed arena for counterarguments and open communication among workers. (However, 12 percent of the website's hits come from Bentonville.)

This past November, workers at Las Vegas SAM's Club Store 6382 were set to vote in the third storewide election at a US Wal-Mart. But as the election approached, the company went into a hiring frenzy, disrupting the laboratory conditions required by the NLRB. Watching its support ebb as the company packed the unit with new hires-all of whom were subjected to anti-union videos and meetings-the union filed charges, which resulted in the board's decision to block the election; on March 28, the NLRB issued a complaint against the company, but the best the union is likely to get is another election with little to guarantee that Wal-Mart won't do the same thing again.

And what of the Teamsters? So far, their activity has been limited to two locals in California and Missouri. At a San Bernardino distribution center, a recent election was lost by a swing margin of 28 votes – an impressive result considering management was promising $3 raises in the week preceding the election and that the campaign was the work of a single organizer. Since Wal-Mart's distribution systems are models of efficiency and integral to the company's success, the Teamsters and UFCW might give Bentonville a run for its money if they coordinated their efforts, applying simultaneous pressure by engaging both truckers and retail workers, thus stretching the capacity of the People Division. But in light of Teamsters organizing director John Murphy's stated goal of transforming his department into "a desk and a telephone," and the union's overall stagnation under Jimmy Hoffa, it's hard to imagine they're going to attempt such a conquest anytime soon.

THE UFCW, for its part, has taken a largely top-down approach to the campaign, which has been guided by pressure tactics coming from union HQ in Washington-with some exceptions. "I get members asking me how it's going, how many people have signed cards, and I say what's the point? Why go through a regular election just to get knocked down?" says UFCW organizer Bernie Hesse. "I'm not trying to go store by store; I'm trying to build a social movement." Hesse's Local 789 has launched a campaign called "You Are Worth More" for retail workers in the Twin Cities. Rather than home in on one particular company, Hesse's local is planting roots in the community, establishing itself as a presence among a multiracial work force at metro-area Targets, KMarts and Wal-Marts.

There's no single war-winning strategy for bringing the union to Wal-Mart workers. Given the UFCW's history of bowing to hostile employers and suppressing its own dissidents, it remains to be seen whether the union is movement building or just circling wagons around its most endangered markets. At risk of excessive parade pissing, consider that even if SAM's Club 6382 wins an election, there are still 3,288 more to go. Wal-Mart is likely to be a decades-long struggle, fought by a largely female work force with no union experience. The struggle is now being waged by a vanguard of union lawyers. Ultimately they will have to take a back seat to shop-floor workers, member organizers and, most significant, the communities where workers live. When the lines between union and community collapse, an employer's traditional mode of attack – labeling the union an alien third party – disintegrates, and the campaign becomes less dependent on legal wrangling. Then, when Wal-Mart denies workers access to the union, wrecks an election or fires activist workers, the outrage does not come from a lone UFCW mouthpiece but from a movement.

Given this campaign's stakes – both real and symbolic – a movement is what Wal-Mart workers need. "If these retailers are going to be the jobs of the future, if we've really switched from a production to a service economy, than what is so revolutionary about insisting that they pay a living wage?" asks Bernie Hesse. Millions of associates and citizens may have to ask this question a million more times before a movement becomes something tangible, and not just a feel-good progressive mirage.

John Dicker is a freelance writer based in Brooklyn, New York.

[back to top]

Mishandling check costs Wal-Mart $130,000
WOMAN WINS LAWSUIT OVER $34

By Bill Estep SOUTH-CENTRAL KENTUCKY BUREAU
27 June 2003
The Lexington Herald Leader

Problems with the handling of a $34 check resulted in a lawsuit verdict of $130,000 against a Wal-Mart store yesterday.

A federal jury in London awarded the money to Mary Waddle of Pulaski County to compensate her for emotional distress and other damages she suffered because of problems that started after her check to the Wal-Mart store in Somerset was returned, said her attorney, Thomas Carroll of Monticello.

Carroll said Waddle, a pharmacy technician at the Wal-Mart, wrote the check to the store in September 2000. The store's bank incorrectly stamped the draft with the notation that Waddle had no account and returned the check, her attorney said.

Waddle did have an account and showed Wal-Mart that the check had been returned in error. The store ran the check back through and got paid, Carroll said.

However, Wal-Mart had reported the returned check to database services that keep track of bad checks as a resource for businesses. A year later, another business refused to take a check from Waddle, showing that Wal-Mart had not rescinded or corrected its report, Carroll said.

Waddle spoke to Wal-Mart managers about correcting the database. But managers later testified that once a check was paid, the store had no way to get into the system and correct mistakes, Carroll said.

Waddle sued the store under the federal fair credit reporting act. The store has an obligation to be as accurate as possible, Carroll said.

Waddle had never bounced a check, Carroll said, and she suffered emotional distress that required medical treatment and medication because of the incident. She took medical leave and has not gone back to the store.

The jury ruled Wal-Mart had willfully violated the federal law and awarded Waddle money to cover her emotional distress, injury to her reputation, lost wages and impairment of her ability to earn money, Carroll said.

"I think it was a fair verdict," Carroll said.

Wal-Mart's attorney in the case, Jim Roark of Hazard, was not available for comment on whether the store will appeal.

Management at the Somerset Wal-Mart referred questions to the Bentonville, Ark., headquarters, but a spokesman was not available yesterday.

[back to top]

Wal-Mart poised to take on apparel sector

CHICAGO, June 26
(Reuters) -

Down the hall from the office of Wal-Mart Chief Executive Lee Scott, a poster tacked to the wall reads: "Who is taking our business? Kohl's."

Not Target Corp. (TGT.N), the second-largest U.S. discount chain, or Paris-based Carrefour (CARR.PA), the world's second-biggest retailer, but mid-priced department store chain Kohl's Corp. (KSS.N) -- a company whose annual revenues are smaller than U.S. sales taxes paid by Wal-Mart Stores Inc. (WMT.N).

Wal-Mart, the world's biggest company by revenues, has always made a point of keeping a close eye on competitors -- even much smaller ones.

"They are maniacally focused on the consumer and the competition," said Michael Collins, a partner with consulting firm Bain & Co.

But singling out Kohl's could spell trouble for the fast-growing department store chain, and it signals a brewing price war in the U.S. clothing sector, analysts say.

"Wal-Mart indicating that Kohl's is stealing their business means that they are intent on going after the apparel retailing market just as they've gone after the food and drug retailing markets," said Bill Dreher, retail analyst with Deutsche Bank.

Dreher rates Kohl's shares "sell," and Wal-Mart's "buy."

Kohl's did not return calls seeking comment.

Wal-Mart has built up an arsenal of name-brand clothing to compete with Kohl's and other department stores, many of which are already struggling with slack demand and diminishing traffic at shopping malls.

This month, Wal-Mart is rolling out an exclusive line of low-priced Levi's jeans, and it has a deal with Carter's for baby and children's clothes. Both are major brands for Kohl's.

Wal-Mart said the most expensive pair -- the "plus"-sized denims -- will sell for just under $25. That compares with around $29 for the lowest priced pair available on Kohl's Web site. Internet stores were offering Levi's classic 501 blue jeans for as little as $39.95.

In another ominous sign for the apparel industry, Wal-Mart is opening two stand-alone clothing stores in Britain this fall to showcase its George fashion line, which is already being sold in stores in the United States and elsewhere. The retailer said it will study the two stores for at least a year before deciding whether to open more.

CRUSHING COMPETITION

Competing with Wal-Mart is rarely a pleasant experience because the world's biggest retailer uses its size to exert pressure on suppliers and buy goods cheaper than most of its competitors can.

Only a decade after getting into the grocery business through its supercenters, Wal-Mart is the largest player and has crushed competitors' profits. Toy retailers and drug stores are also feeling the pinch as Wal-Mart undercuts them.

Wal-Mart founder Sam Walton offered some advice to competitors in his autobiography published in 1992, the year he died: "They need to avoid coming at us head-on, and do their own thing better than we do ours," he wrote. "It doesn't make any sense to try to underprice Wal-Mart on something like toothpaste."

Indeed, Kmart Holding Corp. (KMRT.O) tried to match Wal-Mart's prices and ended up in bankruptcy court. It emerged from Chapter 11 protection this spring and vowed to stick to its pricing strategy of offering steep discounts on selected items every week, but not challenging Wal-Mart head-on.

COSTCO NEXT

Wal-Mart's strategy relies on building a dominant market position and using its size to squeeze lower prices out of suppliers. But that's a tricky proposition when Wal-Mart isn't the biggest player.

Its Sam's Club warehouse stores trail Costco Wholesale Corp. (COSTCO), and Wal-Mart seems determined to change that. In a presentation to analysts this month, Wal-Mart said it was in the process of "establishing price leadership" at Sam's -- corporate speak for a renewed price war, analysts said.

Wal-Mart is turning up the heat even more by combining Wal-Mart and Sam's buying power on purchases from suppliers. Buyers for Sam's and Wal-Mart stores are negotiating deals together for the first time, a move Wal-Mart thinks will bring down prices even further.

In one early example of the new team effort, Sam's Club stores will carry Levi's classic red tag jeans, a deal worked out as part of Wal-Mart's negotiations for lower-priced Levi's at its discount stores.

Richard Galanti, Costco's chief financial officer, declined to comment on whether the company noticed increased pricing pressure, but said Costco was up to the challenge.

"We've competed with Sam's and Wal-Mart for 20 years effectively and will continue to do so," he said in a telephone interview. "We continue to grow our business." Thursday, June 26, 2003 (SF Chronicle)

[back to top]

Wal-Mart wars

Ruth Rosen
June 26, 2003

WOULD YOU LIKE a Wal-Mart "supercenter" store to move into your community? Think of the low prices and the convenience of one-stop shopping! You just park once and get whatever you need -- groceries, drugs, plants, toys, dog food, even eyeglasses. Sounds great, doesn't it? So why have nearly 200 communities refused to allow such big-box stores to enter their lives? Do they know something we don't? To find out, I embedded myself in the Wal-Mart wars that have recently broken out in Contra Costa County. What I learned, in a nutshell, is that Wal- Mart's nonunion, big-box stores drag down other workers' salaries, destroy downtown businesses, prevent smart-growth development and increase traffic congestion. What really surprised me though is that we, the taxpayers, end up subsidizing Wal-Mart stores by paying for the health and retirement needs of its workers. Wal-Mart has announced its intention to open 40 new supercenter stores -- each the size of four football fields -- in such fast-growing California suburban areas as Contra Costa County. But Contra Costa County has fought back. A year ago, Martinez prevented a traditional Wal-Mart store from expanding into a supercenter that could sell groceries. On June 3, the county Board of Supervisors voted to ban such supercenter stores from unincorporated areas of the county. In making its decision, the board cited a study done by the San Diego County Taxpayers Association (SDCTA), a nonprofit, nonpartisan organization. It found that an influx of big-box stores into San Diego would result in an annual decline in wages and benefits between $105 million and $221 million, and an increase of $9 million in public health costs. SDCTA also estimated that the region would lose pensions and retirement benefits valued between $89 million and $170 million per year and that even increased sales and property tax revenues would not cover the extra costs of necessary public services. "Good jobs, good pay, and good benefits should be the goal of an economy," SDCTA concluded, "and supercenters are not consistent with that objective." Wal-Mart, as is its custom, has launched a counterattack against Contra Costa's ordinance. The company parachuted in platoons of signature-gatherers who are stationed outside discount stores and asking shoppers to sign a petition that would place the board's decision on a ballot. If they collect 27, 000 legitimate signatures, Wal-Mart could reverse the board's ban. In response, a coalition of community groups have mobilized to defeat Wal- Mart's counterattack. But they face a formidable enemy. Over the last 40 years, Wal-Mart has grown into the nation's biggest employer and the world's largest retailer. Every two days, Wal-Mart opens another superstore. It has more people in uniform than the U.S. Army. Last year, it banked about $7 billion in profits. The troops fighting Wal-Mart's invasion of Contra Costa County include the Gray Panthers, small businesses, dozens of churches, the National Organization for Women, and environmental and smart-growth activists. Young people, recruited by the Association of Community Organizations for Reform Now (ACORN), fan out daily to discount stores and try to convince shoppers not to sign Wal- Mart's petition. They even carry cards that allow voters to withdraw their signature if they have already signed the petition. The generals in charge of this community resistance are union leaders. John Dalrymple, director of the Contra Costa Central Labor Council, admits they face an uphill battle. The giant retailer is infamous for its take-no- prisoners, anti-union policies. Wal-Mart's ability to offer such low prices, as any union member will tell you, has been achieved by paying its workers -- or "sales associates" -- low wages, offering unaffordable health coverage and no retirement benefits and importing most of its products from developing countries, some of which use child and prison labor. The United Food and Commercial Workers (UFCW) Local 1179, located in Martinez, is headquarters for the war against Wal-Mart. Barbara Carpenter, the union's president, comes from a family whose members have worked for decades at retail companies that provided decent wages, affordable health benefits and pension plans. "It's about saving the American dream," she told me. Wal-Mart, she points out, lowers wages among working families and crushes family businesses. "It not only pays workers less than most of its retail competitors, two-thirds of workers don't have health-care coverage -- a cost taxpayers are picking up across the country." Did she say taxpayers? That's right. We, the customers, get such low prices and convenient shopping because we, the taxpayers, subsidize Wal-Mart profits by paying for county public health services, food stamps and social services for its retired employees. So should you shop at Wal-Mart? To make up your mind, consider this: If you earn a livable wage or are protected by a union, you can probably buy all your monthly needs at Wal-Mart. But that's because the average Wal-Mart employee, who earns about $15,000 a year, cannot do the same. Convenience and cheap prices, it turns out, come with hidden costs. E-mail Ruth Rosen at rrosen@sfchronicle.com

[back to top]

Wal-Mart at critical juncture Sex bias plaintiffs seek class status

By Sue Reisinger SPECIAL TO THE NATIONAL LAW JOURNAL
Monday, June 23, 2003

Lawyers for Wal-Mart Stores Inc. and a group of women employees are engaged in a courtroom fight that, if the employees win the upcoming round, could result in the largest sex discrimination suit ever.

If certified as a class action, the case would include 1.5 million Wal-Mart employees and could theoretically result in compensatory and punitive damages totaling hundreds of billions of dollars, according to lawyers on both sides.

"No court has ever certified such a class," Wal-Mart said in a 60-page brief filed on June 12 in U.S. district court in San Francisco. "If this court were to certify anything like the requested class it will be in uncharted waters, going where no court has ever gone."

U.S. District Judge Martin J. Jenkins will hold a hearing and is expected to rule on the certification issue on July 25.

Seven California women—who all worked at Wal-Mart stores in California—claim in a 2001 suit that Wal-Mart, including its Sam's Club division, systematically discriminates against its female employees by denying them promotions, access to training and equal pay. The lead plaintiff is Betty Dukes, who worked part time, then full time as a cashier in Wal-Mart's Pittsburg, Calif., store and then was promoted to customer service manager in 1997. She claims Wal-Mart discriminated against her by passing her over for promotion and then demoted her when she complained. Dukes v. Wal-Mart Stores Inc., No. C-01-2252 MJJ.

Wal-Mart is asking that if Jenkins grants certification he immediately allow an appeal to the 9th U.S. Circuit Court of Appeals.

Wal-Mart is the world's largest business, with 3,244 U.S. stores, more than $230 billion in annual revenue and 1.3 million employees. The suit could affect not only wages in the retail industry but also the entire U.S. economy, according to lead plaintiffs' counsel, Brad Seligman.

Seligman said his studies found that "the patterns of discrimination at Wal-Mart are remarkably uniform throughout the country—urban and rural, the deep South and North, every one of 45 regions of Wal-Mart, in every state." Seligman is executive director of the Impact Fund, a nonprofit group in Berkeley, Calif., that supports litigation on civil and human rights, the environment and poverty.

The plaintiffs' studies claim that some 70% of Wal-Mart's hourly employees are female but women hold fewer than 33% of store management jobs, and fewer than 15% of store manager positions. Women make up an average of 56% of management positions at Wal-Mart's main competitors, the plaintiffs contend.

Wal-Mart's lead counsel, Nancy L. Abell, a partner in the Los Angeles office of Paul, Hastings, Janofsky & Walker, did not return repeated messages, nor would Wal-Mart's legal department comment.

Mona Williams, vice president of corporate communications, said from company headquarters in Bentonville, Ark., "Our company prohibits discrimination of any kind. While there may be isolated instances of unfairness in any large organization, there is no basis for finding systemwide discrimination at Wal-Mart."

More than 100 other women workers from 34 states have added their declarations of alleged discrimination to the plaintiffs' pleadings. The court has accepted complaints from former employees going back to Dec. 26, 1998.

Williams said that for every plaintiff's claim, she could furnish a female Wal-Mart employee to say the company treats women fairly.

Commonality is key

Federal courts have long held that a motion for class certification should not involve examination of the merits of the case, most recently in a decision by the 2d Circuit in Caridad v. Metro-North Commuter R.R., 191 F.3d 283 (1999). In the Caridad case, which involved allegations of sex and race discrimination, the court reaffirmed that plaintiffs seeking class certification must meet each of the requirements of Federal Rule 23—the three so-called "nexus" requirements of commonality, typicality and adequacy in Rule 23(a) and the requirement of manageability under Rule 23(b).

Most of Wal-Mart's brief addresses those four requirements. It argues that the suit lacks commonality because the class of plaintiffs is too broad and diverse: Most of the plaintiffs are, or were, hourly employees who worked at different jobs, at different stores and under different managers. It also says the potential class of employees presents different issues as to why they felt discriminated against.

The brief states that Wal-Mart is really nine different businesses ranging from supercenters to neighborhood markets, with different management structures and diverse pay plans. It says none of the seven plaintiffs, for example, worked in the grocery division, listed as one of the nine separate businesses.

Wal-Mart also claims there is no typicality because there is no "typical" class representative who shares a common experience with all members of the class. It then argues there is no adequacy because in some cases female supervisors were both the victims and the perpetrators of alleged discrimination.

And the Wal-Mart brief claims numerous manageability problems, especially in determining damages: "Plaintiffs here ask for back pay for 1.5 million people. Such an undertaking cannot possibly be manageable." It adds that a demand for punitive damages presents similar manageability problems and would require examination of each individual's case.

On the other side, the plaintiffs argue that there are questions of law and fact involving Wal-Mart's policies and practices common throughout the company's stores, and that these practices cause women at Wal-Mart to be paid less and to be promoted less often than similarly situated male employees.

The 'same' interests

The seven plaintiffs claim they adequately represent the class because their interests and the interests of the class are the same—proving the existence of Wal-Mart's general practice of gender discrimination in compensation and promotion. And, they argue, typicality is satisfied where the plaintiffs have suffered from the defendant's general policy of discrimination in compensation and promotions.

The plaintiffs also argue that class treatment is manageable and superior to other methods of litigation because, "it would be far more costly for each individual female employee of Wal-Mart separately to seek discovery of Wal-Mart's policies, obtain data concerning personnel decisions, and have a multitude of different experts analyze such data for each individual case. Moreover, separate lawsuits would require analysis of the same evidence by a multitude of courts and juries."

With commonality such a key issue, Wal-Mart went on to claim in its brief that its store managers are autonomous, and that its own statistical analysis concludes that in four of the stores where plaintiffs worked, women succeeded at a higher, not lower, rate than men in comparable positions.

But, Seligman said, Wal-Mart's own data show that there is commonality and grounds for class certification. He said the data reveal that women in every major job category at stores across the country have been paid less than men with the same seniority in every year since 1997, even though the female employees, on average, have higher performance ratings and less turnover than men.

"The judge doesn't have to decide which statistical model is correct, only that there is a question about statistics that justifies class certification," Seligman said.

Wal-Mart's defense that every store is autonomous "is so beyond what everyone knows about Wal-Mart that it is incredible....Wal-Mart is uniquely centralized. It is fanatic about control of the stores—from the thermostat of every single store, to the music it plays, to its inventory and employee records," he said.

While corporate defense attorney Heather Gatley said the factual claims should deeply concern Wal-Mart's counsel, she predicted that the plaintiffs will have an uphill battle in getting the case certified as a class action.

"Decisions were made by different managers in different locations," said Gatley, vice chairwoman of the labor and employment practice at Miami's Steel Hector & Davis, who is not involved in this case. "There is a huge time period, multiple kinds of claims and a huge geographic area. If I were a judge, I would not certify this case." She predicted that any decision to certify would be overturned on appeal, especially in the current political climate that has Congress looking at ways to restrict class actions.

But another attorney, also not involved in the litigation, said numbers and geography alone don't preclude a class action.

Judson Miner, a plaintiffs' attorney with Chicago's Miner, Barnhill & Galland, said, "The fact that decisions impact each person differently doesn't matter. The key is common issues. Does the policy permeate the system? Is there evidence to link the stores together?"

Besides the suit's charges, Wal-Mart is also battling its own reputation as a somewhat ruthless employer and litigator. For example, since 1994, the U.S. Equal Employment Opportunity Commission has filed 16 suits against Wal-Mart for violating the Americans With Disabilities Act—the most against any U.S. company, according to a spokesman.

The EEOC would not disclose if it has any sex discrimination complaints pending against Wal-Mart. An EEOC spokesman said the agency granted the California plaintiffs the right to sue Wal-Mart shortly after they filed an EEOC complaint. Attorneys said it is not unusual for plaintiffs with a strong case to proceed in court before any EEOC investigation.

Win or lose in court, many observers believe that the plaintiffs' suit could forever change how Wal-Mart deals with its female employees.

But Seligman wants to ensure that change. "The single most important thing is winning class certification," Seligman said. "It's either seven women or 1.5 million women. If it's seven, then that is nothing to Wal-Mart."

[back to top]

Wal-Mart collects ink for county referendum

By Sandy Kleffman
24 June 2003

Wal-Mart has begun gathering signatures in the hope of overturning a Contra Costa County ordinance barring super-size retail centers from opening full-service grocery stores in unincorporated areas.

The firm will spend about $100,000 trying to qualify a referendum for the ballot, said Wal-Mart community affairs manager Amy Halley Hill.

"It's a matter of principle," she said. "These types of ordinances are anti-competitive and anti-consumer and we will fight them tooth and nail."

The dispute mirrors battles throughout the country over retail giants.

Supporters like the bargain prices and convenience. Opponents counter that those benefits often come at the expense of smaller retailers and employees who receive low wages.

"They just shouldn't have a super center that's the size of 15 football fields," said Liz Perlman, an organizer for the East Bay Alliance for a Sustainable Economy, which opposes the Wal-Mart petition drive.

County supervisors approved an ordinance June 3 that applies only to retailers with stores in excess of 90,000 square feet in unincorporated portions of the county.

It bans such super centers from devoting more than 5 percent of their floor space to the sale of nontaxable items such as groceries.

The measure, similar to restrictions approved by Martinez, won strong backing from labor unions and social-justice groups.

But Wal-Mart and other opponents accused county supervisors of being discriminatory, harming consumers and interfering with the free market.

Wal-Mart must turn in 26,487 valid signatures by July 3 to qualify a referendum.

County supervisors would then have the option of repealing the ordinance or placing it on the ballot, probably for the March 2004 election.

Supervisors John Gioia and Mark DeSaulnier said Monday they believe the board would place it on the ballot if the petition drive qualifies.

"I think we'll fight them very vigorously," DeSaulnier said. "I think when people in Contra Costa hear the whole story, they won't be terribly sympathetic."

DeSaulnier predicted that grocery chains and labor unions would campaign to uphold the ordinance.

Wal-Mart hired National Petition Management, a Sacramento company, to gather the signatures.

On Sunday, Gioia went to Wal-Marts in Martinez, Pittsburg and Antioch to listen to what the petition circulators are saying.

Some gathered signatures for or against a recall of Gov. Gray Davis at the same time they circulated the Wal-Mart petitions, he said.

He added that several people gave out wrong information by stating that the ordinance applies countywide or would ban existing Wal-Marts from selling groceries.

Instead, the ordinance applies only to areas that lie outside city limits and thus are governed by the county. It would not apply to existing stores within city boundaries.

"They're being a bit loose with the facts," Gioia said. "It's clear that people signing the petitions are not being told the full and accurate story."

EBASE and ACORN, community groups that support the ordinance, have been monitoring the petition drive and setting up their own information tables alongside the signature-gatherers.

"We've been representing our side of the story," Perlman said. "They've got these paid signature-gatherers from out of town. They're basically carpetbaggers."

Although Wal-Mart has no plan to open a store in unincorporated Contra Costa, the company wants to keep its options open, Hill said.

She noted that in Nevada's Clark County, commissioners repealed a similar ordinance after Wal-Mart qualified a referendum.

"We would never enter into this unless we believed there was a real opportunity for us to be successful on the ballot."

[back to top]

Wal-Mart Supercenters spread across Wisconsin

11:58 PM 6/22/03
Marv Balousek Wisconsin State Journal

RICHLAND CENTER - Bev Fink, who has run Ed's Family Foods with her husband, Ed, for 15 years, said she wasn't prepared for the volume of business they lost when the Wal-Mart Supercenter opened in Richland Center several years ago.

"We were really surprised at how much we did drop," she said, adding that a comfortable living turned into a struggle for survival. Promotions, discounts and home delivery for the elderly have since kept Ed's open, she said.

Supercenters with groceries, pharmacies, vision centers and sometimes gas stations represent Wal-Mart's second wave. Supercenters have opened this year in Delavan, Green Bay, Manitowoc, Oshkosh and Wausau. Another Wal-Mart Supercenter will open soon in Portage. More are planned in places that include Jefferson, La Crosse, Neenah-Menasha - and Stoughton in Dane County.

Wal-Mart has an option to buy property just outside Stoughton, but the company hasn't yet filed any papers to move the project forward.

If the company does move ahead, it could face a lot of local opposition. Stoughton Mayor Helen Johnson said Sunday that the City Council will look at a moratorium on the development of "big-box stores" in the next few weeks.

Johnson, who is opposed to a Supercenter, said the city wants time to write ordinances that would require impact studies by developers who want to bring big stores to the city. She worries most about the non-economi mpacts of a Superstore, including how it might change the atmosphere of the city of roughly 12,000.

"People have concerns about small businesses, but we can't legislate competition," she said. "My biggest concern is traffic and storm-water runoff."

Johnson said she and city planner Rodney Scheel will meet this week with Wal-Mart officials to plan a public meeting on the proposal.

A group called Uff Da Wal-Mart has formed to oppose the project.

Nationwide, the company plans to open more than 200 Supercenter stores during its current fiscal year.

Critics say the first wave of smaller Wal-Mart stores that sprouted across America during the 1980s and early 1990s drove smaller hardware and clothing stores out of business. They fear Supercenters will be the same death knell for local grocery stores and pharmacies.

A 1999 impact study of a proposed Wal-Mart Supercenter in a Virginia community by economist Thomas Muller estimated the store would increase community property values by $3.5 million, while threatening the property of competitors worth $8 million to $10 million. He said the store would create about 246 mostly part-time jobs while threatening 248 jobs, many full time, at other businesses.

With nearly a million employees, Wal-Mart is the nation's largest private employer. It's also Wisconsin's largest employer with 21,271 workers, according to the Wisconsin Chamber of Commerce Foundation and the company.

During the fiscal year ending in January 2002, the company spent about $918 million with in-state suppliers, paid $23 million in state and local taxes and accounted for $128 million in sales taxes, according to company statistics.

John Bisio, Wal-Mart regional community affairs manager, said the company has no master strategy of where it will open Supercenters. Instead, he said, store locations are based on point-of-sales data that map where the customers are - when a store is serving too many customers, it's time to build another one.

Proposed Supercenters have aroused vocal opposition in communities like Stoughton, Jefferson and Viroqua, where a Supercenter is operating. Zoning restrictions and the city's master plan kept a Supercenter out of Fort Atkinson. But Bisio said the company faces opposition in a minority of its target locations.

"Even where there's outspoken opposition, we've found there's a pretty significant number of folks - the silent majority - that does recognize the merits of the project," he said. "I think some of this reserve is good. I think people want to be sure they have certain guidelines in place."

Bisio, who's based in Indianapolis but plans to visit southern Wisconsin this week to work on the Stoughton project, said Wal-Mart stores bring many more customers to towns, which benefits other merchants.

"Instead of predicted bankruptcies and foreclosures, Wal-Mart has had a very positive effect on communities," he said. "It helps a community become more of a hub for retail and services."

That's not much comfort to Linda Peterson, who runs Trappings, a gift and clothing store in downtown Richland Center. Peterson said she's careful about the books she carries because Wal-Mart sells some of them for less than she can, despite the discounts she gets from suppliers.

Janet Neefe of The Clothes Horse said she's able to compete with Wal-Mart by offering a different quality of clothing.

Before the smaller Wal-Mart store opened, Richland Center had downtown hardware, discount general merchandise and small department stores. Those have been replaced with specialty shops like Trappings or The Clothes Horse.

"I don't think it does a small town any good," Neefe said of Wal-Mart.

- Matt Hagengruber contributed to this report.

[back to top]

Can $250 Billion Wal-Mart Think Small?

Sat June 21, 2003 05:11 PM ET
By Emily Kaiser BENTONVILLE, Ark. (Reuters)

From its nondescript headquarters in a remote corner of Arkansas, Wal-Mart Stores Inc. WMT.N decides whether to buy T-shirts made in Guatemala or Guangdong Province, and if stylish clothes from its British stores will sell in Brazil.

Love or loathe it, Wal-Mart is the world's biggest company by revenues, and the decisions made in Bentonville affect economies on five continents and dictate prices at other discounters, department stores and grocery chains.

Economists say Wal-Mart single-handedly lowers U.S. inflation by driving down prices at its stores. The company says it raises the standard of living by saving customers billions of dollars that they can spend elsewhere.

"They are the driving force behind what is a natural economic rule -- which is, over time, the price of goods and services come down," said Michael Collins, a partner with consulting firm Bain & Co.

Wal-Mart's strategy is simple: buy and sell goods cheaper than the competition. Unlike most retailers, it doesn't run sales, instead promising its lowest price at all times.

Its stores do so much business that the register tape for one day's sales would stretch 2,670 miles -- or almost from New York to Los Angeles. More than 130 million customers worldwide visit a Wal-Mart store each week.

Wal-Mart accounts for roughly 9 cents out of every retail dollar spent in the United States, excluding autos. The U.S. Federal Reserve phones Wal-Mart executives to check up on sales as a gauge of the nation's economic health.

But critics contend Wal-Mart squeezes its suppliers so hard that they can't afford to pay workers a living wage, and its anti-union stance makes it a top target for labor groups.

Wal-Mart faces dozens of U.S. lawsuits, alleging that the world's largest private-sector employer forces people to work unpaid overtime and discriminates against women.

Its massive supercenters -- some the size of four football fields -- have drawn fire from environmental groups and anti-sprawl activists who say the stores contribute to flooding and gobble up green space.

DOES SIZE MATTER?

Analysts estimate Wal-Mart's sales could top $600 billion by 2011, and some say $1 trillion is not out of the question. For its fiscal year that ended in January 2003, sales were $244.5 billion, three times its nearest competitor's.

But size may prove to be Wal-Mart's Achilles heel. Founder Sam Walton worried about his company becoming so large it could no longer function efficiently.

"The folks who come after me are eventually going to have to face up to this question. Even by thinking small, can a $100 billion retailer really function as efficiently and productively as it should? Or would maybe five $20 billion companies work better?" Walton wrote in his autobiography, published in 1992, the year he died.

Jay Allen, a Wal-Mart spokesman, said it's hard to know what Walton really meant when he wrote that, but the idea of thinking small is still alive and well in Bentonville.

"He left that on the culture. The leadership and people who are successful here still focus on what needs to be better today," Allen said.

Wal-Mart executives regularly quote from Mr. Sam's -- as they still refer to him -- book, and his philosophies remain an integral part of the corporate culture: the customer always comes first, treat your people well, think small, drive down costs.

ALL ROADS LEAD TO BENTONVILLE

So far, Wal-Mart has proved it can manage its massive operations from Arkansas.

All of Wal-Mart's U.S. regional managers are based in Bentonville, but every Monday, they board one of Wal-Mart's 27 airplanes and head out to visit stores -- something Sam Walton, a pilot, used to do regularly.

The managers return to headquarters for a 7 a.m. Thursday sales meeting in a conference room with a dozen chest-high tables and no chairs. Removing the chairs -- an idea Wal-Mart picked up from its British Asda division -- cut meeting times in half because no one got too comfortable.

Every Saturday morning at 7:30, managers review the week's performance and go over any new products or marketing ideas that could affect sales. Stores implement changes over the weekend, when most other company headquarters are closed.

But there are indications that the personal touch of Sam Walton's age is fading as Wal-Mart's reach extends around the globe, with stores in 10 countries and suppliers in many more.

The discrimination lawsuits and tales of union-busting and poor working conditions all tarnish the founder's image of small-town, good Christian values.

Ironically, the company that prides itself on good values has angered religious investors over what they consider to be poor treatment of employees and those who work in its suppliers' factories.

The Rev. David Schilling, director of global corporate accountability for religious investors group International Council on Corporate Responsibility, said Wal-Mart has a responsibility to be a good corporate citizen, and that means treating its people better.

Nitin Nohria, a professor at Harvard Business School and author of a recent book on successful management methods, said the company still reflects Sam's values -- for now.

"As we go through multiple generations, CEOs who had no contact with Sam, then this much power in the hands of someone who doesn't share in the values of the company can be a problem," he said.

 [back to top]

Protesters Rally Outside Wal-Mart

by Aruna Jain Staff Writer
June 19, 2003

A coalition of community and labor activists gathered near the Wal-Mart in Bowie Thursday afternoon to protest what they assert is the retailer's anti-union policies, low wages and poor employee benefits.

Members of United Food and Commercial Workers Local 400, who are not employees of Wal-Mart, but who represent 40,000 workers in the mid-Atlantic region, organized the protest to urge Wal-Mart to agree to collective bargaining. Local 400 president Jim Lowthers said that Wal-Mart is a poor corporate citizen as opposed to what it portrays in its marketing efforts.

"They discriminate against women in promotional opportunities, two-thirds of their employees don't have health insurance and [employees'] wages are so low that they can't really raise families," Lowthers said. Lowthers also said that Wal-Mart has anti-union policies.

The management of Wal-Mart at Bowie declined to comment on the protesters, however its Web site addresses the issue of unions: "…Because we believe in maintaining an environment of open communications, we do not believe there is a need for third-party representation."

County councilmen Thomas R. Hendershot (D-Dist. 3) of New Carrollton and Douglas J.J. Peters (D-Dist. 4) of Bowie were also present. Councilman Peters told protesters that the Prince George's had a pro-union county council.

"We ask Wal-Mart to respect our county and respect our laws and respect the right for employees to organize," Peters said.

After the speeches, many of the protesters wearing anti-Wal-Mart T-shirts separated into groups of two or three and walked into Wal-Mart.

Publicly held Wal-Mart has topped Fortune 500 list and is the largest retailer in the world. The company's recorded sales of $244.5 billion for the fiscal year ended January 31, 2003

 [back to top]

Wal-Mart Loses Appeal In Drug Death

Story by The Associated Press Posted
6/19/2003

Wal-Mart Stores Incorporated has lost its appeal of a 1.27 million dollar jury award to a Texas woman whose husband died after a Wal-Mart pharmacist gave him the wrong prescription medicine.

On Thursday, the Arkansas Supreme Court rejected the argument of the world's largest retailer and pharmacist Russell White that there was insufficient evidence as to the cause of John Tucker's death.

The company argued that the awards to Tucker's widow and daughter were improper.

Tucker died September 4, 1997, after being given the medication Ziac, a high blood-pressure medication. But the medicine was in a prescription bottle labeled for Zaroxolyn, a diuretic. The prescription was filled at a Wal-Mart pharmacy in De Queen.

Court papers say the medication, which Tucker took for two and a half months, allowed fluid to accumulate in his body and caused severe weight gain. Doctors said he died of congestive heart failure.

A doctor testified at the trial in Sevier County that the mistake contributed to Tucker's death.

[back to top]

Who decides what's morally correct in this country today? It's not the pope or the president. Would you believe it's Wal-Mart?

Commentary by Bill Press
June 18, 2003

Yes, the world's largest retailer - with more than 1 million employees and more than 3,400 stores nationwide - has set itself up as the country's new culture cop. From now on, Wal-Mart will decide what's good for us and what's not.

Last month, in response to complaints from religious conservative customers, Wal-Mart pulled from its shelves three men's magazines - Maxim, Stuff and FHM. This week, after more complaints, it announced it would shield the covers of four women's magazines sold in checkout counters.

Now, to be honest, I've never seen the banned men's magazines. Not my style. If they are, indeed, pornographic, then no problem; ban them. But the four women's magazines are about as far from pornography as The Cat in the Hat. Redbook, Cosmopolitan, Marie Claire and Glamour are four of the oldest, best and most popular women's magazines on the market. Sure, each has spruced up its image recently to appeal to younger women, but they are far from what anybody could define as obscene.

This month's cover of Glamour, for example, features a fully dressed country music superstar Faith Hill, surrounded by blaring headlines: "Great Summer Hair, Skin & Body"; "She's 22 With One Month to Live"; and "15 Sexiest Things Women Do Without Knowing it." Surely, any self-respecting woman could spot those headlines in a checkout line without feeling the need to rip off her clothes and suddenly attack the nearest salesman.

Or check out the latest Redbook. It prides itself on offering stories about "Real Life for Real Women" in three categories: family; love and relating; and health and well-being. And these are the magazines some women say they can't even cast their eyes on without being offended?

Why is it that some people want this country to look more and more like what Afghanistan used to be? And who appointed Wal-Mart the new American Taliban?

Obviously, as a business, Wal-Mart has a right to sell, or not sell, whatever product it wants. My father used to operate his own gas station. He had the right to sell Exxon, or Texaco, or no gas at all. But to let a handful of supersensitive religious zealots dictate what all Americans can buy at Wal-Mart, or any other store, is dangerous.

For starters, who decides what's decent and what's not? Will Wal-Mart appoint a committee of smut police? If so, how do you qualify? And what's the definition of indecency? What's indecent in one person's eye is decent in another's.

As an occasional Wal-Mart shopper, for example, I can't stand the sight of gun magazines. Seeing men in camouflage with assault weapons on the cover of some monthly rag offends me deeply because, as a Christian, I think killing is indecent - a lot more indecent than sex. If I complain to Wal-Mart, will they ban all gun magazines?

As an environmentalist, I'm also offended by the huge mega-stores Wal-Mart is trying to force on small communities like Hood River, Ore., and Westerly, R.I. If I find bigger stores indecent, will Wal-Mart stop building them?

Finally, as a fair-minded person, I'm offended that Wal-Mart consistently pays its women employees less than men - for the same job - and fails to promote women to managerial positions as often as men. According to documents filed by women workers against Wal-Mart, the average salary for male store managers is $105,682; for women managers, it's only $80,280. Male sales personnel take home an average $16,526; women, only $15,067. Now, to me, that's really obscene.

Wal-Mart should clean up its own life before trying to clean up ours.

Bill Press is co-host of MSNBC's Buchanan and Press

[back to top]

BIG BROTHER COMES TO WAL-MART

By Mary Starrett
NewsWithViews.com
06/20/2003
 
http://www.newswithviews.com/Mary/starrett14.htm

Starting this week, the nation's largest discount retailer will quietly begin selling tracking-chipped products to clueless shoppers. The first volley in their war against our privacy is set to start at their Brockton, Massachusetts store.

Wal-Mart will put Radio Frequency I.D. sensors on shelves stocked with RFID-tagged Gillette products, but they'd rather you didn't know about it, because, hey, you might not like it, and then you might make noise and then they'd have a big PR mess on their hands.

You might even stop buying Gillette products or, say, refuse to shop at Wal-Mart.

These chips, researched at M.I.T.'s Auto-ID Center are about the size of a grain of sand. Chipsters say the technology will only be used to help retailers keep track of inventory - like bar codes. But privacy-loving consumers question the very concept of a device that sends out radio waves to "readers" that not only identify the article, but where and with whom it's going.

The Big Brother implications of this thing need little hyping to get your skin crawling.

Wal-Mart's putting the pressure on its top 100 suppliers to make sure their inventory is all chipped by the end of next year.

But why start this in Brockton, Mass?

Could it be because the store's customers are typically lower income minorities who'd be less likely to be aware of the tracking devices, and even less likely to make a fuss about them?

Their thinking? Let's foist it on folks who're too concerned about paying the electric bill to be aware of these types of issues.

Retailers are SUPPOSED to alert their customers to the tracking chips and offer to "kill" the tags at the checkout counter.

Don't count on it, because what you don't know won't hurt you, right? And to PROVE those RFID tags won't be "killed" at the cash register one of the ways they're planning on convincing you, the shopper that these tags are A-OK is by touting how "hassle-free" returns will be. Huh? If the tags are supposedly turned off at purchase, how can they be read after the item's brought back to the store? Just one of the myriad lies you'll be told about this technology.

Are we to expect that in addition to being asked the "paper or plastic" question we'll get an option on whether the RFID tags are left on or turned off? Not only will consumers be witnessing the death throes of privacy, but it's going to cost them. Currently, the chips cost about 60 cents each. Add that to the cost of each and every item that uses this Orwellian technology. Gillette and Wal-Mart are only the pioneers here, the stated plan is to affix each item produced on the planet with RFID tags. Each pack of gum, each roll of film, each bottle of Merlot.

So what's a freedom-loving shopper to do?

Fortunately for us, there's a really smart lady finishing up a Ph.D. at Harvard. She started a group that's bellowing out the urgency of fighting this technology; her name is Katherine Albrecht and she's founder of CASPIAN (Consumers Against Supermarket Privacy Invasion And Numbering). Albrecht's CASPIAN has proposed a piece of federal legislation called "RFID RIGHT TO KNOW ACT OF 2003". It's a law that would let consumers know which products had tracking chips attached to them. In short, the proposed bill would amend the Fair Packaging and Labeling Program by adding language that requires manufacturers to state (in a conspicuous location) that the package contains a radio frequency identification tag that can transmit unique identification information to a "reader" device both before and AFTER it's purchased(!).

This is where you come in.

The bill needs a sponsor.

Maybe YOUR Congressional Representative would like to go on record as having helped stop this assault on our privacy. Forward this article to him/her and tell them the entire text of the bill can been seen at nocards.org.

Will you make it a point to email, call or fax your representative today, before our Big Brother gets any bigger? Do it NOW before the lobbyists and big money special interests get to them and convince Congress these RFID chips are consumer-friendly!

And while you're at it, why not tell the suits at Wal-Mart and Gillette (and Home Depot, Proctor and Gamble and Johnson & Johnson, too, by the way) that from here on out you wouldn't go near their stores or their products with a ten foot pole.

It works. Remember back a few months when I told you how Italian clothing company Benetton had chipped their Sisely line of clothes and was all set to roll out the garments with RFID tracking devices? Well your outrage and feedback caused them to put the scheme on hold.

Let's make sure the behemoth Wal-Mart is similarly put on notice. (By the way, IBM's planning to add RFID to it's products; so if Wal-Mart manages to sneak this past us, all bets are off and then every corporate giant will be able to inflict this chilling, tracking/monitoring horror on us.)

If RFID gets off the ground as planned, that would make George Orwells' predictions off by just 20 years.

[back to top]

Wal-Mart claims victory in two union decisions Retailer will appeal meat-cutting ruling at one Texas store click on link for story

http://www.rockymountainnews.com/drmn/business/article/0,1299,DRMN_4_2050071,00.html

[back to top]

FOR IMMEDIATE RELEASE: June 18, 2003

WAL-MART ORDERED TO RECOGNIZE UNION WORKERS WIN HISTORIC BARGAINING ORDER

Company Ordered to Turn Over Information to Union

When meat cutters at a Jacksonville, Tex., Wal-Mart voted for United Food and Commercial Workers Local 540 representation, the company refused to recognize the union-and suddenly changed the job functions of the meat cutters with a change to case-ready meat. Wal-Mart believed it had successfully circumvented the UFCW's first victory at one of its stores-until a National Labor Relations Board Administrative Law Judge ordered the company to recognize and bargain with Local 540 over the effects of the change to prepackaged meat. This order comes more than three years after the original union election.

"Changing the way all of its stores sell meat shows the extent to which Wal-Mart will go to keep the union out of its stores," says UFCW Executive Vice President Mike Leonard. "Anytime management concocts a scheme to ratchet down people's livelihoods, it says a lot about the real nature of the company."

Wal-Mart quickly changed how the Jacksonville store's meat department operated after the workers voted for Local 540, making the meat cutters into "sales associates." The sudden switch to case-ready meat became evidence of the scope of Wal-Mart's anti-union strategy. Wal-Mart even boasted to its managers in a Powerpoint presentation, "It's the ultimate union avoidance strategy!" The meat cutters' specialized skills were devalued once their work assignments were changed.

"The absence of future wage increases, coupled with the effects of inflation, constitute a very demonstrable and adverse effect," the judge concluded. "The elimination of work requiring their special skills greatly affected both job satisfaction and future earning potential."

The judge has ordered Wal-Mart to recognize UFCW Local 540 as the bargaining representative for the meat cutters, and restore the department to its prior structure. The judge also ordered Wal-Mart to bargain with Local 540 concerning the effects of the decision to eliminate meat cutting from the Jacksonville store. Wal-Mart must provide the information regarding its decision to switch to prepackaged meats that it withheld from the workers' union at the time of the change.

On Tuesday, Local 540 President Johnny Rodriguez formally requested the start of bargaining with Wal-Mart. Such negotiations would mark the first time that Wal-Mart and the union would sit at the bargaining table.

"This is a historic decision - the first bargaining order issued against Wal-Mart in the United States," explains Leonard. "It is a victory for all Wal-Mart workers who are fighting for a voice at work."

The meat cutters in Jacksonville became the first group of workers to vote for union representation at Wal-Mart in February, 2000. Just one month later-during a separate NLRB hearing on a union election at a meat department in Palestine, Tex.-Wal-Mart announced it had decided to replace freshly cut meat with case-ready meat-eliminating the need for meat cutters in every one of its stores. Wal-Mart has repeatedly stated that it will not bargain with any union, and has taken steps to prevent workers from organizing in stores across North America.

Who Benefits When Wal-Mart Comes To Town?

While the consumer can benefit from the competitive pricing, particularly in markets where the power retailers are competing head to head, what about the bigger picture? As the manufacturing base in Maine erodes, so is our retail infrastructure. In the communities with less than 10,000 population in particular, which represent the vast majority of Maine towns, we can witness the deterioration of the central business districts and we can generally find an increasing number of vacancies, even in the more modern shopping centers. Main Street has been suffering for some time, but now the strip malls are faced with similar problems. Why??? We believe the power retailers are playing a significant role.

The corporate retailer that has the greatest presence in Maine at this time is Wal-Mart. Wal-Mart with 20 stores, was the first "Big Box" power retailer to enter the state with multiple stores, most being built between 1992 and 1995. Recently, three stores have been converted to "super stores" offering a much broader assortment of goods and products including groceries, and it seems conversions of other stores are being announced almost daily. Because this retail giant has been operating in Maine for many years, now it is possible to examine the retail history in each community to determine if they have brought retail prosperity with them.

Two of the 20 communities, Oxford and Palmyra, do not report at the store type level (building supply, food stores, general merchandise, other retail, automotive sales and restaurant/lodging). However, Newport shares the same shopping area with the Palmyra Wal-Mart and so we have included Newport in our study. We analyzed "restaurant" sales in the communities where they are reported, but we did not analyze the combined category of "restaurant/lodging". Let's begin this Wal-Mart Study with a few facts.

* Ten of the nineteen communities have a population less than 10,000.

* 9 of the 10 and 14 of the 19 have a median household income below the state average.

* Biddeford, Sanford & Windham, all communities with more than 10,000 population, had per capita retail sales less than the state average in 1994. Biddeford and Sanford continued to have per capita retail sales below the state average in 1998.

One of the best ways to identify retail trends is by analyzing the "pull factor" change between two periods. A "pull factor" is calculated by dividing a community's per capita sales (retails sales divided by the population) by the state average per capita sales. If the result is 1.00 or more, then we know more than the average volume of sales is being "pulled" into the community. By way of example, the Skowhegan 1994 per capita sales in "Consumer Retail" (taxable sales to consumers) was $10,390 while the state average was $7,163. The pull factor for Skowhegan of 1.4505 is calculated by dividing $10,390 by $7,163. The 1998 Skowhegan per capita was $11,840 while that for the state was $8,634. The indicated Skowhegan pull factor for 1998 is 1.3713 ($11,840/$8,634). Comparing the 1994 pull factor of 1.4505 to the 1998 pull factor of 1.3713 indicates that less retail business was being "pulled" into Skowhegan in 1998 than in 1994.

We have used this same comparative process to analyze the shifts in retail activity (pull factor) for each of the 19 communities by store type with an emphasis on the 10 smaller communities. All goods/products sold in Wal-Mart are reported in the General Merchandise category but technically would be reported in Building Supply, Food Store, Other Retail, Automotive or Restaurant if reported in the store type they are identified to be in. Furthermore, with the development of more "supercenters", sales in the other store types likely will be influenced to an even greater degree. Wal-Mart has been portrayed as a retail "draw". If this is the case, then it logically follows that the "pull factor" will increase in all store types.

The following summarizes our conclusions. Remember that we are looking for an increase in the pull factor. Also keep in mind that the state average per capita sales is our benchmark at all times. We are only expecting per capita to increase at a greater rate than the state average. We acknowledge the trends in each community should be studied carefully before a shift can be quantified in that market. Restaurant sales are not reported in all communities.

Communities less than 10,000 population

* The consumer retail pull factor declined in 7 of the 10 (70%). * The building supply pull factor declined in 8 of the 10 (80%). * The food store pull factor declined in 6 of 10 (60%). * The general merchandise pull factor declined in only 2 of 10 (20%). * The other retail pull factor declined in 7 of 10 (70%). * The automotive sales pull factor declined in 6 of 10 (60%). * The restaurant pull factor declined in 5 of 6 (83.33%).

Conclusions:

1. The data suggests the arrival of Wal-Mart does not bring retail prosperity to the smaller communities. 2. Because of the growth in the general merchandise store type and a decline in the others, it appears reasonable to conclude that competing businesses not reporting in the general merchandise category suffer a loss in sales. 3. Furthermore, considering the demise of Sears, K-Mart, Bradlees, Riches, and Ames as anchor tenants in many shopping centers, we know other stores reporting in the general merchandise category have found it difficult to compete.

All 19 Wal-Mart Communities

* The consumer retail pull factor declined in 11 of the 19 (57.9%). * The building supply pull factor declined in 13 of the 19 (68.4%). * The food store pull factor declined in 9 of 19 (47.4%). * The general merchandise pull factor declined in only 7 of 19 (36.8%). * The other retail pull factor declined in 12 of 19 (63.2%). * The automotive sales pull factor declined in 9 of 19 (47.4%). * The restaurant pull factor declined in 7 of 13 (53.8%).

Conclusions:

1. 3 of the 4 communities with populations between 10,000 and 20,000 had a decline in consumer retail sales resulting in 10 of 14 or (71.4%) of Maine communities with populations of 20,000 or less experiencing a declining pull factor.

2. The general merchandise and automotive sales store types represent approximately 47% of all taxable consumer retail sales in Maine. Considering Wal-Mart reports in the general merchandise category and automotive sales are not a major component of their business, the consumer retail totals would indicate even greater declines with these store types removed from the analysis.

We believe this study provides compelling evidence that generally Wal-Mart is not a draw to other retail businesses operating in the same market. We acknowledge that certain other chain businesses do tend to follow Wal-Mart and benefit from the traffic volume created by their presence. Again we ask, "Who benefits when Wal-Mart comes to town?"

http://www.mainstreetinsights.com/whobenwmart.htm

[back to top]

Wal-Mart discrimination probe ends Commission to hear 2001 case

By DOUG HARLOW, Staff Writer
Blethen Maine Newspapers Inc.
Saturday, June 14, 2003

WATERVILLE - An investigator from the Maine Human Rights Commission has found reasonable grounds to believe that employees at the Wal-Mart store on Kennedy Memorial Drive unlawfully discriminated against two black shoppers Sept. 14, 2001.

Store officials contend in the commission report that employees simply were being cautious in the days following the Sept. 11 terrorist attacks when they allegedly asked police to remove the men from the premises.

The plaintiffs say they are hunters from New York and bear no resemblance to terrorists.

The case is scheduled for action by the full commission June 23 in Augusta. A finding in favor of the two men would result in a hearing with the commission's conciliation officer to work out an agreement between the parties and possibly cash damages.

In their complaint, Douglas Banks and Anthony Thomas allege they were ordered off Wal-Mart property because of their race. Store employees called Waterville police just before 2:15 p.m. that day with a request to have officers remove the men from the store and parking lot, according to the findings.

Wal-Mart officials through legal counsel insist they did not know who was in a vehicle that had been parked for two hours outside the main door. They said they did not ask anyone to leave, but simply requested police to move the men to the lower end of the parking lot.

Investigator Susan Clark describes a different scenario in her report.

"The police report states that the officer understood he was to ask the men to 'Leave at Wal-Mart's request,'" she wrote.

A copy of that day's incident log at the Waterville Police Department says "... at Wal-Mart's request, they were asked to leave," Police Chief John Morris said Friday.

Employees also recorded the vehicle's license plate number and allegedly had been watching the men come and go from the store.

Banks and Thomas were in Maine that week staying at a hunting lodge near Waterville, according to the commission report. One of the men already had shot a bear.

They took the day off from hunting Sept. 14 because Banks wanted to make some telephone calls from a pay phone at Wal-Mart. The men also planned to eat at the snack bar and do some shopping, according to the investigation.

They parked in a spot near the store entrance.

"Mr. Banks had learned that (he) needed to call someone back in an hour," according to Clark's report. "They had an hour to kill so they used the rest room, then bought some food at the snack bar and took it back out to Mr. Banks' truck to eat so they could listen to the radio to get the latest news on the aftermath of the Sept. 11 terrorist attack."

Later, with Thomas now alone in the truck, a police cruiser pulled up and an officer told him that store management said they were "hanging around" and wanted them to leave.

Thomas told the officer he thought it was "racist nonsense" on the part of Wal-Mart. Banks, angry and insulted, returned the merchandise he had purchased and the pair left.

Wal-Mart officials said they had been directed by the corporate office to be on the lookout for any suspicious activity and that the move against Thomas and Banks was justified because of the "heightened sensitivity to unusual behavior" in the wake of the terrorist attacks.

"Thomas replied that when Tim McVeigh blew up the federal building in Oklahoma, stores did not become extra cautious about white men," according to the investigation report. "He and Mr. Banks are 'Middle-aged black men; we do not look like Middle Easterners.' "

Clark's investigation concluded that Wal-Mart employees knew the men were black and had violated federal law by removing them from a place of public accommodations.

Sharon Weber, a Wal-Mart spokeswoman at corporate headquarters in Bentonville, Ark., said the allegation flies in the face of company policy.

"We're still reviewing the findings of the commission and we don't condone discrimination of any kind," Weber said. "One of the founding principles of our company is respect for the individual."

Doug Harlow

[back to top]

Wal-Mart Wages Don't Support Wal-Mart Workers

By Stan Cox, AlterNet
June 10, 2003

On June 6, Wal-Mart's shareholders converged on Fayetteville, Arkansas for their annual meeting. According to Arkansas Business Online, "The famously colorful event often takes on the feeling of a high school pep rally, as shareholders and company executives perform the 'Wal-Mart cheer.'"

And why shouldn't they cheer? Their company chalked up a record $56.7 billion worth of sales in the first quarter of 2003.

Wal-Mart is the nation's biggest employer, the low-price champion, and a seller of just about everything. A healthy family with a roof over its head could supply virtually all of its other basic monthly needs with one stop at a Wal-Mart Supercenter like the one here in Salina, Kansas. To me, that raised a question: Can a family whose breadwinner works at Wal-Mart afford to supply its minimum needs by shopping there?

Last Sunday, my adult son and daughter joined me for a visit to the Wal-Mart Supercenter in Salina. We spent an hour and a half wandering among the hundreds of red, blue and yellow "Always Low Prices" signs. We checked many of those prices and then went home to do some calculating.

Our conclusion: A single parent employed full-time at Salina's Wal-Mart and raising two children aged 4 and 12 does not earn enough money to supply the family's basic needs by shopping at that same Wal-Mart.

According to the personnel manager at Salina's Supercenter, a cashier earns a starting hourly wage of $6.25. After Social Security and Medicare taxes, the paychecks for a month would total $1,016 for a full-time 176 hours. (That's 40 hours a week, which would put this cashier in a better financial position than the many employees who work 32 or fewer hours a week. Of course, hourly pay rises eventually, but the 2001 PBS report "Store Wars" found that most employees have left by the end of their first year.)

We calculated the amount that our hypothetical three-member family would spend each month if as many of its essential needs as possible were supplied by our local Supercenter. The bottom line: They would need an absolute minimum of $1,136 per month to cover housing, food, transportation, health care and miscellaneous expenses. Despite our best efforts, we exceeded our cashier's monthly income by $120. We couldn't have come even that close had our cashier's family not been eligible for a State of Kansas child-care allowance that covers all but $22 per month in child-care costs for such a family living on so low a wage.

To determine needs, we used published studies on an "adequate but austere" budget for a family with one adult, one preschooler and one school-age child living in Salina. But we slashed some of the published budget items by as much as 38 percent, based on the "Always Low Prices" we found at the Supercenter. And we completely eliminated anything we could do without.

Take a look at the details of our budget and try to decide if you could find a way to cut it and make ends meet.

Living wage campaigns across the country have attempted to determine and advocate for a wage level that can provide a decent life for working families. Living wages are designed to sustain a family over time. Our goal was much more modest. All we asked of our Wal-Mart wage was to get our cashier's family to the end of the month in a central Kansas city of 50,000, assuming they were already settled in a rented apartment or mobile home and had a paid-for car, furniture and appliances. The Wal-Mart wage failed – even at Wal-Mart prices, even with the 10 percent employee discount, and even with employer-assisted health insurance.

Our monthly budget allowed for a USDA-recommended "low-cost food plan" on which we economized further by selecting the cheapest foods in each category. It made for an unappealing and not especially healthful diet. Gas, oil, and repairs for the car – which was used for little more than getting the cashier to work and home – all came from Wal-Mart.

Our cost-cutting left no room for "luxuries": no travel outside Salina County, no cable TV, no home telephone service, no movies, no newspaper or magazine subscriptions, no fees for community sports or classes, no saving at Wal-Mart's in-store bank in case the car had to be replaced, no eating out (except for one meal a month at the McDonald's located in the Supercenter). Most of what's available at the Supercenter was off-limits to us: videos, haircuts, Christmas presents, eye care, tanning sessions, family portraits, bats and balls, small appliances, furniture, bicycles, film and developing.

There is a fundamental and inevitable conflict between the interests of corporations, to whom wages are a cost, and most human beings, to whom wages are a means of survival. Nowhere in this society is that conflict better illustrated than at your local Wal-Mart. Most of its employees and most of its customers depend on their paychecks to pay the bills. But to keep its shareholders in the money, the company depends on hyper-consumption.

Wal-Mart could not survive in a town with good public transportation, where families all grow their own vegetables, cut one another's hair, sew their own clothes, and borrow and lend tools. Like all retailers, it has to move vast quantities of merchandise at an ever-increasing pace. It does it, as the sign in the store says, by "Daring to Save You Even More." And to drive prices to rock-bottom, they have to drive down the wages they pay.

Of course, the wages Wal-Mart pays in Kansas seem princely when compared with those paid by many of its suppliers around the world. Try going to your local Supercenter with the monthly paycheck of a Bangladeshi factory worker who makes shirts for Wal-Mart. You won't make it to the end of Aisle 1.

Here in America, the government implicitly recognizes the insufficiency of Wal-Mart wages. Our cashier's family would be eligible for an Earned Income Tax Credit (EITC) of $4,140 in 2002. That would close the gap between the cashier's wage and bare survival, and provide enough additional income to lift the family just above the poverty line.

EITC, food stamps, Medicaid and state programs like Kansas' childcare allowance are needed because corporations like Wal-Mart refuse to pay their employees a sufficient wage for the work they do. Wal-Mart would not be able to "Rollback" prices the way it does, or pile up its gargantuan profits, without this government subsidy.

In February, Fortune Magazine emphasized the unchallenged dominance of the world's largest corporation: "Wal-Mart in 2003 is, in short, a lot like America in 2003: a sole superpower with a down-home twang."

Well, if Wal-Mart represents both the future of employment and the future of marketing in America, a lot more down-home folks are going to be tumbling into that gap between Always Low Prices and Always Low Wages.

Stan Cox is a plant breeder/geneticist and writer living in Salina, Kansas.

[back to top]

Wal-Mart Is Subject of State Labor Probe

Lisa Girion Times Staff Writer
10 June 2003 Los Angeles Times Home Edition

Wal-Mart Stores Inc. said Monday that California labor officials are investigating the company's alleged failures to comply with state wage and hour laws.

The disclosure in Wal-Mart's quarterly report to the Securities and Exchange Commission did not specify the nature of the alleged violations. However, a company spokeswoman said the California Department of Labor Standards and Enforcement is reviewing Wal-Mart's compliance with meal break requirements.

Wal-Mart spokeswoman Mona Williams said the investigation began in December, and the company has been in discussions with enforcement officials for about three months.

"This is no different from any other compliance review that other employers go through," Williams said. "They are simply reviewing our records to see if we comply. They have filed no complaint."

The nation's largest retailer is the target of wage-and-hour lawsuits in several states. A suit in California, filed in Alameda County in December 2001, accuses the company of forcing hourly employees to skip meal breaks and work "off the clock." The lawsuit also accuses the company's Wal-Mart discount stores and Sam's Club food warehouses of failing to pay supervisory workers overtime.

The suit was filed as a proposed statewide class action, which Wal-Mart is fighting. "Each case is highly individualized, and we feel they cannot be addressed by a class action," Williams said.

The state labor department has not indicated to Wal-Mart whether it is investigating the lawsuit's off-the-clock and overtime allegations.

The labor department has the authority to investigate all three claims and can force violators to pay back employees.

Workers who do not receive a half-hour meal break during an 8-hour shift are entitled to an extra hour of pay, said Dennis Moss, an employment lawyer with Spiro Moss Barness Harrison & Barge.

State labor investigations are rare, however, because the department is short-staffed, private employment lawyers say.

Officials for the state labor department did not return calls.

[back to top]

EPA Probes Wal-Mart Over Fridge Products

6/10/2003
WASHINGTON (AP)

Wal-Mart Stores Inc. said Monday the Environmental Protection Agency has begun an investigation into the company's compliance with some Clear Air Act laws relating to the sale of refrigerant products.

The EPA claims Wal-Mart made 22 sales of refrigerant products to nonlicensed persons, entities, or both, the company said in its quarterly report to the Securities and Exchange Commission.

Wal-Mart Stores, which is based in Bentonville, Ark., said Clean Air Act laws restrict sales of some refrigerant products to properly licensed persons or entities.

The company said it has an opportunity to settle the allegations without admitting any wrongdoing or violations by paying a $400,000 civil penalty and entering a consent decree with the government.

Wal-Mart said that when approved by a court, the consent decree will require it to comply fully with the relevant Clean Air Act regulations.

Wal-Mart shares fell 3 cents to close at $53.79 on the New York Stock Exchange.

[back to top]

When Wal-Mart arrives, towns should tremble

5 June 2003
Lansing State Journal

Retail behemoth's tactics lay waste to communities

A recent Lansing State Journal article seemed to welcome a new Wal-Mart to be built near a mall in Jackson.

The April 18 article cheering the entrance of a Wal-Mart into the community is akin to celebrating a tornado twisting through the region. Yet, inexplicably, that is precisely what the media and retail pundits continue to do every time Wal-Mart opens a new store.

The unwavering support of Wall Street and the financial press is understandable where Wal-Mart is concerned. A company that proudly rolls over suppliers, pushes competition into bankruptcy and creates an entire subculture of the working poor in its employees is, sadly, a star in today's stock market environment.

By no standards, however, has Wal-Mart proven to be anything but destructive to the communities it enters - driving independent retailers out of business and creating a sea of asphalt to complement its stark exterior.

How, then, can a community newspaper herald Wal-Mart's arrival?

Fred Marx, a retail spokesperson, was quoted in the State Journal saying "everyone wants a Wal-Mart." That statement could not be more untrue. Countless lawsuits across the country seek to block the construction of Wal-Mart stores to preserve the integrity of community planning and avoid the backlash of a Wal-Mart debut.

When Wal-Mart was considering a move into downtown South San Francisco, economic studies projected a loss of sales to the area of $11 million to $24 million per year and the closing of up to 30 businesses. Certainly, independent retailers in Jackson now wonder when Wal-Mart's predatory pricing will force them to close their doors.

Wal-Mart's impact upon communities is not restricted to direct competitors.

Wal-Mart uses its muscle to push through property tax decreases for its stores, forcing other businesses and residents to pick up its slack. In Wilton, N.Y., Wal-Mart sought a 41 percent decrease in property taxes, which would have devastated revenue for the school district, library, and local ambulance and fire services. The town threatened to take Wal-Mart to court and the company withdrew its demand.

Unfortunately, the dozens of other municipalities facing the same situation may not fare as well.

While Marx stated that a Wal-Mart lease is "golden" for developers, the fact is that Wal-Mart does not lease its stores, but owns them. This gives the company the freedom to shutter its doors at any time.

To date, Wal-Mart has 300 empty storefronts across the country creating an atmosphere of blight in the affected communities.

Marx also stated that "Wherever there is a Kmart, there can be a Wal-Mart. Wherever there is a Meijer, there can be a Wal-Mart." That may be true, but one cannot be certain that it is accurate in reverse. Wal-Mart is well known for its ability to operate stores unprofitably with the sole purpose of driving the competition out of business. Then, Wal-Mart is free to increase its prices at will with little or no competition in the area.

Certainly, Wal-Mart has evolved from a rural phenomena to a suburban reality. This, however, should not lessen a community's resolve to force this retail giant to adhere to the rules of the community and, frankly, of decent behavior.

Box:

* Robert Potter is president of the United Food and Commercial Workers Union Local 951, which represents more than 36,000 members in Michigan.

 [back to top]

Wal-Mart Holders Defeat 3 Governance Proposals

By Ann Zimmerman
June 9, 2003
The Wall Street Journal

Wal-Mart Stores Inc. shareholders defeated stockholder proposals related to corporate-governance issues, but three proposals garnered a notable number of votes at the annual meeting of the world's largest retailer.

At several large companies this year, some shareholder proposals have won double-digit percentage support. At Wal-Mart's meeting in an arena at the University of Arkansas in Fayetteville, 22%, or about 900 million shares, supported a proposal to require that two-thirds of Wal-Mart's directors be independent, without ties to the company or to Sam Walton, the company's late founder.

By this definition, only seven of the board's 13 members would be considered independent. The other six include Mr. Walton's sons, Rob Walton, chairman of the board, and John Walton; Chief Executive Lee Scott; David Glass, former chief executive; Tom Coughlin, chief executive of the Wal-Mart Stores and Sam's Club divisions; and Jack Shewmaker, a former longtime executive.

Rob Walton defended the board's makeup. "Not one form of board structure satisfies all companies," he said, adding that he considers himself an independent member because "my interest is as a shareholder." The Walton family holds about 38% of the stock of the Bentonville, Ark., company.

A proposal to change the way the interest rate on deferred compensation is determined also garnered 22% of the votes. The proposal sought to prevent the board's compensation committee from paying above-market interest rates on executives' deferred salaries.

A third proposal, which has been introduced and defeated several times during the past 10 years, asked the company to prepare an equal-opportunity report that, among other things, would provide a breakdown of employees by gender and race and job categories during the past three years. The proposal received 12% of the votes.

Wal-Mart fell 1.5%, or 80 cents, to $53.82 a share in 4 p.m. New York Stock Exchange composite trading Friday.

[back to top]

County supervisors target 'super-sized' retail stores

By Sandy Kleffman CONTRA COSTA TIMES
Posted on Wed, Jun. 04, 2003 

Super-sized retail centers such as Wal-Mart face new restrictions on opening full-service grocery stores in unincorporated Contra Costa County under an ordinance approved Tuesday by county supervisors.

The board took the action after a spirited public hearing packed with more than 200 people.

"I don't have a problem with Wal-Mart," Supervisor Federal Glover said. "I have a problem with the super-store concept.

"This is about good planning," he added. "It's about the impacts that I see happening in the community."

Supporters of the ordinance argued that retail giants often drive traditional grocery stores and small retailers out of business. Labor leaders added that it is particularly tough because Wal-Mart often pays less than union firms.

"It's very hard for smaller retailers to compete against this," agreed Supervisor Mark DeSaulnier.

The new regulations will apply only to retailers with a store in excess of 90,000 square feet. Such firms would be banned from devoting more than 5 percent of their floor space to the sale of non-taxable items such as groceries.

The city of Martinez has similar regulations in place.

After the hearing, Amy Halley Hill, western region representative for Wal-Mart, said the firm will explore its options, including taking legal action or supporting a referendum to overturn the ordinance.

"This is clearly aimed at Wal-Mart -- make no mistake," she said during the hearing.

The firm is fighting a similar regulation in Tucson.

Judy Davidoff, an attorney representing several large retailers, argued that the ordinance is discriminatory and won't do anything to lessen traffic or address other concerns.

But Supervisor John Gioia stressed that the measure does not ban Wal-Mart. It simply prohibits it from opening a full-sized grocery store after the building reaches a specified size.

"This impacts other kinds of businesses that will be over 90,000 square feet as well," Gioia said.

Several dozen Wal-Mart employees attended the hearing in their navy blue jackets. They argued that the firm provides a good living for them.

Wal-Mart employee Trina Sims said she raised two children on the wages she makes. "As far as the people in the room who are against Wal-Mart, I see a few here who shop at Wal-Mart," she added.

But numerous union leaders and others argued that such firms often pay lower wages and don't provide health care, which puts a burden on the county healthcare system.

"We feel that Wal-Mart's low price structure is built on the back of its workers," said Gwen Watson, co-chairwoman of the Interfaith Council Social Justice Alliance.

County supervisors approved the measure on a 3-0 vote, with Supervisor Gayle Uilkema abstaining because of a conflict of interest.

Hill said Wal-Mart has no plans at this time to open a new store in unincorporated Contra Costa.

[back to top]

ACCORD REACHED ON PAY LAWSUIT; PHARMACISTS MAY GET CHECKS FROM WAL-MART

John Accola
31 May 2003
Rocky Mountain News

Lawyers representing Wal-Mart and hundreds of pharmacists suing the discount retailer for nearly $45 million in damages have reached a "tentative agreement" to settle.

In a joint motion filed in Denver federal court Thursday, the attorneys asked Judge Zita Weinshienk to vacate a six-week trial that was scheduled to start Monday.

"The parties believe it would be a waste of judicial resources to commence trial on June 2 in light of the tentative agreement," said the motion.

Weinshienk had already ruled in favor of the plaintiffs, in a 1999 summary judgment, that Wal-Mart Stores Inc. had violated labor laws by not paying its pharmacists overtime and shorting their paychecks for two years.

The latest trial was to decide the dollar amount of damages for the underpaid pharmacists, who are represented by Denver attorneys Frank Azar and Gerald Bader.

The case was filed in 1995 on behalf of four Colorado pharmacists who alleged they had routinely worked "off the clock" for Wal-Mart doing paperwork and other chores.

Typically, their work lasted 60 hours, not the 40 hours indicated on Wal-Mart's records, according to the complaint.

Over the years, 596 pharmacists signed on as plaintiffs.

They allege Wal-Mart's failure to pay them overtime compensation - by improperly classifying them as salaried workers - was willful and that the retailer intentionally shortchanged its employees.

That could entitle them to an additional year of accumulated overtime pay at the rate of 1.5 times regular pay, say plaintiff attorneys.

Jeffrey Opp, a financial consultant hired by the plaintiffs, has submitted documents calculating total damages of $44.6 million.

Earlier this week, Wal-Mart attorneys filed a motion to exclude Opp's testimony, claiming his calculations were simplistic and that he was a "witness dressing up as an expert."

Previously, the judge said jurors will be instructed to consider the pharmacists hourly employees, not salaried workers who could be exempt from federal labor rules requiring compensation for overtime.

At an April hearing, Weinshienk said she was "looking forward" to the trial in June.

"I think it's going to be a lot of fun," she said.

"We're probably going to make some new law in the circuit on this case."

[back to top]

Suit charges desecration at Wal-Mart site

By David Waite Advertiser Courts Writer
Posted on: Thursday, May 29, 2003 

An organization that oversees perpetual care for the remains of Native Hawaiians and a woman who claims ancestral ties to the construction site where a new Wal-Mart store is to be built are suing Wal-Mart and state officials.

The suit contends that the 25 sets of human remains found at the site near Ke'eaumoku Street have not been cared for as prescribed by state law.

The lawsuit, filed yesterday by Native Hawaiian Legal Corporation attorneys Alan Murakami and Moses Haia III, accuses Wal-Mart and officials from the state Department of Land and Natural Resources of violating the public trust and unlawfully manipulating and violating sections of state law that deal with protection and preservation of human remains and desecration of graves.

Hui Malama I Na Kupuna O Hawaii Nei and Paulette Kaleikini are named as plaintiffs in the lawsuit.

Peter Young, state Department of Land and Natural Resources director, declined to comment last night.

"I can't respond directly until I have an opportunity to read the lawsuit," Young said.

Young met with Hui Malama officials last week and said he later contacted Wal-Mart representatives and asked them to put up a buffer fence around the site where the remains were found, clean up the area and find a better way to protect the open grave. He said he was under the impression Wal-Mart would act on the request immediately.

Wal-Mart officials could not be reached to comment last night on what actions have been taken to protect the remains.

The lawsuit asks that the Circuit Court declare that Wal-Mart and state officials are violating state law, and seeks a permanent injunction against them to prevent further alleged violations.

The lawsuit also seeks an amount of money to be determined at trial.

Wal-Mart purchased the 10.5-acre site in May 2002 and plans to build a Sam's Club and Wal-Mart there.

Reach David Waite at dwaite@honoluluadvertiser.com or 525-8030.

[back to top]

Following is a letter sent by UFCW Local 400 President Jim Lowthers to the Charleston, WV, newspaper. While Rep. Capito is one of the bill's sponsors, the entire Congress will be voting on this bill in the near future. Modify this letter to urge your Representative to oppose widening this loophole for Wal-Mart.

Industrial banks would damage local economy

May 27,2003
By C. James Lowthers

FOR ALL its good intentions, a bill introduced by U.S. Rep. Shelley Moore Capito would risk the welfare of working families in West Virginia. H.R. 1375, "The Financial Services Regulatory Relief Act of 2003," is designed to knock down unnecessary regulatory barriers, primarily for small banks and credit unions, but it contains a loophole that would allow a little-known type of bank, called an "industrial bank" (or industrial loan company), to open branches outside of its home state without the new state's approval.

"Industrial banks," unlike all other banks, are exempt from crucial federal banking laws. That means that, unlike all other banks, industrial banks can be owned by commercial companies.

Do you think that companies like Wal-Mart, Enron and WorldCom should be able to own a bank? I don't. Bank holding companies are subject to strict regulations for safety and financial soundness by the Federal Reserve Board. That gives Americans confidence that the money we put in our banks is safe. Unfortunately, an "industrial bank" owned by a Wal-Mart won't provide us that protection.

The branching provision in Mrs. Capito's bill would allow a company like Wal-Mart to buy an "industrial bank" in Utah and open new branches in West Virginia virtually unimpeded.

Just last year, Wal-Mart tried and failed to buy an "industrial bank" in California and the company has vowed to try again. If Mrs. Capito's bill passes, it would allow Wal-Mart to buy one of these banks and take it national virtually overnight.

What's wrong with that? Wal-Mart is notorious for using its smiling face to force local businesses with roots in our communities to close up shop for good. Wal-Mart's stated goal is to control 30 percent of every business line it is in - 30 percent of electronics, 30 percent of clothing, etc. The company already sells 16 percent of all retail food and only committed itself to that business in the last 10 years. If Wal-Mart buys an "industrial bank" and opens branches here, they will wipe out West Virginia's community banks.

Most community banks are owned and/or run by local citizens who have a real stake in the lives of our neighbors and the well-being of our communities. Our communities are their homes. The economic health of our communities directly affects the health of these community banks.

Community banks, many of them in rural locations, are an important source of funds enabling local businesses to thrive. Unlike many larger banks that may take deposits in one locality and lend in another, most community bank loans benefit the neighborhoods in which depositors live and work. The interdependence of community banks and their local customers is an integral part of the economic health of many West Virginia communities.

Picture a scene in which the only bank in town is owned and operated by Wal-Mart. Imagine owning a small business, perhaps a grocery store, and being forced to share your business plan with Wal-Mart in order to obtain much-needed credit. If passed, Mrs. Capito's bill will make this scenario a reality.

A Wal-Mart bank would be able to steer loan decisions away from local competitors. Our small businesses (and every business is small when compared with Wal-Mart, the world's largest corporation) have limited access to the capital they need to operate or expand. When Wal-Mart's bank is the only one in town, what options will be left for local merchants in need of credit?

Communities across the country know the impact of Wal-Mart's aggressive business tactics. Little imagination is needed to see what a Wal-Mart bank would mean to our communities, or to local community banks.

This thought brings us back to Mrs. Capito. Well-meaning though her bill may be, we need Mrs. Capito to protect the money we put in our banks and to protect West Virginia's communities. To do that, she needs to close the loophole that would allow Wal-Mart and other commercial corporations to buy a bank. That loophole isn't just bad for working families. It's bad for West Virginia.

Lowthers is president of Local 400 of the United Food and Commercial Workers, which represents some 5,000 members in West Virginia.

[back to top]

Wal-Mart's rise concerns top grocer Kroger

By DAVID KAPLAN Copyright 2003
Houston Chronicle
5/28/2003

AT A GLANCE New Kroger stores in 2003: • Texas 249 at Antoine, opened in January. • FM 2920 at Kuykendahl, opened in April. • Atascocita at Will Clayton Parkway, opening in October. • FM 2978 at FM 1488 in Magnolia, opening in November. • U.S. 290 at Spring Cypress, opening in December. • FM 1093 at FM 1464 in Clodine, opening in December. • Eldridge at West Little York, opening in December. • Tidwell at Antoine, opening some time in 2003.

If the Houston grocery business is a poker game, Kroger has the most chips. But competition is increasingly fierce at this card table. When they deal 10 years from now, will Kroger still hold the winning hand?

Other big-time players include Safeway-owned Randalls, H-E-B and Fiesta, but Kroger is most worried about someone else.

The biggest threat is Wal-Mart, according to Gary Huddleston, Kroger's manager of consumer affairs for Texas and Louisiana.

Wal-Mart, the nation's largest retailer, has tremendous buying power and a reputation for value in general merchandising, which it now brings to the grocery business -- at its Supercenters and smaller Neighborhood Market grocery stores.

But Kroger is no small fry. It's the nation's largest traditional food retailer, and in Houston it has a particularly strong presence.

Kroger has a plan for taking on Wal-Mart, Huddleston said. The company aims to compete on price while offering unique amenities.

For example, 20 of Kroger's local Signature Stores have supervised play areas called HugslieLand, run by YMCA-trained supervisors and offering games and videos.

Numbers are also in Kroger's favor. By year's end, it will have 100 Houston-area stores.

Doing business in Houston since 1955, Kroger has gobbled up many prime locations, including some of the best in the heart of town.

"It always comes down to a neighborhood battle," said Chuck Gilmer, editor of the Shelby Report, a trade publication that follows the grocery industry, "Are you best located to serve an area, and are you offering what the neighborhood wants?"

Before opening one of its Signature Stores, Kroger mails surveys to neighborhood residents to get their input and responds to their requests.

Anywhere from 2,000 to 3,000 people typically participate in the survey, Huddleston said.

In 2003, Kroger will open eight Signature Stores and remodel six other stores in the area -- an impressive one-year expansion.

In Houston, Kroger has about a 28 percent market share, according to the Shelby Report.

Among national retail grocers, Kroger is a powerhouse, Gilmer said.

"Kroger is in a better position than any other national grocery retailer, but all chains have been taking a hit because of Wal-Mart," said Howard Davidowitz, chairman of Davidowitz & Associates, a national retail consulting firm in New York.

Wal-Mart's growth also explains, he said, why so much consolidation is taking place in the industry.

Grocery retailing is a high-volume, razor-thin profit margin business, and the advantage of a Wal-Mart Supercenter is that it can make a nice profit from the sale of, say, automobile tires, allowing it to sell lettuce really cheap, Gilmer said.

Kroger's acquisition of its own superstore chain in the Northwest, Fred Meyer, is a case of it "biting back into Wal-Mart's game," Gilmer said.

Located in Oregon, Washington, Utah, Idaho and Alaska, Fred Meyer sells electronics, home furnishings, groceries and more.

Kroger is also expanding its private-label merchandise to increase profits, Gilmer said.

"Kroger is being proactive in taking on Wal-Mart probably more than anyone else in the industry," said Meredith Adler, an analyst at Lehman Brothers.

"They have great market share position and are focused on getting prices competitive with Wal-Mart," she said.

"They have size and scale and are leveraging better all the time," by improving partnerships with manufacturers.

While Kroger's future looks good, Adler said, getting there will be challenging because with so many competitors, the battle gets expensive.

As in poker, she explained, retailers with weaker hands tend to stay in the game as long as they can afford to before pulling out.

Until the weaker hands fold, all grocery retailers will have to be extremely competitive on price.

The traditional retail grocery industry has, in general, been hurt by Wal-Mart over the past decade, Davidowitz said, but recently Kroger has done relatively well.

For its fiscal year ending Feb. 1, the Cincinnati-based company's sales increased 3 percent to $51.76 billion. Net income before special items rose 18 percent to $1.23 billion.

With a heavy hitter like Wal-Mart posing a particular threat to Kroger, "you've got to worry about everybody," Gilmer said.

San Antonio-based H-E-B, for example, is innovative and aggressive and making a strong push in Houston.

"Everyone is good," Gilmer observed. "There aren't many slack grocers out there."

[back to top]

Area is hot spot to organize Wal-Mart

If it can be done, Toledo is the place, union says (THE BLADE) Jeff Stephens, Local 911 president, says the union must educate employees and customers; the company says it doesn't need a union anywhere.

By JULIE M. McKINNON BLADE BUSINESS WRITER
5/27/2003

SOON AFTER a dozen employees in a Jacksonville, Texas, Wal-Mart Supercenter's butcher department joined a union, the retailer that promotes itself with yellow smiling faces stopped cutting meat and switched to prepackaged cuts.

It wouldn't be much of a stretch, then, to imagine the world's largest company sacrificing its budding ranks of metro Toledo stores if the United Food & Commercial Workers organize their employees here, one labor expert said.

"I can see Wal-Mart saying, ...'We'll just close our stores in Toledo and expand elsewhere,'" said Paul Clark, professor of labor studies and industrial relations at Pennylvania State University.

The union is leading the way in attempts to organize at least some of about 3,400 Wal-Mart Stores Inc. outlets nationwide as the chain that has become mainstream in small communities turns its sights on metropolitan, and more likely union, areas. The first of three or four planned metro Toledo stores opened in March in Oregon.

For now, UFCW Local 911 has called for a boycott of Wal-Mart, runs radio spots that suggest where to shop instead, stages occasional informational picketing at the store, holds rallies, appeals to other unions, and is making plans to pass out literature in neighborhoods.

Local 911 will need to educate employees and customers more before it can approach organizing workers in metro Toledo stores, said Jeff Stephens, the union's president.

"I believe if it can be done anywhere, it can be done in Toledo," he said. National figures show that Toledo is one of the most heavily unionized metro areas in the country.

Wal-Mart spokesman Cynthia Illick said the company is not anti-union, but it doesn't believe a union is needed in metro Toledo or anywhere else.

She said the business doesn't need a third party to represent its employees, whom the company steadfastly calls "associates." The stores have an open-door policy, and employees can progressively take their complaints up the ladder, to the chief executive if necessary, she said.

"One thing you have to remember is that the unions are a business, and at this point, they're a declining business," Ms. Illick said. "Their revenue is based on membership."

She added of Wal-Mart employees: "There's no middle man, and they don't pay anyone dues."

A linchpin of union distaste for Wal-Mart is in its labor practices. More than 40 National Labor Relations Board complaints have been filed in the last decade against the Bentonville, Ark., company. They included a couple - one of which was dismissed - involving Ohio stores. Union organizers contend Wal-Mart intimidates employees, blocks union elections, and uses other means to thwart organizing campaigns, such as closing a department instead of accepting union representation.

The closing of the meat-cutting department in Jacksonville was a coincidence, Ms. Illick said. Whether to offer pre-packaged meats in all Wal-Mart stores had been under study for two years before the organizing vote, and executives decided to discontinue all Supercenter meat-cutting operations, she said.

Two former Wal-Mart employees in northwest Ohio said they were fired for unwarranted reasons, firings they contend a union could have helped prevent.

One, Kelly O'Neill of Delta, said she was fired two years ago after more than three years at the Wauseon store. She said she was working alone in the cafeteria and needed to take some medication with food for a heart condition, and when she couldn't find anyone to relieve her, consumed a hot dog and pop - which she wasn't allowed to ring up for herself - and was fired before she could pay for it.

(THE BLADE)

A Wal-Mart store in the Toledo area.

The company makes workers fear for their jobs, said former employee Catherine Morgan of Wauseon.

Those jobs, the food workers union contends, are not worth the fear. Among other things, the union rails about Wal-Mart's wages, health insurance, and lack of a pension.

Ms. Illick said Wal-Mart pays wages competitive with other area retailers but she declined to say what Oregon store employees make. A job advertisement from before the store opened states wages start at $8 an hour.

Employees can opt to get limited health coverage during their introductory period, which is six months for those working at least 34 hours a week and two years for part-timers, Ms. Illick said. That plan costs about $30 a month and covers up to $1,000 worth of health-care costs annually. After that, other health-care plans are available, including one for a family that costs $114 a month, Ms. Illick said.

In lieu of a pension, Wal-Mart has a 401(k) plan to which Wal-Mart makes contributions even if the employee doesn't, the spokesman said. Other benefits include a stock purchase plan, with a 15 percent company match, and profit-sharing based on how well an employee's store does, she said.

By comparison, UFCW-represented employees at local Meijer stores start at about $7 an hour, but they are guaranteed progressive raises starting after three months, Mr. Stephens said. The health-care plan, which typically full-time employees get, costs the employee $90 to $100 a month, and there is a pension, he said.

The presence of Wal-Mart, whose sheer size is an advantage for negotiating prices with suppliers, makes it hard to negotiate labor rates with companies such as Meijer, Mr. Stephens said. "They have to compete with Wal-Mart," he said.

Organizing Wal-Mart, experts agree, would be a major coup and would help the union in organizing other retailers.

Wal-Mart is powerful, but the UFCW is one of few unions committed to organizing, said Gary Chaison, professor of industrial relations at Clark University in Worcester, Mass.

"They're working hard to get one, and they'll get one," he said.

Still, while boycotting a supermarket can be effective because of narrow margins, Wal-Mart easily can absorb losses at a given store or a few stores, Mr. Chaison said. It's hard to make a case that Wal-Mart is a sweatshop, and management can argue that the union is jeopardizing jobs by hurting business with a boycott campaign, he said.

But Mr. Clark, the Penn State professor, said a boycott is justified. He conceded, though, it would be hard to hurt Wal-Mart.

"People like Wal-Mart - they like to get the stuff cheap, and they've got everything you want," he said.

Sales at the suburban Toledo store are meeting expectations, Wal-Mart's Ms. Illick said.

Nationwide, meanwhile, the food workers union's organizing efforts are likely to get help from a gender-discrimination lawsuit filed in San Francisco alleging that Wal-Mart favors men in promotions and pay, said Al Zack, the international union's assistant director of strategic programs.

A hearing on whether the lawsuit can have class-action status is scheduled for July 25, and many of the plaintiffs now are active in organizing, Mr. Zack said. Other class-action lawsuits nationwide allege employees were made to work off the clock, sometimes after being locked inside stores.

[back to top]

Firms' Push to Enter Banking Wins Hill Support Brokerages and Retailers Would Operate Without Fed Oversight; Greenspan Is Among Critics

By Kathleen Day Washington Post Staff Writer
Friday, May 23, 2003

Merrill Lynch, Morgan Stanley, Wal-Mart, General Electric and other companies are gaining support in Congress for the right to set up a nationwide banking system that could compete with commercial banks but operate under looser federal rules.

Consumer groups, bankers, some lawmakers and Federal Reserve Board Chairman Alan Greenspan have sharply criticized the effort, saying it would create a second, parallel banking system that would result in unfair competition and more risk for the federal deposit insurance system and possibly taxpayers.

The changes, contained in two pieces of legislation, one of which has been passed by the House, would enable retailers and manufacturers, such as Wal-Mart and GE, to own full-service banks nationwide, which current law prohibits. They would also allow securities companies to own full-service banks without having to submit to oversight by the Federal Reserve Board.

At issue is whether Congress should expand the power of obscure entities known as industrial loan companies. These state-chartered, limited-purpose banks -- which operate in Utah, California, Colorado, Nevada and Minnesota -- generally specialize in one area, such as offering credit cards. The owners of these companies are not regulated by the Federal Reserve and may include automakers, discount department stores and other firms that are largely unrelated to financial services.

The House Financial Services Committee has passed two bills that would allow the giant Wall Street and retail firms to transform their industrial loan companies into full-blown banks. For example, Merrill Lynch would be allowed to open full-service branch offices around the country that could accept deposits, cash checks and pay interest on accounts for individuals and companies.

One bill, which passed the House last month, would give industrial loan companies the right to offer checking accounts to businesses and to pay interest on that money. These new powers are necessary if industrial loan companies are to compete with commercial banks, executives at securities firms say.

A second bill, passed by the committee this week, would make it possible for industrial loan companies to set up branch offices nationwide without seeking states' permission. Currently they cannot do that in most states.

Greenspan, in a letter to Rep. Michael G. Oxley (R-Ohio), chairman of the House Financial Services Committee, said the changes "would alter the structure of banking in the United States and be contrary to two important national policies," one prohibiting non-financial companies, such as Wal-Mart, from owning a bank, and one that gives the Federal Reserve responsibility for ensuring that "companies that own federally insured banks operate in a safe and sound manner."

"Industrial loan companies are a loophole that would be greatly expanded by this legislation," Federal Reserve Board governor Donald L. Kohn said in a recent interview. "If they want parity with banks, they should have parity in every respect, and that means their parent companies would be subject to the same rules and regulations the parents of other federally insured banks are subject to. If they were granted the powers they are trying to obtain, they would be treated differently and preferentially relative to other federally insured banks."

The American Bankers Association is against giving the industrial loan companies new powers without Federal Reserve supervision. The Federal Reserve is worried that if the bills become law, companies that have full-service banks, such as Citigroup, might drop their regular bank charters and move their operations into their industrial loan companies to avoid Fed scrutiny, according to Fed sources. Citigroup declined to comment.

Merrill Lynch and Morgan Stanley, which have taken the lobbying lead on the issue, say industrial loan companies are adequately regulated by Utah state regulators and by federal regulators at the Federal Deposit Insurance Corp. FDIC Chairman Donald E. Powell and Utah Commissioner of Financial Institutions Ed Leary agree.

But Greenspan said, in his letter, that there were significant differences in the regulatory authority of the Fed and the other overseers. For instance, the FDIC and the state can only regulate the industrial loan company itself, not the parent. The Federal Reserve is required to examine the financial health of the parent company to ensure that if the non-bank portion fails, it does not plunge the bank into financial problems that would pose a risk to the federal deposit insurance system and ultimately the taxpayer. The Fed, for example, can require the parent company to hold additional reserves as a cushion against potential losses.

Executives at Merrill, Morgan and Goldman say they do not want to be regulated by the Federal Reserve Board, because they think it is overly restrictive. For example, if they are under the Fed, most security companies would have to hold more capital as a potential cushion against loss than they currently have to hold.

Wall Street firms also argue that the legislation would not have a major impact on their industrial loan company operations. A two-page document being circulated to members of the House Financial Services Committee by Merrill Lynch and Morgan Stanley says that industrial loan companies "have long had the authority" to offer checking-type accounts to "both retail and corporate customers."

But regulators with the federal government and in Utah, where Merrill's industrial loan company was chartered, say that only small industrial loan companies -- those with assets of $100 million or less -- can offer corporate checking accounts and that it's unlikely giant securities firms would want a bank that small. Under the legislation, industrial loan companies of any size could offer corporate, interest-bearing checking accounts.

Merrill Lynch, which has owned an industrial loan company since 1987, uses it to offer its securities customers federally insured, interest-paying accounts and loans secured by those accounts. As of June 30, 2002, Merrill Lynch's industrial bank, based in Salt Lake City, had assets of $63 billion. Morgan Stanley has told lawmakers that its Utah-based industrial loan company is a tiny institution. Public records show the industrial loan company has assets of $2.8 billion.

Goldman Sachs and UBS Warburg have applications for industrial loan companies pending in Utah.

A Wal-Mart spokesman said changes in the industrial loan company rules are the retailer's best hope of getting into banking, given the other rules that bar it from owning a bank. The company wants to offer banking services, because those are the services most frequently requested by customers, said Wal-Mart spokesman Jay Allen. "Our fixation is not on getting a bank, but on giving our customers what they want," he said.

Wal-Mart for years has been offering money orders, money transfers and paycheck cashing, and at cheaper prices than competitors, Allen said. The company also has leased in-store space to local banks at 784 stores, but hundreds of its stores can't find a bank to partner with.

"The issue for us is providing affordable, everyday prices for financial services to our customers and our employees, with a particular interest in serving those who aren't served by anyone else, the so-called unbanked," Allen said.

Critics say the issue for them is potential conflicts. "Without proper oversight, a commercial company might be tempted to use an industrial bank as a personal piggy bank and endanger the safety and soundness of the bank," said Travis Plunkett, legislative director of the Consumer Federation of America.

The current situation dates to 1999, when Congress passed the Gramm-Leach-Bliley Act. It deregulated the financial services industry by allowing securities and banking to exist under one roof as long as the Federal Reserve oversaw the parent company.

The law also closed loopholes that had enabled non-financial companies, such as Ford Motor Co., to own banks, leaving industrial loan companies as the only way for non-financial companies to enter banking.

An exception was made for industrial loan banks because they were generally small and engaged in limited banking activities.

Utah has chartered 24 of the 53 industrial loan companies in the country, more than any other state. California and Colorado, which have chartered 19 and five, respectively, have barred non-financial firms from owning an industrial loan company, citing historic separation of commerce and banking in the United States. California's decision was triggered by an application from Wal-Mart. Nevada is debating the commerce and banking issue.

The idea of expanding powers for industrial loan companies has strong support in the House, where supporters say these other companies have a right to compete with banks on an equal footing. Critics are hoping for a compromise. Rep. Barney Frank (D-Mass.), the ranking Democrat on the House Financial Services Committee, said he was working with Oxley to narrow the law by barring industrial loan companies owned by non-financial service corporations, such as Wal-Mart, from enjoying the expanded new branching powers that industrial loan companies owned by securities firms would enjoy. It's unclear whether GE also would be barred. Oxley's staff did not return repeated telephone calls and e-mails.

Rep. Jim Leach of Iowa, the former chairman of the House Financial Services Committee and now its second-highest-ranking Republican, opposes the legislation and is concerned about its impact. "Seldom have I known of a greater power play more against the public interest than that being contemplated in these bills. It reduces supervision of the financial sector at precisely the time that dangers to the financial system are merging in unpredicted ways."

The legislation may have a tougher time in the Senate. Although Sen. Robert F. Bennett of Utah, the No. 2 Republican on the banking committee, strongly supports the measures, Chairman Richard C. Shelby (R-Ala.) has, in the past, been an advocate of separating commerce and banking. He has not indicated his position on the new effort. Sen. Paul S. Sarbanes of Maryland, the committee's ranking Democrat, strongly opposes it.

Plunkett said it was ironic that Merrill Lynch, Morgan Stanley, Goldman Sachs and UBS were pushing to expand the power of industrial loan companies -- and are embracing the state of Utah as a primary regulator that could help set national bank rules.

Last month, these firms were among 10 Wall Street firms that paid $1.4 billion to settle state and federal charges that they had cost individual investors billions of dollars by issuing inaccurate, overly rosy stock research reports to win investment banking business. These firms continue to decry a probe by New York state that led to the settlement because they say state officials should not be setting rules for a national and global industry.

"We think it's a particularly bad idea that the companies pushing this are investment firms: Given everything we know about how poorly investment firms have handled conflicts of interest in recent years, why would we make it easier for them to skirt federal restrictions?" Plunkett said.

[back to top]

 'MEMO' SHAKES, AND STIRS, CITY HALL WAL-MART DENIES ANY LINK TO DOCUMENT OUTLINING 'PLOT' TO CONTROL CITY COUNCIL

By Tom Zoellner, The Arizona Republic
16 May 2003 The Arizona Republic

A top Wal-Mart executive is trying to ease the damage created by a supposedly bogus campaign memo that sent waves of panic and suspicion through the Phoenix City Council this week.

"A backroom operation is not the way we deal with public officials," said Bob McAdam, the retailer's vice president for state and local government relations.

He was referring to the "Lloyd memo," an inflammatory three-page document that details a purportedly secret Wal-Mart plot to get rid of council members perceived as unfriendly to giant retail stores.

McAdam has been making phone calls from his Bentonville, Ark., office to council members, assuring them that Wal-Mart had nothing to do with the memo, or a purported May 1 meeting at the office of an unidentified person named "Lloyd."

Fiction as it may be, and laden with slang and unflattering depictions of city politicians, the Lloyd memorandum still sketches an accurate map of some of the buried tensions among city council members.

The infighting over Phoenix's generally permissive policies toward megastores is detailed, as is the influence of firefighter and grocery employee unions. The author is familiar with sly campaign finance tactics, but misspells the name of top Republican fund-raiser Jack Londen.

The Wal-Mart coup d'etat will "change the balance of power in Phoenix," the memo predicts, even though neighborhood advocate and big box skeptic Phil Gordon will "unfortunately be the next mayor."

"With four council votes, we can make Phil do what we need to do," the memo says. "He will pay less attention to the downtown business types and unions if we have strong voices pounding on him."

The memo's purported author, veteran Arizona political consultant Chuck Coughlin, has proclaimed his innocence and filed a report with the Phoenix police alleging identity theft. He has retained a private investigator to dust the memo for fingerprints and promised to sue whoever is responsible.

Coughlin was an aide to former Gov. Fife Symington and is legendary in Arizona political circles for his hardball tactics and image as a behind-the-scenes policy player.

Wal-Mart is one of his clients, but he denies any link to the memo. He says what proves his innocence is his willingness to go to the police and risk felony charges for filing a false report if he is lying.

A central character in the Lloyd memo is Councilwoman Peggy Neely, who is aghast at being portrayed as someone willing to dispense damaging information on her colleagues.

"I am so angry," she said. "If anybody knows Peggy Neely, they know that Peggy Neely is not a power-hungry manipulator; Peggy Neely is a consensus builder."

Reach the reporter at (602) 444-2474.

[back to top]

Wal-Mart steps into `morality police' role

Robert Morast
9 May 2003
Argus Leader

Wal-Mart is the new Jerry Falwell.

Like religious leader Falwell, the popular chain of discount stores is hiding behind a smile - in this case, a yellow smiley-face that supposedly controls the prices at Wal-Mart - and telling people what they should and should not be listening to, looking at or reading.

Since the mid-'90s, Wal-Mart hasn't allowed the sale of music albums with lewd, questionable or offensive lyrics or images.

This has been a continual controversy because the chain is essentially practicing a sneaky form of censorship by "telling" record labels what artists can and can't say in order to have their music carried by one of the largest suppliers of commerce in the country.

The idea still rubs me raw.

But now, Wal-Mart has stepped up its role as a mouthy member of the morality police by banning the sale of the popular men's magazines FHM, Maxim and Stuff.

The New York Times reported that this move was made after Wal-Mart listened to customer complaints that the magazines - which some people mistakenly label as soft-core porn because of their content of sexy women - were offensive.

The Times also reported that Wal-Mart was under pressure from Christian groups about the sale of some magazines.

While it is probably Wal-Mart's right to sell whatever it wants or doesn't want to, the decision to ban these "racy" magazines is ridiculous in its hypocritical nature.

A trek to the magazine rack at the east-side Wal-Mart in Sioux Falls confirms that no copies of FHM, Maxim or Stuff are available. But it also displays how small-minded the move is.

A host of nearly nude women in sultry positions still are present on the covers of plenty of magazines. In the men's section, the famed Sports Illustrated's swimsuit edition features a barely clothed hottie who could easily be on the cover of Stuff. But that's sport, and Wal-Mart customers love sports.

Move over to the women's magazine section, and there's enough skin to send a pubescent male into a hormonic frenzy.

On the cover of W, noted pinup girl Pamela Anderson poses as sexy as ever, and inside shots show her teasing readers with skin and poses of ecstasy.

Move over to Self, and there's a shot of Lucy Liu in a bikini. But that's nothing special; there are a lot of bikini-clad women in women's magazines. Yet they won't be banned because millions of women shop at Wal-Mart, and a large share of those women like those magazines.

The skin parade doesn't stop in the magazine section. Walk over to the clothing department, and you'll find promotional posters of women posing in nothing but the latest lines of underwear. They're as sexy as anything in FHM.

I suppose you could argue that these underwear ads and women's magazines are less lascivious than the banned periodicals, but that's the problem with Wal-Mart's decision. It's suddenly telling us what is too sexy or distasteful for average Americans and, in the process, making the chain more pleasing to the large portion of Americans who try to follow a "moral" lifestyle.

Ka-ching.

Yet, while Wal-Mart is taking to task the morality of some periodicals, it's overlooking its own movie section.

For sale are the first season of "Six Feet Under," which has a lot of "morally questionable" homosexual situations; "Cheech and Chong" films, which glamorize drug use; and "8 Mile," which clearly shows star Eminem's character having sex. But apparently when Eminem sleeps with a slut, it's art.

One could argue that "racy" magazines are more accessible to young boys than movies, but the fact remains that in either case, Wal-Mart is the enabler.

And while magazines or music with lewd material is wrong, publications about guns or high-action movies are okay.

But banning those would mean that the large faction that uses Wal-Mart as a portal to convenience and culture would be offended. And they buy more products than young men looking for some risque print media while their moms wind shopping carts around the store trying to find some cookies, pantyhose and maybe a six-pack of Schlitz.

Still, the most offensive example of Wal-Mart's skewed ideals is that while it's okay to declare sexy magazines as dastardly, moving into small towns and forcing mom-and-pop stores to close because they aren't able to compete with the giant corporation is "just business."

Robert Morast grew up on a ranch. He can be reached at rmorast@argusleader.com or 331-2313.

[back to top]

Wal-Mart Execs' Testimony Could Help Sex Bias Suit

May 1, 2003
By Liza Featherstone WeNews correspondent

The sex bias claims by a group of Wal-Mart employees may be strengthened by recent pre-trial testimony of Wal-Mart executives. Meanwhile, the group awaits a decision whether their case will become the largest civil rights class action in history.

(WOMENSENEWS)--Female plaintiffs in a major sex-discrimination class-action against Wal-Mart filed for class certification on Monday, before a San Francisco federal judge.

Depending on the outcome of a class certification hearing this summer, which will decide how many women can be included in the case, the suit could become the largest civil-rights class action in history. If the plaintiffs have their way, the class will include over 1.5 million women.

One of the plaintiffs' lead lawyers, Joseph Sellers of Cohen, Milstein, Hausfeld and Toll, a law firm with offices in New York, Washington, D.C. and Seattle, says the pretrial testimony undercuts Wal-Mart's defense that the reports of sex discrimination were isolated incidents by renegade managers. Sellers says that the statements made under oath by Wal-Mart executives indicate that people running Wal-Mart have been aware of the company's "failure to promote women and they've done nothing about it." He adds the statements also show that sexism is a part of Wal-Mart's corporate culture, even "at the very highest levels."

The lawsuit, Dukes v. Wal-Mart, is named for lead plaintiff Betty Dukes, a 52-year-old African American woman who still works at Wal-Mart in Pittsburg, Calif. In the case, seven current and former employees are charging the nation's largest employer with discrimination in promotions, pay, training and hiring. A majority of the company's workers are women, but women fill only one-third of its management positions. The current plaintiffs, all of whom are from California, are supported by more than 100 detailed statements from women who worked in Wal-Mart stores in 30 states. Many women say Wal-Mart supervisors told them that men were paid more because they had families to support.

Thomas Coughlin, chief executive officer of Wal-Mart Stores Inc. based in Bentonville, Ark., has also given testimony in the case. Questioned about diversity goals Wal-Mart sets for itself, Coughlin testified that he did not know what they were or whether the company was meeting them.

In speeches to company managers, Coughlin has stressed the importance of winning the customer's trust. Plaintiffs' lawyer Joseph Sellers showed Coughlin handwritten notes for such a speech, in which, according to Sellers, the Coughlin had written that customers should feel as if they could trust Wal-Mart employees with "their wife and their wallet." Coughlin admitted those notes were his and that he gave this speech frequently. Sellers told Women's eNews he found Coughlin's use of the term "wife" revealing, as it suggested that he assumed he was speaking to a predominantly male group and because "it sure came across that you were trusting them with your chattel, your property."

Personnel Chief Disavows Diversity Memos Coleman Peterson, executive vice president of Wal-Mart's "people division," as the company refers to its human resources department, has worked for the company since 1994. According to internal company memos obtained by the plaintiffs' lawyers, Peterson has, during his tenure, repeatedly let his Wal-Mart colleagues know that women are underrepresented in company management and offered suggestions on remedying the problem, including hiring a point-person to oversee diversity initiatives.

In one memo, Peterson complained that Wal-Mart did not hold managers accountable for promoting more women and minority men. Under questioning from Sellers, Peterson distanced himself from the implied criticism in his statement, attributing it to a general spirit of perfectionism at the company. At Wal-Mart, he said, whatever the topic of conversation, the message sent by leadership is that "we can always do better." Pressed further, he said, "Part of my responsibility is to get everybody's attention."

Sellers, referring to the statement in the memo, asked, "Well, was it a lie? Were you writing something that wasn't true?" Peterson answered, "Yes, I was."

Minutes of Wal-Mart board meetings, provided to plaintiffs' lawyers, record that Peterson, on several occasions, reminded his colleagues that the company lagged far behind its competitors in representation of women in management. He pointed out that, for example, Target, a competing retailer based in Minneapolis, 52 percent of managers are women. According to economist Marc Bendick, an expert witness hired by the plantiffs, 34 percent of the managers in Wal-Mart stores are women, while the company's major competitors boast 56.5 percent female management. Bendick, a partner in the private firm Bendick and Egan Economic Consultants, has analyzed employment data in more than 100 employment discrimination cases and has testified for both employees and companies.

In April, Wal-Mart released competing analyses by its own experts, disputing those interpretations of its work-force statistics, maintaining, among other points, that women are promoted at Wal-Mart "at a rate that exceeds their rate of applying . . . for those promotions."

In the case, Wal-Mart has consistently argued in that competitors' numbers only look better because they count department managers, or supervisors who are paid by the hour, as managers, while Wal-Mart counts only salaried supervisors. Salaried managers earn significantly more money. A woman working as an hourly department manager, for instance, makes on average $21,709 a year, while as an assistant manager--the lowest level of salaried management--she'd average $37,322. Salaried managers are also given much more responsibility.

The majority of hourly supervisors are women, as are the majority of other hourly workers at Wal-Mart. Peterson claimed that when he raised the issue of female representation at meetings and cited other company's statistics, he always added this disclaimer about the hourly managers, but he was unable to explain why that disclaimer never appeared in the meetings' minutes.

While Peterson repeatedly asserted that other large retailers count hourly supervisors as management, he was able to provide only a single example of a company that did this.

Erratic Job Postings, Meetings at Strip Clubs The plaintiffs have also cited Wal-Mart's lack of systematic job posting as a barrier to women's advancement. Human resources experts agree that posting notices announcing open positions in places where employees can see them--break rooms, for example--tends to undermine favoritism and prejudice while promoting more fairness in a workplace.

Peterson admits that posting salaried job openings leads to greater equality of opportunity, but also acknowledged that Wal-Mart doesn't enforce it in any systematic way. Asked about individual store managers' decisions not to post particular positions, he said "Frankly, it's not something I would look at or review." Nor, he added, would any of his staff in the "people division" monitor this.

Some female managers have testified that business meetings with their male Wal-Mart colleagues have been held in strip clubs and Hooters restaurants, an Atlanta-based chain, in which the customers, 70 percent of whom are male, are waited on by attractive and scantily clad "Hooters Girls." (The motto on the company's Web site is "Men have different faces so you can tell them apart.") Coleman Peterson felt that strip club get-togethers on company time were not "something Wal-Mart culture would support and believe is okay."

Asked about business meetings at Hooters, however, he reserved judgment. "It is conceivable in some small town that Hooters is kind of like the restaurant du jour, okay," he said, "and that it is viewed as one of the most elegant and really one of the best places to meet and eat."

Wal-Mart has long required that employees be willing to relocate when promoted into management, a rule that has, according to plaintiffs, been a major barrier to women's advancement in the company. (In his autobiography, "Made in America: My Story," company founder Sam Walton acknowledged this problem.) A Resident Assistant program is intended to promote women and other employees who cannot relocate their families but wish to enter the ranks of management.

When asked by Sellers about this program in a deposition, Wal-Mart boss Coughlin said he believed it was a dead end and hadn't helped to promote a single employee.

Susan Phillips, international vice president of the Washington, D.C.-based United Food and Commercial Workers Union, and director of its Working Women's department, says if Wal-Mart doesn't start treating female workers better, female consumers may take notice. (The union has been trying for several years to organize Wal-Mart workers. No Wal-Mart workers currently belong to a union.) "Women spend about 90 percent of consumer dollars," she says. The National Organization of Women last year gave its "Merchant of Shame" award to Wal-Mart and urges consumers to shun the company.

Ellen Rosen, a Brandeis University professor of women's studies and author of "Making Sweatshops: The Globalization of the U.S. Apparel Industry" is now writing about Wal-Mart and female workers. She sees a connection between conditions in overseas factories where Wal-Mart clothing is made--and where most of the workers are women--and those of women working in its U.S. stores.

"To promote the bottom line at the home office," she says, Wal-Mart relies on "women workers, who are paid a 'women's wage.' This may be leading to a new kind of globally sanctioned gender discrimination."

Liza Featherstone is the author of "This Woman's Work: Poverty, Discrimination, and the Nation's Largest Private Employer," a book about sex discrimination at Wal-Mart, which will be published by Basic Books in late 2004.

[back to top]

Meet the Enron of Workers' Rights

By Liza Featherstone
May 1, 2003

Liza Featherstone, a writer in New York City, is working on a forthcoming book about Dukes v. Wal- Mart.

Wal-Mart, the nation's largest private employer and the richest company in the world, may just be the new Enron.

The mass merchandiser has been widely celebrated as a paragon of business success, just as Enron once was. It tops the Fortune 500, and was listed this year as one of Fortune's "Most Admired Companies." But Wal-Mart, the target of a massive and historic lawsuit, is a scandal, not a praiseworthy business model.

Dukes v. Wal-Mart - named for its lead plaintiff, Betty Dukes, who still works at a Wal-Mart store in Pittsburg, Calif. - charges the company with sex discrimination in promotions, training and pay. On Monday, lawyers representing the plaintiffs filed a class certification motion before a San Francisco federal judge, asking him to allow the case to proceed on behalf of more than 1.5 million women, making it the largest employment discrimination case in history.

Women make up more than two-thirds of Wal-Mart's hourly workers, but the company remains virtually untouched by the women's liberation movement. Its competitors had a larger percentage of female managers in 1975 than Wal-Mart had achieved in 1999. Even internal company memos acknowledge that Wal-Mart lags behind its competitors in the promotion of women - quite an accomplishment given the retail industry's longtime record of systemic sex discrimination.

And yet, a recent Business Week headline exemplified the worshipful attitude of the business community: "How Wal- Mart Keeps Getting it Right." Wall Street loves the company's robust stock values, and the rest of the business world is in awe of its profits. Customers love its low prices, not to mention the "one- stop shopping" it offers. At Wal-Mart you can change a tire, buy groceries for dinner, and get a new pair of shoes and some yard furniture - a set of errands that once would have required a long afternoon of visits to far-flung merchants. Underpaid, over-worked America delights in spending as little as possible, all in one place.

But the retailer keeps those prices down and the profits and stock prices soaring by violating workers' rights, especially those of women. It doesn't need Enron's "creative accounting."

Experts hired by the Dukes plaintiffs to analyze Wal-Mart's own work force data find that at every level of the company, women are paid less than men who hold the same jobs. Women testify that when they've ventured to ask why, their Wal-Mart superiors have come up with some astoundingly primitive answers. A South Carolina employee was told that "God made Adam first," while an Arizona manager was informed she "didn't have the right equipment." Perhaps even more disturbingly, one plaintiff, a divorced mother of two, was assured that a man was paid more because he had "a family to support."

In addition to sex discrimination, Wal-Mart is notorious for ignoring federal laws protecting workers' freedom of association. The company has been found guilty of retaliating against - even firing - workers for union organizing.

Wal-Mart has also been accused, in class action suits filed in more than 30 states, of breaking federal overtime laws. In many cases, workers say, managers locked the store doors and would not allow workers to leave.

Workers who make clothing and toys sold at Wal-Mart - mostly young women in Asia - aren't treated much better. The company is frequently criticized by human rights groups like the National Labor Committee and the Lawyers' Committee for Human Rights for its less-than-half-hearted efforts to improve sweatshop conditions in factories making Wal- Mart goods.

Yet we're not hearing as much about Wal-Mart as we heard about Enron. Its crimes receive comparatively little media coverage, and while Enron was a poster child, albeit briefly, for politicians hoping to sound tough on corporate corruption, no politicians are promising to punish, much less reform, Wal-Mart.

Ken Lay is considered an embarrassment, a fallen idol of the now-forgotten New Economy, but the late Sam Walton is still regarded as a folk hero whose heirs carry the victory torch of a noble and profitable tradition. That's because while cheating shareholders is considered an outrage, cheating workers - especially female workers - is too often shrugged off as business as usual.

It shouldn't be. Workers deserve fairness, and Wal-Mart deserves to be the new Enron, a symbol of shameless corporate greed and hubris. Unlike Enron, though, Wal-Mart - which is growing so fast that analysts expect it to run afoul of anti-trust laws by 2009 - isn't going away. Neither should its critics, or the workers brave enough to stand up to the discount behemoth in court.

[back to top]

Wal-Mart May Value Families, but Women?

April 29, 2003

The economy being in the pits and all, I'd been thinking lately about getting a second job, just a bit of moonlighting to bring in a bit of extra mazuma.

So I went to this employment agency and told them what I was looking for, and they handed me a ballpoint pen and a clipboard and told me to sit down and fill out the job application.

Name, address, experience, mm-hmm, right, check, got it....

And then I got to the part of the form describing the job, and the work requirements:

"Must be willing to hang out at late hours at strip clubs, in the company of oversexed businessmen."

"Must answer to nicknames like 'Little Janie Q.' "

"Must accompany male executives and managers to lunch or dinner at T-and-A-themed restaurants, and be a good sport about it."

And I'm thinking, whoa, Nellie! Just what kind of job is it I'm applying for here? Escort service?

I turned over the form and scanned it for the job title. There it was: "Assistant department manager, Wal - Mart ."

Wal - Mart ? Family values Wal - Mart ? All-American Wal - Mart ? Heart of the Ozarks Wal - Mart , the biggest little company in America?

Gospel-true, swears a brief filed yesterday in federal court for a group of California women suing the big W for job discrimination.

From what the women have to say in that brief, the Wal - Mart working atmosphere for women really doesn't sound much different from making a living in a strip club, except for the wardrobe.

At Wal - Mart , just as at Club Slee-Z, about three out of four employees are women.

At Wal - Mart , the women in the court brief say, there's not a lot for them in the way of job advancement opportunities; at Club Slee-Z, too, the divide between labor and management seems pretty deep and clear.

At Wal - Mart , the women say, what you get in the way of $$ depends on what you've got in the way of XY -- the male chromosome. When one Wal - Mart woman asked why her pay was lower than that of a less-qualified male worker, she said she was told by her boss, an XY guy, "You don't have the right equipment. You aren't male, so you can't expect to be paid the same."

The brief is a piece of a larger argument that the court should make this case a class action: a suit not just about the hundred or so women whose declarations and depositions it details, but about the million and a half women who've worked for Wal - Mart in the last five years -- a lawsuit that could put an eight- or nine-figure dent in the fortunes of the Fortune 500's No. 1 firm. A quarter-trillion dollars passes every year through the cash registers of the nation's largest private employer, which began as Sam Walton's little Arkansas five-and-dime.

Wal - Mart has certainly grown, but when it acts like the nation's retail pulpit, it seems like it hasn't completely grown up.

It refuses righteously to sell naughty magazines or oversexed video games -- but the court brief says that some of its men-in-charge think of pole-dancing as suitable business entertainment, and expect the women who work with them to sit there and enjoy the show.

Wal - Mart refused to carry an issue of Life magazine showing a naked mother breastfeeding her baby -- but the lawsuit says some of its male managers' idea of a great place for a bas-cuisine business dinner is Hooters.

Wal - Mart has barred from its bins some CDs it finds offensive, and it has snipped obscene words and sexual images from CDs it does sell -- but the lawsuit says some of its male managers have no problem calling their women colleagues "girls" and "little Janie Qs."

Wal - Mart stocked and then stopped selling the Kathie Lee Gifford line of clothing, which in 1996 turned into the designer label for the scandal of exploited overseas sweatshop labor -- but according to the brief still has no problem paying thousands less a year to women than to men doing the same job.

I wonder whether Dixie Chicks CDs sell for less than Garth Brooks CDs -- if Wal - Mart is stocking anything by those un-American Dixie dames at all these days.

April has not been kind to Wal - Mart in California.

There's this court brief released yesterday.

And at the beginning of the month, Wal - Mart stores across California stopped selling guns altogether, temporarily, after Atty. Gen. Bill Lockyer found that Wal - Mart clerks broke the state's gun law nearly 500 times, selling guns to convicted felons and letting buyers have guns before the 10-day waiting period had run out.

Wal - Mart , the nation's biggest seller of just about everything, including guns, promises it'll retrain its employees -- "associates" in Wal-Speak -- on the law. Too bad it evidently didn't do the same for some of its managers.

A Wal - Mart spokeswoman, Mona Williams, denied pervasive bias and disputed the allegations.

A woman vice president, who has since departed Wal - Mart 's premises, had the nerve to complain when the front ranks of the men leading Wal - Mart 's Sam's Club stores would slang around the terms "girls" and "little Janie Qs" in their weekly executive meetings, to speak about their employees.

When she complained, she got warned not be so overly judgmental.

Yeah, honey, lighten up. Have a little respect. For all you know, these fine men learned everything they know at the U.S. Air Force Academy.

Patt Morrison's columns appear Mondays and Tuesdays. Her e-mail address is patt.morrison@latimes.com

[back to top]

Testimony from women is gathered to make the case for a class-action suit

By Lisa Girion
Los Angeles Times

April 28, 2003 Female managers of Wal-Mart Inc. were required to attend strip clubs with male colleagues on business trips, according to a brief to be filed today in federal court for a group of California women suing the nation's largest retailer for job discriminatio n.

The women's declarations also say they had to take business meetings at Hooters, a restaurant where food is served by amply endowed women clad in tight shirts.

And the top brass of Wal-Mart's Sam's Club stores referred to female employees in weekly executive meetings as "little Janie Qs" and "girls," even after a woman vice president complained. The executive, who no longer works at Wal-Mart, said her complaint earned her a warning against being overly judgmental.

The testimony was collected to support a request that the case proceed as a class action on behalf of more than 1.5 million women employed by Wal-Mart since late 1998. The proposed class dwarfs the size of other employment discrimination cases and, if approved, would make the suit one of the largest against a corporation.

The brief, which comes 17 months after the suit was filed in U.S. District Court in San Francisco, paints the most detailed picture yet of the scope and effect on women of the alleged discrimination. It argues that a gender pay gap ; which plaintiffs' experts say averages about 5% throughout the company ; is a reflection and result of a culture of bias that flows from Wal-Mart's Bentonville, Ark., headquarters and permeates nearly every store.

Wal-Mart spokeswoman Mona Williams denied any pervasive bias within the company and disputed the plaintiffs' analysis of the evidence.

She said that experts who analyzed payroll data for the company found that "nine out of 10 times, women and men are paid equally," and that women are promoted at a rate consistent with the rate at which they apply for positions.

"We feel there is room for improvement with the pay, but from a promotional standpoint, it's absolutely fair," Williams said.

The 61-page brief filed by plaintiffs pulls testimony from more than 100 depositions of executives and the voluntary declarations of 110 female employees. In them, some women described being discouraged from applying for management positions and jobs in sporting goods, meat departments and other areas dominated by men.

Others recalled instances where male managers not only acknowledged but endorsed a pay gap between men and women.

One woman quoted in the brief said she asked why her pay was lower than a less qualified male worker. Her department manager's reply: "You don't have the right equipment. You aren't male, so you can't expect to be paid the same."

Brad Seligman, a lawyer for the plaintiffs, said the attitude conveyed in the comment is not an aberration.

"We've got more than 100 declarations from 30 states," said Seligman, director of the Oakland-based Impact Fund, a legal advocacy organization. "It's not just a problem in the Deep South or Alaska. It's a constant story that we hear all across the country, and it's consistent with what the numbers show."

Plaintiffs contend that male managers frequently tap male subordinates for the unposted jobs, leaving women out of the loop.

Williams said that can no longer happen. The company began posting entry-level management positions for the first time in January. She said Wal-Mart's focus on growth had precluded it from requiring such postings until then. Wal-Mart also is rolling out companywide guidelines that would remove some subjectivity from pay raises by basing them on performance evaluations, she said.

"We will be implementing quarterly reports to make sure that men and women are paid equally and are promoted at equal rates," she said.

Until recently, Williams said the company has left hiring, pay and other employment responsibilities largely up to store managers. If there is truth to any of the allegations of bias, Williams said, such instances would be the fault of individual managers whose behavior did not reflect the intent of the corporation.

"The entire company is very decentralized," Williams said. "Store managers run their stores. They have an awful lot of autonomy to make the right decisions for their stores. Sometimes they've made the wrong decision, but there is absolutely no basis for any kind of systemwide discrimination at Wal-Mart."

Williams said the declarations filed by women in support of the suit amount to a tiny fraction of the 700,000 women currently employed by the company.

"They are exceptions, and we cannot afford to be judged by these exceptions," Williams said.

The plaintiffs portray the company as a retail empire tightly controlled by headquarters, which uses state-of-the-art technology to regulate everything from the temperature to the music inside stores.

"But when it came to looking at disparities in pay for women and even, to a great extent, the absence of women from management, they showed a remarkable lack of curiosity," said Joseph M. Sellers, a lawyer with Cohen, Milstein, Hausfeld & Toll in Washington, who is representing the plaintiffs. "For a company that makes a penchant, and indeed relies for success, on closely monitoring every aspect of activity in its stores, its lack of interest or curiosity is telling."

The plaintiffs are seeking back wages equivalent to what they believe they would have earned were it not for the alleged bias. They also are seeking compensation for promotions allegedly lost because of discrimination.

Lawyers for the plaintiffs said they had not calculated the possible damages. But, if the case becomes a nationwide class action and any liability is found, they could add up quickly. In the largest settlement of such a case, Voice of America agreed three years ago to pay $531 million to 1,100 women rejected for jobs at the former U.S. Information Agency.

Wal-Mart is scheduled to file its brief in opposition to the class action in early June. A hearing on the class question is set for July.

[back to top]

For Wal-Mart, New Orleans Is Hardly the Big Easy

April 27, 2003
By CONSTANCE L. HAYS

NEW ORLEANS

WHEN a local developer announced triumphantly that a new Wal-Mart would rise here on a sandy patch of earth along the Mississippi, it was presented as a good thing, a bit of progress that would bring in much-needed tax dollars and jobs and transformation where the rundown St. Thomas public-housing project once stood.

But along the way, someone overestimated the willingness of other New Orleanians to accept the advance of Wal-Mart across their turf. And one result has been a foul gumbo of accusations against everyone from the developer, once considered an urban hero, to the federal government, which made the grant that set off the fireworks in the first place. Themes of jealousy and betrayal have sounded over financing that gives the developer and Wal-Mart Stores — which wants to put up a 200,000-square-foot store plus a parking lot — unusual benefits. Lawsuits have been filed to block construction on behalf of the environment, the fabric of the city and the rights of the former residents of St. Thomas.

The back-and-forth, which began two summers ago, has been so intense and, in many ways, so particular to this place — the stage version could be called "A Streetcar Named No Thanks" — that the store is now more than a year behind schedule.

The struggle here is taking place as many of the country's big retailers, companies like Costco Wholesale and Home Depot as well as Wal-Mart, are reaching beyond their usual locations for growth. After saturating rural areas and edging into the suburbs, they are experimenting with ways to fit large stores into vacant inner-city acreage. It's not an illogical strategy, but as Wal-Mart is finding, the going can be rough.

"Nobody on the side against Wal-Mart is against jobs or against housing or against retail," said Neil Alexander, a photographer who has been a vocal opponent of the store. "What a lot of us are against is poor planning or no planning, and selling the city short to the largest corporation in the world."

Finding dozens of acres of empty land inside any city can be difficult. In New Orleans, close to half the land for the proposed Wal-Mart originally belonged to the housing authority, which received a federal Housing and Urban Development grant through a program known as HOPE VI to replace the aging St. Thomas complex. Its 1,500 apartments, built in the 1930's and 1940's and bulldozed in 2000, once held nearly 2,000 people, most of them African-American and poor.

THE site, near the city's landmark Garden District and a recently revived section of Magazine Street, covers 64 acres, nearly all of which is empty for now.

The original plan was to build a new development in which apartments would be split evenly between the poor and the middle class. The residents of the St. Thomas apartments were moved out and helped to find new housing; many of them expected to move back, their advocates say. Now, a HUD spokeswoman says, there will be 182 public-housing apartments, an additional 272 apartments considered "affordable" and 784 more that would be sold or rented at market rates — making the original residents of St. Thomas a minor element in the project.

"They have been treated like a crop on the plantation," said Camille J. Strachan, a tireless opponent of the plan, whose law office is two blocks from the edge of the St. Thomas site and whose house is decorated with a large banner that reads: "No Sprawl-Mart."

Wal-Mart became involved at the invitation of the developer, Maurice Pres Kabacoff, whose company, Historic Restoration Inc., is based in New Orleans and has won awards from preservation groups.

He made the store the linchpin of his plan, and to make it work, the St. Thomas project now includes an assortment of public financing arrangements, like $20 million in bonds backed by sales tax collected from Wal-Mart for construction of upscale apartments. The arrangement is known as tax increment financing, or TIF, and New Orleans never had it until this project, said Sidney J. Barthelemy, a former mayor who is now a vice president at Mr. Kabacoff's company.

An additional $28 million in tax-free bonds will be issued by the state Industrial Development Board to cover the costs of building the Wal-Mart, enabling the retailer to borrow money and essentially repay itself, said Trey Langus, another vice president. Finally, a similar bond issue, worth up to $29 million, will finance additional construction of apartments on the site, Ms. Strachan said.

Such largess leaves other business owners in the city irate. "There are huge concessions being made to Wal-Mart, the richest company in the world, that are not being made to other businesses," said Barry Schlaile, who operates a lighting store not far from the site and has tallied the number of stores in the area — 45 out of 67 — that he thinks may lose sales to the Wal-Mart.

Michael M. F. Liu, the assistant secretary for public and Indian housing at HUD, said HOPE VI grants — the acronym stands for Housing Opportunities for People Everywhere — were intended to combine commercial and residential development. The idea is to bring residents of various incomes together, instead of segregating the poor.

"The commercial aspect is always a key part of the financing," he said. "It is very much a part of the norm."

The grant for the St. Thomas rebuilding was $25 million, but "you needed $30 million before you could build a single house," Mr. Kabacoff said, citing demolition and other expenses. He sought large retailers for the site, approaching Lowe's, Home Depot and Target before he got to Wal-Mart. When its executives said they would do it, "as long as you let us put our grocery store and our regular store there," he said, "I got down on my knees and kissed" the ground on which they stood.

The Wal-Mart does have some local support. The mayor, C. Ray Nagin, has refused to block the plan, and Bart Stapert, a lawyer who represented the St. Thomas tenants during negotiations with the developer, said his clients backed the Wal-Mart as a last resort. "We struck a deal that there would be 240 units on the site and 100 off site," he said. "In exchange for what we thought was a guarantee, we agreed to support the Wal-Mart. Some residents personally supported it because of the jobs. Others said, `These are not the greatest jobs in the world.' " The guarantee evaporated, he said, while the Wal-Mart plan remains.

At Wal-Mart, the urge to conquer the New Orleans interior represents a revision of the strategy — a kind of commerce oblige — that has made the 41-year-old discount chain the dominant force in retail. "The company started in rural areas and the reason was that people in those areas did not have access to goods that other people did," said Daphne Moore, a community-affairs liaison for the company, which calculates that the St. Thomas store will do $100 million in sales a year, based on current sales at other Wal-Marts nearby. "It's also true in these urban areas. The individuals who choose to live in the core of the city don't have the same access to goods and services that their counterparts in the suburbs and small towns have. It's an interesting shift."

Design changes have been made to accommodate local concerns. Instead of the usual blue and gray exterior, the store will use a brick-colored material, Mr. Langus said. The parking lot, for 850 cars, will be shaded by trees; one street has been widened, although some people in the area say they remain concerned about traffic buildup.

Among them is Don Everard, a soft-spoken former St. Thomas resident who is the director of Hope House, a nonprofit social services agency in the neighborhood. He moved out of St. Thomas several years ago, into a small house nearby. He expects that more traffic will roll past his front porch because of the Wal-Mart, but he says other people in the area are excited about shopping there. "Most people are viewing the Wal-Mart as inevitable," he said. "My biggest gripe about the whole deal is the use of the $20 million TIF to pay for market-rate housing when the city has such deep trouble finding money for low-income housing. As a political decision, that is so unfair."

Some opponents criticize HUD as failing to oversee the development. The Greater New Orleans Fair Housing Action Center, an advocacy group, filed a complaint this month with HUD that accuses the agency of mishandling the relocation of the St. Thomas residents. The agency is reviewing the complaint.

IN the beginning, the residents had representation," said Stacy Seicshnaydre, the center's general counsel. "But as time went on, their voices became more and more drowned out." She said she was concerned about the small number of former St. Thomas residents who would be able to move back, citing the lower-than-expected number of apartments as well as criteria that prospective tenants must meet — like incomes within certain levels.

Mr. Liu, the HUD official, said the HOPE VI program, which began in 1992, was left out of the current federal budget. The agency will assess the program in response to complaints, including the ones echoing from New Orleans. "We are sensitive to those who have raised questions about the number of replacement units," he said, adding that current projects had higher requirements. "This program was only authorized for 10 years, and we think it's a reasonable time to look at all these issues."

Mrs. Moore of Wal-Mart said the company had not built stores as part of any other HOPE VI development. "We're not really involved in HOPE VI except to the extent that the tax revenue from our store will help fund that project," she said. "We are not the social engineers on this one. We're simply a means to an end."

But the company has opened stores in other cities, including Baltimore and Philadelphia. A plan to open a store in Dallas was rejected not long ago by the City Council.

Mr. Langus, who oversees the project for Historic Restoration and is Mr. Kabacoff's son-in-law, called the HOPE VI program "atrocious," adding: "I have no interest in doing another one."

In the initial HOPE VI plan for St. Thomas, small-scale stores would be built to employ neighborhood residents. Like the initial goals for the apartment mix, those stores are no longer part of the plan. "Pretty much everything has been flipped over," said Mr. Everard at the Hope House social services agency. "You almost expect developers to behave in a way that lets them make as much money as they can. But you also expect there will be people who will be watchful for the other side."

Merchants in and around the site are quivering at the prospect of having to battle Wal-Mart. Mrs. Moore, however, says the customers are not the same, and Mr. Kabacoff contends that people who travel to the Wal-Mart will also shop at smaller stores nearby.

The biggest losers are likely to be grocery stores. Already, a carefully negotiated plan — mediated by Mr. Kabacoff — to build an Albertson's supermarket in another historic neighborhood fell apart after the Wal-Mart plan became known.

Controversies have arisen in other parts of the country over the perception of favors granted to large retailers. The Institute for Justice, a nonprofit group in Washington, has defended business owners whose property was seized by local governments through what is known as the power of eminent domain, and then turned over for large chain stores. "It is an all-too-common tactic," said Dana Berliner, a senior lawyer for the institute, adding that the practice has escalated in recent years.

At Costco, a shareholder called on the company this year to avoid building on such land. But James D. Sinegal, the chief executive of Costco, said, "In many instances, when we look for land, these are the only places we can find it in these communities."

To Mr. Kabacoff, the future — not to mention the present — is obvious. "You've got to pay attention to the real world," he said. "Americans have decided they want discount shopping in volume, and that's the real world."

Others say that the vitality of New Orleans depends on its various charms, and that large-scale retail isn't one of them. "I can't imagine someone coming to New Orleans and having to see a Wal-Mart right there," said Val Dansereau, the president of the Preservation Resource Center, a nonprofit group that has led the charge against the store. "New Orleans is known for its old buildings and its quaintness."

AFTER simmering so long, the situation in New Orleans has begun to attract attention outside the city. John P. Relman, a Washington lawyer who specializes in civil-rights issues, says he has been trying to get detailed information about the size of the apartments that will be available for low-income housing. He said he might sue on behalf of the former St. Thomas residents if the developer did not provide him with that information, adding that he was worried that families with children might be shut out of the new complex..

"It's this, far more than any historic or development concerns, that is likely to shut this down," Mr. Relman said. "It is basically race rearing its ugly head again in a Southern city."

Others see racial discrimination elsewhere. Mr. Barthelemy, the former mayor, said he thought complaints about the Wal-Mart were merely a subterfuge for derailing the whole development. "There are some in the area who don't want affordable housing," he said, "because it means minorities coming back into the area, and a lot of minorities do shop at Wal-Mart."

William E. Borah, a lawyer active in preservation issues, said his concern was what he called the broken promise to the people of the development. "It is a disgrace," he said. "It's supposed to be about public housing. But now it's about for-profit housing, and they are throwing in a Wal-Mart. It's a scandal of national proportions."

Mr. Kabacoff says he and his Wal-Mart aren't going anywhere. "We never quit," he declared. "That's what the preservationists didn't realize."

"This is going to work," he added. "And it's going to be a wonderful model for the country."

[back to top]

Wal-Mart To Pay $750,000 Civil Penalty, Govt Agency

Says DOW JONES NEWSWIRES
April 25, 2003 3:03 p.m. EDT

WASHINGTON -- Retailer Wal-Mart Stores Inc. (WMT) has agreed to pay $750,000 to resolve charges it failed to report exercise equipment hazards.

The Consumer Product Safety Commission said Friday the civil penalty resolves a lawsuit filed in May 2001 by the Justice Department on behalf of the safety agency.

In the suit, the government charged Wal-Mart with failing to report safety hazards associated with exercise gliders it sells.

"This case demonstrates that retailers, like manufacturers, importers, and distributors, are required to report consumer product defects and injuries to the Consumer Product Safety Commission in a timely manner, and that there are penalties for those who fail to do so," said Hal Stratton, the commission chairman.

"Prompt and timely reporting by companies will allow us to act swiftly to protect consumers from injuries," he said.

Under the law, manufacturers, distributors and retailers must immediately report product hazards to the CPSC.

The government charged Wal-Mart failed to report hazards with Weider and Weslo brand exercise gliders, despite knowing of at least 29 consumers injured while trying out the gliders in Wal-Mart stores across the country.

"The injuries included fractured vertebrae, herniated discs, and a compression injury to a woman's spine," the CPSC said.

The regulator says the lawsuit and civil penalty settlement represent the first time a retailer has been sued and paid a penalty for failing to report a safety problem where the retailer was not also an importer or private labeler.

Under the settlement, Wal-Mart also agreed to establish internal recordkeeping and monitoring systems to keep track of information about product safety hazards, the CPSC said.

A Wal-Mart spokesman couldn't immediately be reached for comment.

-By Jeff Bater, Dow Jones Newswires; 202-862-6616; Jeff.Bater@dowjones.com

Asked why the retailer settled, Wal-Mart spokesman Bill Wertz said the company shares the goal with the CPSC of product safety.

Wertz also said it wanted to avoid the costs of a trial.

"We acknowledged no wrongdoing," he said. "We believe we acted responsibly in this case."

-By Jeff Bater, Dow Jones Newswires; 202-862-6616; Jeff.Bater@dowjones.com

[back to top]

WAL - MART PLAYS ROUGH, SO CRITICISMS ARE VALID

04/24/2003
The Columbus Dispatch Home Final Page 12A
(c) Copyright 2003 Columbus Dispatch. All Rights Reserved.

A response is needed to the April 11 letter from Paul Harris regarding Wal - Mart . As the president of a corporation that has sold countless deals to Wal - Mart , I can say that its "Buy American'' campaign in the early '90s has turned into, "If it's made in America, quickly reproduce it in China.'' The store's buyers won't talk to any distributor who has opportunistic deals (closeouts).

Is there credibility to the well-circulated idea that when Wal - Mart enters a small city, it lowers its prices to the point of losing money to put the local business under? I've seen it. There has been no downturn in our economy, no odd business trend or any other malady that has put more local, regional and national chains out of business than Wal - Mart has.

Ask any single mom how well she likes it when she is forced to go to just one store because no competitors exist to compare prices. No studies in Discount Store News , Housewares Daily , etc., have ever shown Wal - Mart to have the lowest prices. When that single mom loses her job to the Asian market that supplies the only retailer in town, see how happy she is.

BRIAN WAINER President Marketing International Inc.

[back to top]

FOR IMMEDIATE RELEASE: March 11, 2003

WAL-MART'S WAR ON WORKERS: FRONTLINE REPORT FROM ARIZONA

JUDGE ORDERS REINSTATEMENT, BACKPAY FOR WAL-MART WORKER; ISSUES NATIONWIDE REMEDY FOR RETAILER'S ANTI-UNION TACTICS

Labor Board Judge Rules Retail Giant Illegally Tried to Silence Workers. Wal-Mart Ordered to Remove Anti-Union Language from Benefits Materials

(Kingman, Arizona) - Wal-Mart will be forced to reinstate yet another worker with full back pay and to notify its one million employees nationwide that it had committed an unfair labor practice as a result of a decision by an administrative law judge for the National Labor Relations Board (NLRB).

Judge Gregory Z. Meyerson ordered Wal-Mart to rehire Brad Jones in the retail giant's Kingman, Arizona, Tire and Lube Express (TLE) department. Jones was fired on February 28, 2002 in retaliation for his efforts to organize a union.

A majority of the "associates", as Wal-Mart calls employees, working in the TLE at the Supercenter had signed union authorization cards for United Food and Commercial Workers Union (UFCW) Local 99 to give them an organized voice on wages, health benefits, scheduling and working conditions, and the NLRB had set a secret ballot union representation election for August, 2000.

The NLRB blocked the election, however, due to Wal-Mart's systematic intimidation and other illegal tactics against its workers. But the company's campaign against the union supporters didn't end. Jones, one of three leaders in the union effort at the store, was a "marked man," according to the ALJ.

The judge found that Store Manager, Jim Winkler, had targeted three outspoken union supporters by directing supervisors to hold them to a higher standard and "wait for them to screw up." Two left and the third, Jones, was singled out by management. Jones was fired two days after receiving a good yearly performance review which included a 4% wage increase.

During the campaign, the judge found that Wal-Mart illegally monitored workers by placing a new manager in the department to carry out illegal surveillance on the workers' union activities. The manager, who had no experience in an automotive service unit was unable to work alongside the TLE employees as the job required.

The judge also found that Wal-Mart failed to enforce its non-harassment policy against an anti-union worker who was harassing two union supporters. The victims suffered from their colleagues' harassment about their weight and religious beliefs. Despite several appeals to management to protect the victims, Wal-Mart refused to enforce its policy, although one Bentonville executive insisted the company takes "complaints of harassment seriously."

Wal-Mart's illegal tactics in Kingman, Arizona exposed further illegal threats to workers across the country. The company's "Associate Benefits Book" which outlines eligibility for various benefits expressly stated that associates represented by a union are not eligible for benefits. The Judge ordered that Wal-Mart reprint and amend its benefit book to reflect that union-represented workers' benefits are determined through the collective bargaining process and that union-represented workers will remain eligible for benefits during bargaining.

Wal-Mart is also required to post notices in every location admitting its violations of the law and promising not to discriminate against union-represented workers. The ALJ decision in Kingman is the first time Wal-Mart has been ordered to make a national remedy to its illegal anti-union tactics.

Copies of the NLRB complaints are available on www.ufcw.org

[back to top]

Up Against Wal-Mart Jennifer McLaughlin and her boyfriend, Eric Jackson, say Wal-Mart has held anti-union meetings and closely monitored employees who are trying to unionize the company's store in Paris, Texas.

At the world's largest and most profitable retailer, low wages, unpaid overtime, and union busting are a way of life. Now Wal-Mart workers are fighting back.

By Karen Olsson
March/April 2003 Issue

Jennifer McLaughlin is 22, has a baby, drives a truck, wears wide-leg jeans and spiky plastic chokers, dyes her hair dark red, and works at Wal-Mart. The store in Paris, Texas -- Wal-Mart Supercenter #148 -- is just down the road from the modest apartment complex where McLaughlin lives with her boyfriend and her one-year-old son; five days a week she drives to the store, puts on a blue vest with "How May I Help You?" emblazoned across the back, and clocks in. Some days she works in the Garden Center and some days in the toy department. The pace is frenetic, even by the normally fast-paced standards of retailing; often, it seems, there simply aren't enough people around to get the job done. On a given shift McLaughlin might man a register, hop on a mechanical lift to retrieve something from a high shelf, catch fish from a tank, run over to another department to help locate an item, restock the shelves, dust off the bike racks, or field questions about potting soil and lawn mowers. "It's stressful," she says. "They push you to the limit. They just want to see how much they can get away with without having to hire someone else."

Then there's the matter of her pay. After three years with the company, McLaughlin earns only $16,800 a year. "And I'm considered high-paid," she says. "The way they pay you, you cannot make it by yourself without having a second job or someone to help you, unless you've been there for 20 years or you're a manager." Because health insurance on the Wal-Mart plan would deduct up to $85 from her biweekly paycheck of $550, she goes without, and relies on Medicaid to cover her son, Gage.

Complaints about understaffing and low pay are not uncommon among retail workers -- but Wal-Mart is no mere peddler of saucepans and boom boxes. The company is the world's largest retailer, with $220 billion in sales, and the nation's largest private employer, with 3,372 stores and more than 1 million hourly workers. Its annual revenues account for 2 percent of America's entire domestic product. Even as the economy has slowed, the company has continued to metastasize, with plans to add 800,000 more jobs worldwide by 2007.

Given its staggering size and rapid expansion, Wal-Mart increasingly sets the standard for wages and benefits throughout the U.S. economy. "Americans can't live on a Wal-Mart paycheck," says Greg Denier, communications director for the United Food and Commercial Workers International Union (UFCW). "Yet it's the dominant employer, and what they pay will be the future of working America." The average hourly worker at Wal-Mart earns barely $18,000 a year at a company that pocketed $6.6 billion in profits last year. Forty percent of employees opt not to receive coverage under the company's medical plan, which costs up to $2,844 a year, plus a deductible. As Jennifer McLaughlin puts it, "They're on top of the Fortune 500, and I can't get health insurance for my kid."

Angered by the disparity between profits and wages, thousands of former and current employees like McLaughlin have started to fight the company on a variety of fronts. Workers in 27 states are suing Wal-Mart for violating wage-and-hour laws; in the first of the cases to go to trial, an Oregon jury found the company guilty in December of systematically forcing employees to work overtime without pay. The retailer also faces a sex-discrimination lawsuit that accuses it of wrongly denying promotions and equal pay to 700,000 women. And across the country, workers have launched a massive drive to organize a union at Wal-Mart, demanding better wages and working conditions. Employees at more than 100 stores in 25 states -- including Supercenter #148 in Paris -- are currently trying to unionize the company, and in July the UFCW launched an organizing blitz in the Midwest, hoping to mobilize nearly 120,000 workers in Michigan, Kentucky, Ohio, and Indiana.

Wal-Mart has responded to the union drive by trying to stop workers from organizing -- sometimes in violation of federal labor law. In 10 separate cases, the National Labor Relations Board has ruled that Wal-Mart repeatedly broke the law by interrogating workers, confiscating union literature, and firing union supporters. At the first sign of organizing in a store, Wal-Mart dispatches a team of union busters from its headquarters in Bentonville, Arkansas, sometimes setting up surveillance cameras to monitor workers. "In my 35 years in labor relations, I've never seen a company that will go to the lengths that Wal-Mart goes to, to avoid a union," says Martin Levitt, a management consultant who helped the company develop its anti-union tactics before writing a book called Confessions of a Union Buster. "They have zero tolerance."

The retaliation can be extreme. In February 2000, the meat-cutting department at a Wal-Mart in Jacksonville, Texas, voted to join the UFCW -- the only Wal-Mart in the nation where workers successfully organized a union. Two weeks after the vote, the company announced it was eliminating its meat-cutting departments in all of its stores nationwide. It also fired four workers who voted for the union. "They held a meeting and said there was nothing we could do," recalls Dotty Jones, a former meat cutter in Jacksonville. "No matter which way the election went, they would hold it up in court until we were old and gray."

If you've seen one Wal-mart, you've seen the Paris store, more or less: a gray cinder-block warehouse of a building, with a red stripe across the front, flags on the roof, WALHMART spelled in large capitals in the center, and the company credos ("We Sell for Less" and "Everyday Low Prices") to the left and the right. Inside, the cavernous store is bathed in a dim fluorescent light that makes the white walls and linoleum look dingy, and on a Friday shortly before Christmas, the merchandise is everywhere: not only in bins and on shelves, but in boxes waiting to be unloaded, or just stationed in some odd corner, like the pine gun cabinets ($169.87) lined up by the rest rooms. Television monitors advertise thermometers and compact discs, Christmas carols play over the audio system, and yet there's a kind of silence to the place, a suspension of ordinary life, as shoppers in their trances drift through the store and fill carts with tubs of popcorn, a microwave, a chess set, dog biscuits. Here Protestant thrift and consumer wants are reconciled, for the moment anyway, in carts brimming with bargains.

Wal-Mart's success story was scripted by its founder, Sam Walton, whose genius was not so much for innovation as for picking which of his competitors' innovations to copy in his own stores. In 1945, Walton bought a franchise variety store in Newport, Arkansas. The most successful retailers, he noticed, were chains like Sears and A&P, which distributed goods to stores most efficiently, lowered prices to generate a larger volume of sales, and in the process generated a lot of cash to finance further expansion. These, in turn, would serve as basic principles of Walton's business. As he explains in his autobiography, Sam Walton, Made in America, he drove long distances to buy ladies' panties at lower prices, recognizing that selling more pairs at four for a dollar would bring greater profits than selling fewer pairs at three for a dollar. The women of northeastern Arkansas were soon awash in underwear, and a discounter was born. Walton opened his first Wal-Mart Discount City in 1962 and gradually expanded out from his Arkansas base. By 1970 Wal-Mart owned 32 outlets; by 1980 there were 276; by 1990, 1,528 in 29 states.

The company grew, in no small part, by dint of its legendary frugality -- a habit that started with Sam Walton himself, who drove an old pickup truck and shared hotel rooms on company trips and insisted on keeping the headquarters in Arkansas as plain as possible. Payroll, of course, tends to be a rather larger expense than hotel rooms, and Walton kept that as low as he could, too. He paid his first clerks 50 to 60 cents an hour -- substantially below minimum wage at the time -- by taking questionable advantage of a small-business exemption to the Fair Labor Standards Act. In 1970, Walton fended off an organizing push by the Retail Clerks Union in two small Missouri towns by hiring a professional union buster, John Tate, to lecture workers on the negative aspects of unions. On Tate's advice, he also took steps to win his workers over, encouraging them to air concerns with managers and implementing a profit-sharing program.

A few years later, Wal-Mart hired a consulting firm named Alpha Associates to develop a "union avoidance program." Martin Levitt, the consultant who worked on the program, says that Wal-Mart does "whatever it takes to wear people down and destroy their spirit." Each manager, he says, is taught to take union organizing personally: "Anyone supporting a union is slapping that supervisor in the face." The company also encouraged employees to believe in the good intentions of "Mr. Sam," who peppered his autobiography with tributes to his "associates": "If you want to take care of the customers you have to make sure you're taking care of the people in the stores."

Yet many Wal-Mart workers allege that the company Walton left behind when he died in 1992 is anything but a benevolent caretaker. "We're underpaid, and I'm worried about my retirement," says an overnight stocker in Minnesota who asked not to be identified. "I imagine I'll be working until I'm 90." Her daughter works as a stocker, too, but after nine years she doesn't make enough to support her children. "She's had to go down to the food bank, and I've sent stuff over for them," her mother says. "They just can't do it." On the job, she adds, workers are forced to scramble to make up for understaffing. "We're short -- we have a skimpy crew at night. We've got pallets stacked over our heads, and we can't get caught up with all of it."

A quick look around at the store in Paris makes clear what an employee is up against: thousands of items (90,000 in a typical Wal-Mart) that customers are constantly removing from the shelves and not putting back, or putting back in the wrong place, or dropping on the floor -- the store a kind of Augean stable, with a corps of blue-vested Herculeses trying to keep things clean. (When I mention this to Jennifer McLaughlin, she tells me that's why no one likes to work the 2 a.m. to 11 a.m. shift, because "all it is, is putting stuff back.") To get the job done, according to the dozens of employee lawsuits filed against the company, Wal-Mart routinely forces employees to work overtime without pay. In the Oregon wage-and-hour case, a former personnel manager named Carolyn Thiebes testified that supervisors, pressured by company headquarters to keep payroll low, regularly deleted hours from time records and reprimanded employees who claimed overtime. In 2000, Wal-Mart settled similar lawsuits involving 67,000 workers in New Mexico and Colorado, reportedly paying more than $50 million.

Wal-Mart blames unpaid overtime on individual department managers, insisting that such practices violate company policy. "We rely on our associates," says spokesman Bill Wertz. "It makes no business sense whatsoever to mistreat them." But Russell Lloyd, an attorney representing Wal-Mart employees in Texas, says the company "has a pattern throughout all stores of treating their workers the same way." Corporate headquarters collects reams of data on every store and every employee, he says, and uses sales figures to calculate how many hours of labor it wants to allot to each store. Store managers are then required to schedule fewer hours than the number allotted, and their performance is monitored in daily reports back to Bentonville. To meet the goals, supervisors pressure employees to work extra hours without pay.

"I was asked to work off the clock, sometimes by the store manager, sometimes by the assistant manager," says Liberty Morales Serna, a former employee in Houston. "They would know you'd clocked out already, and they'd say, Do me a favor. I don't have anyone coming in -- could you stay here?' It would be like four or five hours. They were understaffed, and they expected you to work these hours."

When Judy Danneman, a widow raising three children, went to work as an hourly department manager in West Palm Beach, Florida, she quickly realized that she would have to climb the management ladder in order to survive -- because, as she puts it, "my kids had this bad habit of eating." The only way to do that, she says, was to work off the clock: "Working unpaid overtime equaled saving your job." When she finally became an assistant manager, Danneman knew she had to enforce the same policy: "I knew for my department managers to get their work done, they had to work off the clock. It was an unwritten rule. The majority of them were single mothers raising children, or else married women with children. It was sad, and it was totally demanding and very draining and very stressful."

In fact, more than two-thirds of all Wal-Mart employees are women -- yet women make up less than 10 percent of top store managers. Back when she was first lady of Arkansas, Hillary Clinton became the first woman appointed to the Wal-Mart board, and tried to get the company to hire more women managers, but that effort apparently went the way of national health insurance. Wal-Mart today has the same percentage of women in management that the average company had in 1975.

Attorneys representing workers contend that Wal-Mart is too tightly controlled from headquarters in Arkansas to claim ignorance of what's happening in its stores. "In Bentonville they control the air conditioning, the music, and the freezer temperature for each store," says Brad Seligman, a lawyer with the Impact Fund, a nonprofit legal organization in Berkeley. "Most companies divide stores into regions, and then you have a home office of senior management. At Wal-Mart, the regional managers are based in Bentonville; they're on the road Sunday to Wednesday, and then back meeting with management Thursday to Saturday. They're the ones who make the fundamental employee decisions -- and the home office knows exactly what they are doing."

The company insists it adequately trains and promotes female managers. But in 2001, a Wal-Mart executive conducted an internal study that showed the company pays female store managers less than men in the same position. "Their focus at Wal-Mart has always relentlessly been on the bottom line and on cost cutting," says Seligman. "Virtually every other consideration is secondary -- or third or fourth or fifth."

To protect the bottom line Wal-Mart is as aggressive at fighting off unions as it is at cutting costs. Employees approached by co-workers about joining a union are "scared to even talk," says Ricky Braswell, a "greeter" at the store in Paris. "They're afraid they'll lose their jobs."

In Paris, it was Jennifer McLaughlin's boyfriend, 21-year-old Eric Jackson, who first started talking about a union. Raised by a mother who works in a factory, Jackson always assumed he would find a job after high school rather than go on to college. But the few factory jobs in Paris are highly sought after, so Jackson wound up at Wal-Mart, which employs 350 people out of a local workforce of only 22,000. "People ain't got no other place to go," he says. "There's no other jobs to be had."

Jackson started as an evening cashier earning $5.75 an hour, and it wasn't long before he was regularly asked to perform the duties of a customer service manager, supervising the other cashiers and scheduling their breaks. He asked for a promotion, but three months later he was still doing the extra work for no extra pay. "I took it because I wanted more money, but I never got the raise," Jackson says. "They knew they could do it to me." He fought for the promotion and eventually won, but by then he had already contacted a local union office about organizing the store.

"When Eric first suggested it, I looked at him like he was on crack," says McLaughlin. "I said, You can't take down a company like Wal-Mart with a union.'" Nevertheless, Jackson arranged for a UFCW organizer to come to Paris and meet with a small group of workers one June afternoon at the Pizza Inn. But the company soon caught wind of the organizing effort. As one worker left an early meeting of union supporters, he spotted a Wal-Mart manager in the parking lot. From then on, workers seen as pro-union were watched closely by management.

"By the time we had our first meeting, they were holding their first anti-union meeting," says McLaughlin. The response came straight from the company's union-avoidance playbook: Troops from the Bentonville "People Division" were flown in, and employees were required to attend hour-long meetings, where they were shown anti-labor videos and warned about unions. "They tend to treat you like you're simple, and they use real bad scare tactics," says McLaughlin. Those who supported the union, she says, were told, "Some people just don't belong at Wal-Mart."

McLaughlin isn't shy about speaking her mind, and in the meeting she confronted one of the men from the People Division. "Let me tell you, I used to have epilepsy," she told him. "My dad was in a union, and we had health insurance, and I got better. I don't have health insurance. If my child got epilepsy, what would I do? Doesn't a union help you to get company-paid insurance?" The man, she recalls, became flustered. "Jennifer, I don't have an answer about that," he said. "I'll have to get back with you."

The meetings were just the beginning. "The videos and group meetings are the surface cosmetics," says Levitt, the former consultant. "Where Wal-Mart beats the union is through a one-on-one process implemented from Bentonville. They carefully instruct management to individually work over each employee who might be a union sympathizer." In Paris, Eric Jackson was called into a back room by five managers and made to watch an anti-union video and participate in a role-playing exercise. "I was supposed to be a manager, and one of them was the associate who came to me with a question about a union," says Jackson. "So I quoted the video. I said, We do not believe we need a union at Wal-Mart,' and they were like, Good, good!' and then I said, We're not anti-union -- we're pro-associate,' just like I'm supposed to say."

Before the onslaught by the company, says McLaughlin, she talked to more than 70 workers at the Paris store who were prepared to sign cards calling for a vote on union representation, but that number quickly dwindled. Those who'd signed cards felt they were being watched. "All of a sudden the cameras start going up," says Chris Bills, who works in the receiving area. "Now there's three in receiving. This one manager took up smoking so he could sit with us on our breaks." Other hourly employees learned for the first time that they were actually counted as managers. "They said we were considered management, so we shouldn't get involved with the union stuff," says Dianne Smallwood, a former customer service manager who worked at the store seven years. Employees opposed to the union were given "pro-associate" buttons to wear, while managers amended the dress code to exclude T-shirts with any kind of writing on them, apparently to prevent workers from wearing union shirts.

Wal-Mart declined to let Mother Jones interview store managers or representatives from the People Division in Bentonville, but says it sends out people from corporate headquarters "to answer questions associates may have and to make sure that all store personnel are aware of their legal requirements and meet those requirements exactly." But the company has also made clear that keeping its stores union-free is as much a part of Wal-Mart culture as door greeters and blue aprons. "Union representation may work well for others," says Cynthia Illick, a company spokeswoman. "However, it is not a fit for Wal-Mart."

With the company so determined to ward off unions, the prospects of employees in towns like Paris, Texas, winning significant improvements in wages and working conditions seem awfully slim. "It's a long process," Jennifer McLaughlin concedes. "I wish it could be done in the next year, but people come and go, and for every one union card you get signed, two other ones who signed cards have gotten fired or left. It's real frustrating, and a lot of times I don't want to do it no more. But I'm not going to give up until I end up leaving the store."

In the end, the success of the organizing drives may depend on labor's ability to mobilize more than just store employees. "We'll never bring Wal-Mart to the table store by store," says Bernie Hesse, an organizer for UFCW Local 789 in Minneapolis. "I can get all the cards signed I want, and they'll still crush us. They'll close the frigging store, I'm convinced. We've got to do it in conjunction with the community." That means going to small businesses and religious leaders and local officials, he says, and convincing them that it's in their interest to stand up to Wal-Mart. "As a community we've got to say, All right, if you want to come here and do business, here's what you've got to do -- you've got to pay a living wage, you've got to provide affordable health insurance.'"

Putting together such a broad initiative can be "like pulling teeth," Hesse says, but the stakes are high. If employees succeed in improving wages and working conditions at the country's largest employer, they could effectively set a new benchmark for service-sector jobs throughout the economy. Some 27 million Americans currently make $8.70 an hour or less -- and by the end of the decade, Hesse notes, nearly 2 million people worldwide will work at Wal-Mart.

"These are the jobs our kids are going to have," he says. What do you think?

[back to top]

Growing Pains

By ANDY LENDERMAN | For The New Mexican
01/13/2003

TAOS-The Wal-Mart fight boils down to jobs. And three votes.

Developers promise new jobs, workers to operate the biggest business building in Taos County history.

Opponents say 180,000 square feet of groceries, tires, motor oil and merchandise will destroy most jobs with good wages and change the county's historic character forever.

It's a battle over the future direction of Taos County, both sides agree. It's about who can afford to live here, and who can't.

The population here continues to grow despite a high unemployment rate of 10 percent, increasing land prices and water limitations.

Whether these newcomers will shop at a Wal-Mart Supercenter is a matter that could be decided very soon.

The plans are ready and zoning changes necessary to allow such a big store have been prepared. Three votes on the Town of Taos Council can approve the zoning change. Or three votes against Wal-Mart could enforce a county growth plan that clearly supports small businesses over chain stores.

The council will discuss the matter Jan. 23, more than three years after it denied Wal-Mart an expansion permit the first time.

"It's going to be wrong to a lot of people," Town Councilor Bobby Duran told the Hispano Chamber of Commerce last week. "That's just the way things are."

Today, The New Mexican looks at a Wal-Mart Supercenter through the people who have a lot to win, or lose: small businessmen and developers, union workers and Wal-Mart managers.

La Gente for Wal-Mart

Moises Martinez is a Taos businessman backing the Supercenter because he wants Taos natives to have a place to work when they grow up. He says too many people are forced to leave the valley.

"Times have changed and we want to welcome some kind of industry here for out kids, and for the future," said Martinez, who operates a ski shop.

Wal-Mart is "a good clean industry," he said, and can serve as a magnet for Northern New Mexico shoppers.

He criticized many retirees and "trust-fund people" who move to the valley and value a historic environment at the expense of economic development.

That development involves Cunnyngham Properties, LLC, the company that owns about 24 acres at the southwest corner of N.M. 68 and N.M. 585, according to court records. That's where the proposed Supercenter would be built, according to Martinez's group, La Gente for Wal-Mart.

Marcia W. Cunnyngham, a company trustee, said she's not developing the land.

"There is a third party who is involved who has leased the land from us and is working with Wal-Mart," Cunnyngham said. She declined to elaborate.

Wal-Mart would likely lease the property, said Jaime Chavez, a lobbyist and point man for Wal-Mart supporters.

It's unclear what would happen to the current Wal-Mart building a few blocks north, which houses about 75,000 square feet of general merchandise.

The new store would cost $18 million to build, and that, too, creates Taos area jobs, Chavez said.

Chavez has been pushing the Wal-Mart issue along with Ramon Trujillo, a former boss of the Taos County Democratic Party. When asked if he was being paid for his services, which includes several months of petition gathering, Trujillo declined to comment.

Chavez said he was not being paid by Wal-Mart, and said his contract prevents him from discussing any other details.

"When people feel passionately enough about something, they open their pocketbooks," Chavez said.

Chavez is a former lawyer from Taos who was disbarred by the New Mexico Supreme Court on May 10, 2000, according to court records. Chavez violated several professional standards, including allegations he mishandled his clients' money, according to court records.

"This has nothing to do with Wal-Mart," Chavez said. He said he plans to reapply for his license this year.

Still, Chavez made a presentation last week to a tough crowd at the Taos County Hispano Chamber of Commerce.

The idea that local businesses will be steamrolled by Wal-Mart is not true, he said.

"Sales increase because the Wal-Mart Supercenter adds more traffic to the local markets," Chavez said.

He also defended the company's labor record, often blasted by opponents.

As the nation's largest private employer, with 1.3 million workers, only one of 3,300 stores is unionized, he said.

"Wal-Mart is not exempt from the National Labor Relations Act," Chavez said. "... They treat their employees fairly, and the need for a union doesn't exist."

Employees are counted as full time at 28 hours a week, he said. That statement was greeted with laughter from some in the group.

Darrell Cordova

Darrell Cordova joined the United Food and Commercial Workers union in 1979 as a 16-year-old carry-out kid.

Now, at 39, he owns land, good vehicles, and helps a daughter at The University of New Mexico. Union wages at his grocery store mean everything to this native Taoseño: "You can afford to have a family." He makes close to $20 an hour, which includes benefits.

Observers say a new Wal-Mart grocery store will kill one, maybe two of the three grocery stores in Taos: Smith's, Raley's or Super Save.

If that happens, union jobs and another piece of America's shrinking middle class go with it, Cordova says.

Cordova, like other Wal-Mart fighters, has numbers: For every two Wal-Mart jobs, he said, three good ones must be eliminated from the economy.

Cashiers at union stores make about $30,000 a year; Wal-Mart workers make $11,000.

The difference means Cordova can buy land to pass onto his son, he says.

"It's very rare," Cordova said. Many families pass on land from generation to generation, and are unable to expand their holdings, he said.

The fight rests with the Town Council's four members and Mayor Fred Peralta, he said. Despite being appointed to a state position, Peralta hasn't resigned yet and could be in office when the approval comes up.

"They're holding everything in their hands and they know it. They're literally the judge and jury of the whole situation."

Judy Vigil

She earned two promotions in six months at Wal-Mart, and Judy Vigil says hard work can pay off here.

Vigil, 30, is full of peppy energy. She's the new customer-service manager, overseeing the cashiers, handling problems and keeping an eye on the front end of the always-busy Taos store.

"There's opportunity to move up and a lot of different jobs to check out," said Vigil, who's worked at Wal-Mart twice before.

Associates, as they're called, are promoted based on performance, not seniority, store manager Rob Cowgur said.

She was stuck in a job with less pay, working as a cashier at another store, when Cowgur offered her a job at Wal-Mart.

Now, life is better. "I'm working good hours," Vigil said. "I'm with my kids more. I have my weekends off."

Vigil declined to discuss her wages or benefits, which is Wal-Mart's policy. Still, she said she's able to pay her family's bills more, and plans to carry herself and two children on the company health plan later this year. Wal-Mart pays two-thirds of the insurance plan, she said.

Her husband works for a local law enforcement agency and is covered through his employer.

Vigil's promotion means she can watch her son's wrestling meets in person now, with better hours.

"I was always watching it on video," she said. "And now I'm actually there."

Vigil wants to be promoted again, to a department manager, an assistant manager or maybe a store manager. The company's rapid expansion creates lots of opportunity, said Cowgur, a 29-year-old boss.

Vigil is looking forward to her kids working there, too.

"I believe this is going to be the last job that I have," she said.

Paul Martinez

Paul's Men Shop survived the first Taos Wal-Mart, which opened in 1986. He carried clothes and merchandise for Taoseños then.

"I was pretty much local at the time," he said.

But Wal-Mart forced him to drop that approach and go tourist. Now he sells nice wool shirts, fancy cowboy hats and expensive leather belts to visitors cruising downtown Taos. You can find anything you need for a Taos weekend here: ski goggles and rain coats, boots and souvenirs.

"I kind of lumped a lot of things into one, and it worked," said Martinez, who's been open for 29 years.

But he doesn't want a bigger Wal-Mart, which will cut into the local economy, he said.

"I think most small business people take care of their employees," Martinez said. "And they try to give them 40 hours ... We eat on a daily basis."

The opposition to Wal-Mart now claims 80 small businesses as members, said Jeanne Timber, a spokeswoman for Taoseños Against Wal-Mart Superstore. They've got 3,200 signatures, are challenging the supporters' claim of 8,000 signatures, and have enlisted the Western Environmental Law Center for legal advice.

"We need to investigate the potential harmful impacts of big box development on a small and largely rural community like Taos," center director Mark Preiss said.

The group is interested in an economic impact study performed by a third party. And Timber says the group will fight to slow down the project, the announcement of which came as a surprise to many in late December.

"They're trying a slam-dunk to get this through that will profit a few individuals," she said.

[back to top]

Can Wal-Mart Get Any Bigger? (Yes, a lot bigger... Here's how)

Sunday, Jan. 05, 2003
By BILL SAPORITO

The aisles are clean, the store is brightly lit, and "associates" in red polo shirts provide friendly service to customers who flock there for the low prices and the wide range of products offered. Throughout the store the image of a kindly old man appears in posters and photographs. His slogans and philosophy have been internalized by all employees, and they can tell you the story of his long march from humble rural roots to become a great leader.

And by the way, would you like us to skin that frog for you?

Welcome to Wal-Mart in China, where the late Sam Walton has a new image: the Mao of retailing. There, as in Walton's home state of Arkansas, having the right merchandise is paramount. So the store in Shenzhen, just north of Hong Kong, is crowded with tanks of crabs, fish, frogs and shrimp, which can be taken home wiggling or be expertly gutted and cleaned on the spot. Wal-Mart's push into China?and Brazil and Germany and deeper into California and New York?offers a hint of why the world's largest retailer seems unfazed by this stinker of a holiday shopping season. Wal-Mart's sales in stores open at least a year were up only about 3% compared with the same period last year?at the low end of its expectations. But many other retailers were hurt much worse. Wal-Mart just keeps gaining market share, not only from bankrupt discounter Kmart but also from grocers like Kroger, drugstore chains like CVS and electronics sellers like RadioShack. Wal-Mart is mounting an audacious expansion that could double its sales within just five years, to $480 billion. Some of that growth will come in new markets abroad, where 1,200 stores in nine countries already account for about 16% of the chain's total sales. But even more growth will be won as the chain insinuates itself into more U.S. neighborhoods and invades more product categories.

If you think Wal-Mart already sells just about everything, think again. Think PCs, ceiling fans, more fashionable clothing, gasoline and even cars.

"Their goal is to have a 30% share of every major business they are in," says Linda Kristiansen, a retail analyst for UBS Warburg Equity Research.

If there's no Wal-Mart store near you, just wait. If you shop at Wal-Mart, expect your store to get bigger or a new store to open even closer. The chain plans to expand from 3,400 U.S. locations today?half of them in the South?to a nationwide network approaching 5,000 stores in five years.

Wal-Mart has 1,300 Supercenters, many of them converted from standard discount stores, offering everything from hardware to groceries and drugs. In some areas, it is placing these 180,000-sq.-ft. monsters as close as 5 miles apart. And in the spaces between, it's tormenting local grocery and convenience stores with Neighborhood Markets (call 'em Small-Marts). Wal-Mart is building its first urban Supercenter, in downtown Dallas. And without fanfare it is testing used-car sales alongside one of its Houston stores. "It's surprising how much room we have for growth," says Robson Walton, 58, Sam's son and the company's nonexecutive chairman. "I'm not trying to be flippant," adds Lee Scott, 52, Wal-Mart's ceo. "But simply put, our long-term strategy is to be where we're not." Yet for Wal-Mart to get where it isn't is going to be a lot harder than it was to get where it is. Even with sales expected to grow to about $240 billion for the fiscal year that ends Jan. 31, price wars in its grocery business narrowed Wal-Mart's profit margin to its lowest level in four years. The company plans to fatten profits by becoming more of a producer and even designer of its goods, especially clothing. It's making blouses in China and towels in India that it intends to sell everywhere from Berlin to Beijing and Boston. But fashion is a notoriously fickle business.

And by diving deeper into the manufacturing of more of its products, Wal-Mart is braving a path that has brought grief to some of history's biggest retailers, such as A&P and Sears. Wal-Mart's centralization of power at its headquarters in Bentonville, Ark., could produce agitation among the managers of its stores, who have traditionally been granted considerable independence in stocking what locals want. And consumers get bored by one-size-fits-all merchandise. Says Ira Kalish, an analyst for consultancy Retail Forward, in a mostly bullish report on Wal-Mart: "Excessive size could breed bureaucracy as well as failures in the areas of merchandising and customer relations."

Whether?and how?Wal-Mart meets these challenges will be of vital importance to its customers, its 1.3 million worldwide employees, the owners of its widely held stock and even the U.S. economy. According to an independent study by McKinsey & Co., Wal-Mart's efficiency gains were the source of 25% of the entire U.S. economy's productivity improvement from 1995 to 1999. "When you become No. 1 and as big as we are, business has a tendency to complicate if you don't do things to force yourself to keep it simple," says Tom Coughlin, head of Wal-Mart's store operations. As simple as keeping the right products in stock?a huge problem for Kmart. And maintaining a smooth checkout system. "We call it Take the Money," says Coughlin. What's the point of low prices if consumers can't pay for their items quickly? Wal-Mart's operating mantra has been "a store at a time," meaning that no one can manage thousands of stores; it has to be done locally. Long before it was fashionable, Wal-Mart pushed responsibility and information to the lowest ranks. Managers of departments such as sporting goods or women's apparel still get detailed reports of sales and profits in their areas, and they have a say in which products are stocked. Store managers can still buy locally and ask headquarters to adjust inventory of company brands that it has asked them to stock. Coughlin says Wal-Mart will not stray far from the locals-know-best model, even as more information and merchandise flows through Bentonville. At headquarters, management focuses on the top 20% and bottom 20% of its stores, as measured by sales and profitability. It wants to know who has been naughty and who has been nice and why. The rest are largely on their own.

Sam Walton used to visit all his stores using a propeller-driven plane. Now it takes a fleet of 20 jets just to keep management in touch. Its headquarters force, 10,000 strong, lately includes a group of artists whose sole function is to design logos and labels and fulfill other graphic needs. That's quite an indulgence for a company so comically cheap that it still puts tin coin boxes next to its coffee pots, demanding 10(cent) a pop.

Wal-Mart's Supercenters are able to underprice their supermarket competitors about 15%, according to analyst Kalish, in part because they are more efficient but also because the discount giant uses nonunion labor. Wal-Mart matches the union pay rate in union markets, but the average wage at Wal-Mart nationally is less than $10 an hour before bonuses. The two most frequent complaints made by Wal-Mart employees to Time?low wages and morale-killing store managers?recently factored into a labor case the company lost in Oregon. A jury found Wal-Mart guilty of requiring associates to work unpaid overtime?even locking them inside stores. The company plans to appeal the verdict and says workers were locked into stores only late at night, for security reasons. Some 40 other lawsuits are pending, most of which similarly accuse Wal-Mart of requiring hourly employees to work "off the clock." Since September 2001, Wal-Mart also has been the defendant in 28 complaints brought by the National Labor Relations Board (NIRB) over alleged antiunion activities, including firing employees suspected of being friendly to organized labor. "The company is dragging wages and benefit levels back to 19th century standards," says John Sweeney, president of the afl-cio, which is sponsoring an organizing effort at the company's stores.

That campaign has borne little fruit, in part because Wal-Mart's wages are competitive with those paid by rivals such as Kmart and Target. Wal-Mart offers health benefits, and its stock plan has been a wealth builder for many lower-level employees, at least until the market crashed. Still, Wal-Mart is regarded as offering ample opportunities for advancement. Charlyn Jarrells Porter, who heads the Wal-Mart division that deals with personnel issues, says two-thirds of its managers come from the ranks of store associates, which is what Wal-Mart calls all employees. This year the company will enroll 5,500 people in its management-training program. "If the jobs are so bad," she asks," why are so many people working for Wal-Mart?" The company denies any of the wrongdoing alleged in the lawsuits and NIRB complaints and insists that managers who violate policy are disciplined. Being viewed as a good place to work is vital to Wal-Mart, because it will need to add some 800,000 employees in the U.S. alone over the next five years.

As it tries to leverage its size overseas, Wal-Mart may find it difficult to export one of its biggest advantages. Its expertise in managing high-volume inventory and supply networks doesn't work as well in Europe and Asia, where the highway systems aren't as good and stores typically are smaller. So Wal-Mart has to become better at buying, reaching further back into the supply chain to purchase at the factory such products as hardware and apparel that it now obtains from outside vendors and importers. "We realized that, as we continue to expand internationally, the need to leverage international and domestic buying power was key, and the only way to do it effectively is to do it ourselves," says Ken Eaton, who heads global procurement. The idea is to buy goods universally for all stores where feasible, so the 20 locations in Brazil can get the same price as the 3,400 Wal-Marts in the U.S. The company ended its relationship last year with its longtime outside-buying organization and hired hundreds of that firm's employees to start rounding up fruit and salmon from South America and $6 billion a year in goods from China?everything from clothing to televisions to fans. Wal-Mart has opened 21 offices around the world to oversee its factories.

By becoming contractor, importer and wholesaler, Wal-Mart expects not only to save money on the buy but also to cut down on inventory by speeding up the supply lines. Wal-Mart gets most of its towels from India, and today it reorders once a month. If one pattern gets hot and sells out early, sales are lost. In going direct, however, Wal-Mart will make the factories in India part of its Retail Link system. That allows vendors like Sara Lee (Hanes underwear, Bryan bacon) to dip into Wal-Mart's computers and track sales and replenish supplies constantly. By the same token, Wal-Mart will be held more responsible for these factories' social and environmental policies. As the folks at Nike can tell you, this carries its own risks.

Wal-Mart figures to take 20% of the cost out of procurement over the next five years and improve gross-profit margins by nine percentage points worldwide on general merchandise it buys directly. In retailing, this figure is astonishing. Think about that $6 billion worth of goods from China. Multiply by .09. Take to bank. Global sourcing can provide the ammunition Wal-Mart will need to wage price wars against such powerful retailers as France's Carrefour, Holland's Royal Ahold and Germany's Makro. Each of these European companies got to foreign markets long before Wal-Mart did. At ASDA, the British chain Wal-Mart bought in mid-1999, the company was selling men's jeans for about $24 after paying $14 per yd. for 50,000 yds. of material to make them. Then the buy was moved to Bentonville, and the conversation went something like, "We'd like 6 million yds., please.

Now what's your price?" Try $4.77 per yd. As a result, ASDA slashed its retail prices in half and upped its annual jeans sales to 1 million, from 174,000. ASDA is acquiring some 2,000 products from Wal-Mart's global network and has become Britain's leading seller of kids' clothes. The traffic is not all one way. ASDA's George brand of apparel is one of the most popular private-label lines in Britain, and Wal-Mart recently launched it in the U.S. "We're selling apparel anyway," says Claire Watts, Wal-Mart's fashion boss. "Would it kill us to be a little more up to date?" Designers from ASDA and from Wal-Mart headquarters now go on trend-spotting trips together, an exercise associated more with hip brands like Nike, and one that sounds perilously outside Wal-Mart's core competency. Watts insists that her group isn't trying to move Wal-Mart into haute couture. The focus is fashion basics at low prices.

When the team creates a new blouse, all the product specifications?colors, patterns, fabrics?are controlled by Watts' designers in Bentonville. Then Eaton's group tells the factories what and how much to make. No samples have to be made and sent back and forth across oceans because the company uses high-end computer color rendition and printing. Changes can be made quickly. The motive is speed as much as price. From the factories, garments can be sent to Newcastle, England, or New Castle, Del.?and therein lies the trap. This kind of centralization always makes sense in the beginning, when cost savings are easy and the staff is lean. But history shows that the buying organization eventually becomes bloated, as it did for Kmart, and tries to force merchandise through the system whether or not local managers and their customers want it.

Wal-Mart's expansion has gone well in Mexico, where it is the country's largest retailer. And the company just completed a deal to crack the Japanese market by acquiring 34% of Seiyu, a well-positioned but struggling retailer. But Wal-Mart has stumbled badly in some countries, particularly Germany. "We could write a training manual about our experiences in Germany," Scott says. "We really did more things wrong than right." There, Wal-Mart faces tough competition from well-established chains, especially among grocers. The German managers Wal-Mart brought on board through two mergers resisted American help. "We've been trying to get the Germans culturalized; we bring them to Bentonville," says John Menzer, head of the international division. But Bentonville also had to learn a few things about Berlin. German shoppers found Wal-Mart's door greeters appalling, and they regarded the ever helpful clerks as an intrusion on their private space.

From Wal-Mart's point of view, it's the Chinese who have turned out to be the best capitalists. At the store in Shenzhen, local managers hold Ping-Pong tourneys, stage fashion shows and have clerks hawk products like paper towels in front of a large display. And that's just on Tuesday. The store even has its own fight song ("My heart is filled with pride .. I long to tell you how deep my love for Wal-Mart is ..."). Wal-Mart is increasing this year, from 25 to 40, the number of stores in China. The company introduced the Walton Institute, a program to teach local managers the master's Three Basic Beliefs (respect for the individual, service to our customers, and to strive for excellence), the 10-Foot Rule (always greet a customer when she gets within 10 feet of you), the Sundown Rule (any employee or customer request must be addressed before sundown) and other cultural foundations. In China's three main cities, according to a McKinsey study, increasing wealth will support 250 Supercenters among the competing retailers, each selling $24 million to $36 million annually. That's good. But a U.S. Supercenter sells four times as much.

Walking into a Wal-Mart Supercenter in Fort Worth, Texas, CEO Scott recalls that when Wal-Mart was an underdog, "you could really go after a competitor." Now the company no longer shows comparison-shopping baskets to demonstrate that Wal-Mart has lower prices than competitors. "It just looks like we're picking on people," he says.

To be sure, Wal-Mart has to keep finding new people to pick on. Over the past two years, Kmart filed for bankruptcy, and Ames and Bradlees, once East Coast powerhouses, closed up shop. Wal-Mart is quickly adding scalps in the grocery industry too, the venerable Grand Union among them. Safeway, Albertsons and SuperValu have all slashed their earnings estimates in the past few weeks. Before getting into groceries, starting in 1986, Wal-Mart figured that a typical store needed a potential customer base of at least 150,000 people. But add groceries, and more of the available shoppers show up; each store needs a smaller area to support it. So Wal-Mart can situate Supercenters less than 5 miles apart in many suburban areas. It is also deploying a cut-down grocery-convenience store called the Neighborhood Market between the superstores. At the same time, Wal-Mart is adding merchandise categories, such as gasoline, Linux computers and flat-screen TVs, in which it can take prices down significantly. There's no escape. ceo Although Wal-Mart's stores may look identical, the company is pinning some of its growth prospects on the idea that what goes into them won't be. Wal-Mart's next competitive weapon is advanced data mining, which it will use to forecast, replenish and merchandise on a micro scale. By analyzing years' worth of sales data?and then cranking in variables such as the weather and school schedules?the system could predict the optimal number of cases of Gatorade, in what flavors and sizes, a store in Laredo, Texas, should have on hand the Friday before Labor Day. Then, if the weather forecast suddenly called for temperatures 5 degrees hotter than last year, the delivery truck would automatically show up with more.

The company calls the program the "store of the community." The principle is as old as shopping: customers differ significantly depending on where they live, what they earn and other factors. But the differences are far subtler than anyone ever imagined. The company has been analyzing every purchase made over the past 10 years, looking at the relationships between the items people buy and hundreds of other variables such as time of day and price. The data miners are constantly searching for exploitable relationships?say, between sales of cameras and atlases. Consider: a slow-selling line of chicken pieces was slated for discontinuation at Sam's Clubs. But the software noticed that the customers who did buy the product were huge spenders on other merchandise. So the item wasn't necessarily a loser if it helped keep those customers coming. One can think of Wal-Mart as a huge pipe organ with thousands of stops that executives constantly pull and push. Early on the day after Thanksgiving 2001, one of the busiest shopping days of the year, the system was reporting slow sales of a boxed computer-and-printer combo for which merchandisers had had high hopes. But one location was bucking the trend. A quick call from headquarters determined that the store manager had cut open one of the stacked cartons so shoppers could see they got both machines for one price. Soon a message went to all other stores: open a box. Sales began to move immediately.

Sell a buck. Save a buck. Repeat. It's that cycle of high-powered logistics engineering and nickel-squeezing huckstering that remains retailing's most potent weapon. UBS's Kristiansen sees no reason why Wal-Mart, which has trounced the Dow over the past five years, will not sustain 15% earnings growth. Scott, who earns less than most other Fortune 500 ceos, was leaving a store not long ago when he stopped to chat with one of the many senior citizens who work as greeters. They are a fearless lot, and the old gent teased the boss with a question: "Did you give everyone a big raise?" Scott returned a look of mock horror. "Are you kidding me?" he said. "This is Wal-Mart!"

With reporting by William Boston/Berlin, Neil Gough/Shenzhen and Rita Healy/Denver

[back to top]

WAL-MART TO PAY $220,000 FOR REJECTING PREGNANT APPLICANT, IN EEOC SETTLEMENT

12/23/02 - PHOENIX - The U.S. Equal Employment Opportunity Commission (EEOC) today announced it has settled a pregnancy discrimination lawsuit against retail giant Wal-Mart Stores, Inc., based in Bentonville, Arkansas, for $220,000 in damages and other relief for its failure to hire a female applicant due to her pregnancy.

Under the Consent Decree filed in Arizona District Court (EEOC v. WalMart CIV 94-465 TUC WDB), Wal-Mart will pay nearly a quarter million dollars to Ms. Jamey Stern and engage in comprehensive training concerning the Pregnancy Discrimination Act of 1978, in lieu of a further trial on the issue of punitive damages. The EEOC filed this lawsuit in 1994 alleging that Wal-Mart refused to rehire Jamey Stern at their Green Valley, Arizona, store because she told them she was pregnant in November of 1991. The litigation was subjected to repeated trials and appeals before all issues were finally resolved.

According to the lawsuit, Ms. Stern was told by the Assistant Manager to "come back after she had the baby," after informing him that she was pregnant. Ms. Stern was not aware that refusing to hire someone because they are pregnant is against the law until she read an article in a magazine in her doctor's office. She then filed a charge of discrimination with the EEOC and the Arizona Civil Rights Division. The EEOC investigated the case and filed the lawsuit on behalf of Ms. Stern after its efforts to reach a voluntary negotiated settlement proved futile.

Mary Jo O'Neill , the Regional Attorney for the Phoenix District Office lauded the settlement, "Sometimes employers don't take pregnancy discrimination as seriously as other kinds of discrimination. It is illegal to refuse to hire a woman because she is pregnant. This settlement confirms that the EEOC will not tolerate pregnancy discrimination."

Ms. Stern, the charging party, said, "This 11-year struggle has proven that one person can truly make a difference and I owe a million thanks to many individuals at the EEOC for making that possible. I am proud to have been a part of a process that has restored my faith in my determination to assert my rights, even in the face of such an adversary as Wal-Mart. I'm confident that many will benefit from this effort and become educated concerning their own rights and learn that they have the ability and resources available to assert and protect those rights."

In 1997, a jury found that Wal-Mart intentionally refused to rehire Ms. Stern because she was pregnant. However, the issue of punitive damages was not allowed to go to the jury in that trial. The EEOC appealed that decision. The Ninth Circuit Court of Appeals sent the case back to the District Court to be retried on the issue of punitive damages, which are money damages designed to punish the wrong doing employer and deter other employers from engaging in discrimination. The issue of punitive damages was tried to a jury in 2000, but again evidence pertinent to Wal-Mart's actions and to the question of punitive damages was withheld from the jury. The case was again appealed and the Ninth Circuit, which once more sent the case back to the District Court with explicit directions that the jury was to be told that Wal-Mart fabricated a number of facts during the investigation and initial trial.

Sally C. Shanley, the EEOC Trial Attorney remarked, "It is verysatisfying to be a part of this settlement as it sends a message both to employers and employees that there is recourse for discrimination in the workplace and that the Commission will persist in seeking justice."

Charles Burtner, EEOC's Phoenix District Director, which has jurisdiction over Arizona and Utah, said: "We are very pleased with the resolution of this case. We take the Pregnancy Discrimination Act very seriously. The Phoenix Office of the EEOC has seen a significant increase in charges of pregnancy discrimination over the last 10 years, mirroring a national trend."

Under the Pregnancy Discrimination Act of 1978, which amended Title VII of the Civil Rights Act of 1964, employment discrimination on the basis of pregnancy, childbirth, or related medical conditions constitutes unlawful sex discrimination. In addition to prohibiting sex-based discrimination, Title VII prohibits discrimination based on race, color, religion, or national origin.

EEOC enforces Title VII of the Civil Rights Act of 1964, which prohibits employment discrimination based on race, color, religion, sex, and national origin; the Age Discrimination in Employment Act; sections of the Civil Rights Act of 1991; the Equal Pay Act; and Title I of the Americans with Disabilities Act. Further information about the Commission is available online at www.eeoc.gov.

 [back to top]

Widow v. Wal-Mart

December 9, 2002 

Bangor woman sues after retailer collects life insurance on husband

Three years ago, Michael Rice, a 48-year-old assistant manager at the Wal-Mart in Tilton, N.H., helped a customer bring a large television out to her car.

On his way back to the store, he suffered a massive heart attack and collapsed. Seven days later, Rice died.

Wal-Mart collected at least $325,000 from a life insurance policy the company had taken out on him. His wife and two sons never saw a dime.

Now Rice's wife, Vicki, is suing Wal-Mart. In court papers, she argues that the corporation did not have the right to insure her husband's life, and that the benefits the company received from his death should rightfully go to her.

"They used Mike terribly," Vicki Rice said from her new home in Bangor, Maine.

"They abused him, working him like that," she said. "And then they go out and collect $300,000? It's very immoral."

Corporations commonly take out life insurance policies on key officers and directors, but during the 1990s, Wal-Mart and other companies bought life insurance policies on hundreds of thousands of lower echelon employees to take advantage of a tax loophole. Beyond the tax benefits, the insurance companies also collected a tax-free insurance payment when an employee died.

Between 1993 and 1996, Wal-Mart purchased what the industry calls "janitor" or "dead peasant" insurance on 354,600 employees across the country.

The arrangement was supposed to provide the company with substantial tax savings, according to a lawsuit Wal-Mart filed against the insurance companies earlier this year in Delaware. Wal-Mart borrowed money from the insurance companies to cover the cost of the premiums and deducted the interest payments on its federal tax returns. The policies themselves also were considered investments, as their value increased over the lifetime of an employee. And, when an employee died, Wal-Mart collected the benefits.

"It's essentially a high-stakes gamble," said David Slawsky, the Concord, N.H., attorney representing Rice. "They're investing $16,000 with some tax benefits that might turn into $65,000 or $300,000. That's a heck of a return, and it's a tax-free $65,000."

Wal-Mart spokesman Bill Wertz denied that the company was gambling on its employees' lives.

"The way it was supposed to work, we would benefit more if the employees stayed alive," Wertz said. "The benefits we received tax-wise offset the benefits that we received from a death."

Ironically, Wal-Mart says it lost more than $150 million. In the Delaware lawsuits, Wal-Mart claims the insurance companies misled them about the financial benefits of buying the broad-based policies on their employees.

Mike Rice worked for Wal-Mart for more than 10 years. He had owned a convenience store in Aurora, Mo., but in the late 1980s he decided he needed a bigger challenge, Vicki Rice said.

He chose Wal-Mart because the company's headquarters in Bentonville, Ark., were nearby, and Sam Walton, the company's founder, was a local hero.

Rice applied to Wal-Mart, and the company trained him as an assistant manager. He started out at a store in southern Missouri, but the company moved him around, placing him at stores in six states, including Maine, over 10 years. Rice helped open the Palmyra, Maine, store in 1993, and was there for two years before being transferred to New York. In August 1998, Wal-Mart moved Rice to the Tilton, N.H.,store. He was earning $46,000 a year.

By then, her husband had grown sick of the Wal-Mart life, Vicki Rice said.

He was hired to work 48 to 52 hours a week but often put in 80 or 90. The stores were continually short-staffed. In the five days before his heart attack, Rice had worked an average of 16 hours a day, she said. When he collapsed, Vicki Rice had not seen her husband in three days.

Rice now lives in an old Victorian house in Bangor with her 20-year-old son, James. She said her older son, Michael Jr., 29, who lives in Ozark, Mo., is a former Wal-Mart employee who was let go months after his mother won a workers' compensation case against Wal-Mart and was awarded survivor's benefits.

Rice said she and her husband always loved Maine, and after his death she decided to return because of its tranquil setting.

"After Mike died, I had very little family left," Vicki Rice said. "I didn't have any family after traveling around like a gypsy for 10 years."

These days, Vicki Rice doesn't have a job, but said she commits up to 40 hours a week advocating for changes in insurance laws. She plans to devote the next two years fighting for regulations that force companies to disclose to employees when they take out life insurance policies on them.

She spoke about Wal-Mart's insurance practices at a November rally in Portland, where numerous unions and nonprofit groups protested the retailer's labor practices. And she distributed fliers detailing her husband's plight to early-bird shoppers standing in line outside Wal-Mart in Bangor at 5:30 a.m. the day after Thanksgiving.

Rice said she doesn't want to see what happened to her husband happen to others.

At issue in the New Hampshire lawsuit is whether Wal-Mart had a substantial financial interest in the lives of its employees. The lawsuit was filed in U.S. District Court in Concord as a class action. So far the class includes Rice and Patricia Keenan of Dover. Keenan's husband, Bob, worked in maintenance for the Somersworth Wal-Mart, earning little more than minimum wage. When he died in 1995, he left his blind widow with two children to care for. Wal-Mart collected $69,000 on his policy.

In all, Wal-Mart received death benefits on nine New Hampshire residents, a total of about $1 million, Slawsky said. Eventually, Slawsky wants to include in the lawsuit every employee for whom Wal-Mart purchased life insurance.

Under New Hampshire law, a person or corporation must have an "insurable interest" in someone to purchase a life-insurance policy on them, Slawsky said. Between a husband and a wife, that interest is clear, as it is between a corporation and its directors, Slawsky said.

In court, Wal-Mart will argue that it had an insurable interest in its New Hampshire employees, according to Wertz. When employees die, it costs the company to hire and train replacements, and the company loses the experience, Wertz said.

It is an argument Slawsky has a hard time believing, given the company's high turnover rates. In one workers' compensation case, a Wal-Mart supervisor testified that the company has a 106 percent annual turnover rate, Slawsky said.

"If they do lose more people than they hire in any given year, it's hard to imagine they had any real substantial loss if any of these people died," Slawsky said.

But Wal-Mart also will argue that Georgia law, not New Hampshire law, applied; the trust Wal-Mart set up to purchase the insurance was based in Georgia. Company officials chose Georgia because state law specifically allows corporations to buy insurance on all employees, according to the Delaware lawsuit.

So far that argument has not proved persuasive. Earlier this year, a U.S. District Court judge in Texas ruled in a similar lawsuit that Texas law, not Georgia law, applied there. In August, the judge ruled that Wal-Mart did not have an insurable interest in a distribution center employee who died in 1998.

A judge is not expected to rule in the New Hampshire case for at least a year.

In Maine, companies can hold life insurance policies on their employees but with certain conditions, according to Judy Chamberlain, deputy superintendent of the state Bureau of Insurance. If an employee dies, any money collected on those policies must be put into the company's pre- or post-retirement benefits programs and cannot be used to better the companies' bottom line through gains on investments.

This weekend, the National Association of Insurance Commissioners will be meeting to discuss changes to corporate-owned life insurance policies, Chamberlain said. The group will be looking to make it mandatory for corporations to not only inform employees, but also to ask them first for their permission to take out a life-insurance policy, she said.

"I think this is a step in the positive direction," Chamberlain said.

If the association approves the changes, states such as Maine that are part of the national organization can adopt the new rule, she said.

Wal-Mart no longer carries life insurance on broad classes of employees. In 1996, federal law changed, ending the tax benefits that had made the life insurance attractive. By January 2000, Wal-Mart had canceled all of the policies.

In the Rice lawsuit, Slawsky argues that employees did not know about or consent to the life insurance policies, a claim that Wertz denied. Wal-Mart offered employees a free life insurance benefit as part of the program, Wertz said. Employees were told that their estate would receive $5,000 to $10,000 if they died, Wertz said. They could also opt out.

"It's like offering you something for nothing," Wertz said.

Wal-Mart ended the free life insurance benefits for employees in 1998, a year before Rice died.

Bangor Daily News business writer Deborah Turcotte contributed to this report.

 [back to top]

Sterling Wal-Mart Resells Donated Toys National Headquarters Donates Toys To Make Up

December 5, 2002

STERLING, Colo. -- Toys that had been placed in a drop-off box for charity at a Wal-Mart store were put back on the store's shelves after a mix-up that frustrated organizers.

With 10 days left until the end of the annual Toys for Tots drive for the Logan County Chamber of Commerce, organizer Susan Kraich said she was back at square one.

"I've been keeping an eye on that box every time I went to Wal-Mart, and was so excited as it slowly began to fill. Over the weekend I heard that it was nearly full, so I went to pick it up. I was devastated when I found it empty," Kraich said.

Kraich said she complained to store management, but was told the store would only replace the items she knew for a fact were in the box. She left the store after replacing only three toys that she had purchased and donated to the cause.

"I don't know how I am suppose to prove what was in there ... I thought since Wal-Mart agreed to place the box, they were agreeing to keep an eye on it," she said.

Wal-Mart manager Brad Barritt said the Toys for Tots organizer he met, whose name he could not remember, was instructed that donated items needed to be wrapped in Wal-Mart bags to ensure the items had been purchased.

Kraich denied ever receiving any such instruction.

"There was everything in that box -- clothing, sporting goods, food items. My understanding was that the box would be emptied regularly. We had no way of knowing whether or not those items had been paid for," Barritt said.

He said the box was not visible from the store's security cameras, so there was no video proof that the toys were purchased.

As a result, he decided to place all of the items in the box back on store shelves to be resold.

Barritt noted that the retailer is a regular benefactor to area clubs and organizations, donating more than $50,000 annually. Wal-Mart even offered a $1,000 cash grant to Toys for Tots this year.

"Not that that has anything to do with this situation. Only to say that, as a corporation, we are very community minded. I'd hate to see a discrepancy over a few toys change that perception in the eyes of the public," Barritt said.

By late Wednesday, telephone lines were buzzing between Wal-Mart, its Arkansas corporate headquarters and the local charity.

Before the day was out, $425 worth of toys were delivered to the Sterling office of First America Cash Advance, where Kraich works.

[back to top]

OFFICIAL PRESS RELEASE

November 20, 2002 - MARTINEZ

A coalition of labor, environmental, senior citizens and faith-based organizations will stage a demonstration on Thursday, October 21, from 4 - 6 p.m. at Wal-Mart's Arnold Drive store. The demonstration is part of a national day of action against Wal-Mart called for by the United Food & Commercial Workers International Union.

"We are expecting a number of activists from our sponsoring organizations," reported Barbara Carpenter, president of UFCW Local 1179 in Martinez. Our demonstration co-sponsors include: the SF Chapter of the Sierra Club, Faith Works, Global Exchange, EarthRights International, Grey Panthers of California, Contra Costa County Central Labor Council and Building Trades Council," concluded the union mentor.

The demonstration and its speakers will focus on Wal-Mart's unfair treatment of workers and their support of foreign manufacturers that run sweatshops to produce toys and other goods for the world's largest retailer.

"Now that Wal-Mart has opened its global headquarters in Schenzen, China, they have the clout to bring about changes in the stopping violations of workers' rights in the hundreds of manufacturing plants supplying the goods sold in Wal-Mart stores. Child labor, prison labor and military labor are providing the low-cost items Americans are buying at Wal-Mart. The minimum wage for Chinese workers is 31-cents per hour; however, many children toil 10-12 hours a day for 13-cents an hour or less according to the National Labor Committee," said Carpenter.

The unenforced labor laws on the books in China have long been a subject of great concern to human rights groups around the world.

Environmental organizations have also pointed out the need for stricter laws for foreign manufacturers to protect the world's environment from unregulated pollution in third world countries. Traffic, air, water and noise pollution have also been a concern of local environmentalists when it comes to the expansion of big box retailers, like Wal-Mart, in the Bay Area.

United Food & Commercial Workers Union, Local 1179

Contact Person: Phil Tucker, Special Projects Representative

Telephone: (925) 228-8800; (707) 479-6000 (Cell) FAX: (925) 370-7305

For further information on Thursday's demonstration contact UFCW Local 1179 at
(925) 228-880

[back to top]

_____________________________________________________________________________

Goal set by unions to crack Wal-Mart Retailer called a wage depressor

BYLINE: BY KEVIN FREKING ARKANSAS DEMOCRAT-GAZETTE

WASHINGTON- November 19, 2002- Organized labor accused Wal-Mart Stores Inc. on Monday of lowering wages and working conditions for millions of Americans, and it promised a vigorous attempt to unionize the retailer in coming years. "This is a monumental campaign," John Sweeney, president of the AFL-CIO, said at a news conference in Washington. "It will probably be the largest organized campaign any union has undertaken in the history of our country."

Wal-Mart, the world's largest retailer, has steadfastly fought every attempt to unionize any of its work force. Labor's latest effort will begin Thursday with about 100 events in 40 cities - none in Arkansas. An event was defined as anything from a boycott to a talk with individual employees about their right to participate in a union. Labor leaders said the campaign was necessary because Wal-Mart doesn't compensate its 1.4 million workers adequately. In turn, Bentonville, Ark., company's competitors and suppliers have to keep employee wages and benefits down, too, they said.

Wal-Mart spokesman Bill Wertz said the unions are wrong when they allege that executives and shareholders profit at the expense of employees. He said that, just like any company, Wal-Mart seeks good workers, and if it didn't provide competitive wages and benefits, it couldn't hire those workers.

"The test of whether you have a competitive plan is whether associates are willing to go to work for you," Wertz said "A lot of people come to us because of the pay and benefit package we offer, plus the unparalleled opportunity we offer for career growth and advancement. Seventy percent of management started out as hourly workers."

Wertz said that Wal-Mart's low prices are generated by many means, from an efficient distribution system to a no-frills headquarters in Bentonville, but not by shortchanging employees.

Labor leaders at the news conference disagreed.

Doug Dority, president of the United Food and Commercial Workers International Union, said the jobs that made America a working, middleclass country are almost gone. The jobs of the 21 st century most likely will offer low wages, no benefits and high turnover, and the jobs will more likely be at Wal-Mart than at any other company, he said.

"Wal-Mart is the largest employer. It is also the largest retailer, which makes it the largest buyer of goods and services," Dority said. "It will set the wage and benefit standards for the tens of thousands of companies that produce the goods that fill Wal-Mart's shelves.

"If Wal-Mart decides to go offshore for a shopping spree, American companies are forced to shift their production facilities offshore to meet Wal-Mart's shopping habits. If Wal-Mart buys in countries where child labor is prevalent, producers must shift investment in the pursuit of the lowest wages and the most easily exploited labor. "No one is immune from Wal-Mart or the corporate culture that it creates, a culture where a high-profit company can condemn workers to chronic economic insecurity."

Dority was one of eight speakers who equated Wal-Mart with the worst kind of corporate wrongdoers. The speakers missed few ways to portray what they described as Wal-Mart's greed.

Besides union representatives, two religious leaders and the president of the National Organization for Women participated.

One speaker was a former customer who described how bones in her neck and her back were broken because an employee dropped two 25-pound boxes on her head. She said the company fought her at every turn in her efforts to get compensation for her medical bills and loss of wages.

Another woman listened with tears streaming down her face as reporters were told how the woman's daughter had been abducted from a Wal-Mart parking lot and murdered. The mother believed Wal-Mart provided inadequate security.

A former deli manager described how she was compensated at rates lower than those of male colleagues who performed the same job.

Dority said consumers would probably pay more for what they buy at Wal-Mart if the unions win. But Kim Gandy, president of the National Organization for Women, said consumers pay one way or the other. If Wal-Mart employees have to rely on food stamps or if they cannot afford health insurance, then consumers pay the bill through higher taxes.

"In the final analysis, [organizing workers] would not have an impact on the broad group of customers that shop at Wal-Mart," Gandy said. "It would, however, have a dramatic impact on those customers who are part of families that include a Wal-Mart worker."

Dority represents about 1.4 members of the food- and commercial-workers union. Those members work as meat cutters, cashiers and stockers at grocery stores such as Kroger and Safeway, and they fear that many of those jobs could disappear as Wal-Mart expands its presence as a grocer.

Dority said about 200 meat cutters in Texas voted to join the union, but soon after they did, Wal-Mart shut down that part of the store.

Wal-Mart spokesman Wertz said the company believes that the best way to succeed in the retail business is for managers to have a close working relationship with workers.

"We have always felt that having a union in the middle of that communication, acting as an agent or third party, just wasn't appropriate for our company," he said.

The AFL-CIO said the average Wal-Mart employee makes about $ 8.50 an hour and works about 32 hours a week. The union said about 30 percent of those wages would go to health care if the employee chose to participate in the company's health-insurance plan.

Wertz did not dispute the AFL-CIO's numbers. Nor did he confirm them. He did say that employees are offered a profitsharing plan and a 401(k) plan that does not require matching contributions from the employee. Wertz also said this was not the first time that the AFL-CIO has announced a campaign against Wal-Mart.

"I think the union came out with a similar program two years ago," he said. "It was not very successful."

But labor leaders said Monday that they are ready for a long battle.

[back to top]

____________________________________________________________________________

JUDGE ORDERS REINSTATEMENT, BACKPAY FOR WAL-MART WORKER

FOR IMMEDIATE RELEASE: Thursday, November 14, 2002

Alaskan Fired for Requesting Witness for Interview on Union Activity; Labor Board Issues New Complaint in 2000 Firing of North Carolina Worker

WASILLA, AK — On the same day the head of Wal-Mart's "people division" was cited in a New York Times article about its anti-union program as bragging the giant retailer had "never been found guilty of firing any employees" for supporting a union, an administrative law judge for the National Labor Relations Board ordered an Alaska worker reinstated with full backpay.

Ken Stanhope was fired in March, according to Wal-Mart, over a conversation he had with a co-worker about supporting the union. The co-worker said Stanhope had used profanity in the course of this conversation. The judge found that the conversation was union activity, that Stanhope was, among other things, informing the co-worker about "his perceptions of the necessity of union representation for [Wal-Mart] associates," and that Wal-Mart knew this. The judge also found that the co-worker who accused Stanhope of using profanity struck him as a witness "who could not be trusted."

The judge found that store managers, based on advice from Wal-Mart's home office in Bentonville, Arkansas, denied Stanhope's lawful request for an employee witness -- a right commonly known as a "Weingarten right" when management sought to question him about the conversation. Instead of permitting Stanhope to exercise his Weingarten rights, Wal-Mart demanded that he continue to participate in the interview and unlawfully fired him after he twice refused to participate without a witness.

Judge Burton Litvack wrote that Wal-Mart "effectively eviscerated Stanhope's [legal] rights" and thus violated the National Labor Relations Act. "Whether in a union or non- union context, it is, of course, patently unlawful for an employer to terminate an employee because he/she invokes his/her Weingarten rights," the judge said.

The judge also found that out of eight employees disciplined for using profanity at the store, Wal-Mart had only previously immediately terminated two of them. He ordered Stanhope reinstated with full back pay and benefits, and ordered Wal-Mart to post a notice stating:

"WE WILL NOT require that our employees, who have a reasonable believe that the matters to be discussed may result in their discipline, continue to participate in investigatory interviews after their request for the presence of their own witness has been denied by us.

"WE WILL NOT discharge our employees because they request the presence of their own witness before participating in an investigatory interview which they reasonably believe may result in discipline against them."

In October, Wal-Mart agreed to a similar posting in College Station, Texas, to avoid a trial on a similar Weingarten complaint issued by the NLRB. In that case, the company's posting stated: "WE WILL NOT deny our associates/employees, upon request, representation during investigatory interviews which the associate/employee reasonably believes might result in disciplinary action."

Wal-Mart also agreed not to ask employees about union activities or leave them under their impression that their activities are under surveillance, not to interfere or threaten employees with termination for lawfully soliciting for the union during breaks, meals and other non-work times, and not to threaten to reduce their bonuses or promise them benefits in order to influence employees about the union.

The NLRB also issued yet another complaint against Wal-Mart, this time for discharging Steven Lockyer, an employee in its Boone, N.C., store who posted his own leaflet protesting low pay in the breakroom. Lockyer was fired in March of 2000, and a hearing before an administrative law judge was scheduled for February 19, 2003, in Boone.

The Boone complaint also alleges the company established an overly-broad rule against union solicitation and distribution of union literature.

Prior to the Alaska decision, the New York Times reported on November 8, 2002 ("Labor Opens a Drive to Organize Wal-Mart) that the chain had been found guilty of illegal practices in 10 cases and had settled 8 others. The paper said, "Coleman Peterson, the executive vice president of Wal-Mart's people division, said the company instructs managers not to violate labor laws and has never been found guilty of firing any employees — Wal-Mart calls them associates — for supporting a union."

"While I'm proud that Local 1496 exposed Wal-Mart's hypocrisy," said Walter E. Stuart, president of the UFCW local union in Anchorage, "it is terrible that Mr. Stanhope has had to suffer the indignity of unemployment for so many months at the hands of the world's largest and richest corporation."

Stuart called on Wal-Mart to "prove you put people first and immediately put Mr. Stanhope back to work and don't contest his back pay. Let him resume his life."

For additional information on the Stanhope decision, contact: Walter E. Stuart, president, UFCW Local 1496, 907-258-1496.

For additional information on Wal-Mart in general, contact: Greg Denier, UFCW Director of Communications, 202-223-3111.

[back to top]

WAL-MART ACCUSED OF STEALING TIME FROM LOSS PREVENTION AGENTS

FOR IMMEDIATE RELEASE
November 8, 2002
Class Action Lawsuit for Back Pay Filed by Texas Associates

Wal-Mart Loss Prevention agents have a clear mission—to prevent losses. But a lawsuit filed recently in federal court for the Eastern District Court of Texas charges Wal-Mart with stealing time and money from the very workers assigned to root out theft.

Loss Prevention associates in Tyler, Texas, are fighting back with a class-action lawsuit claiming the retail giant has a "pattern and practice" of failing to pay Loss Prevention associates for all of the time Wal-Mart requires them to work. Federal law requires employers to pay workers time and a half for all hours above 40 worked in a week.

The plaintiffs, Michael Michell and Robert Weaver, claim Wal-Mart fails to maintain records of all hours worked by Loss Prevention associates, much less compensate them for the extra hours. The ironic twist to their case is that, among their duties, Loss Prevention workers are charged with enforcing the company's policy prohibiting off-the-clock work.

Some of the unpaid overtime worked by the two plaintiffs was spent installing surveillance equipment at management's direction to monitor the employees' union activities. These workers are also responsible for preventing theft and overall store security.

If the suit is successful, Wal-Mart could be forced to pay workers back wages for all unpaid overtime for the past three years and the court could double that award as liquidated damages.

Thousands of current and former Wal-Mart Loss Prevention associates could be eligible to join the lawsuit, and can inquire by calling Attorney Michael Ace, 903-593-3001.

For more information, contact Michael Ace, attorney at law, 903-593-3001.

 [back to top]

Hearing set on Wal-Mart zoning appeal

By Treena Shapiro Honolulu Advertiser Staff Writer

Tuesday, November 5, 2002...The city Zoning Board of Appeals has tentatively scheduled a hearing Jan. 30 in response to a citizen group's concerns that the Ke'eaumoku "superblock" Wal-Mart project has been approved based on erroneous information. The Citizens Against Reckless Development has appealed the Department of Planning and Permitting's determination that the plan to build a Wal-Mart store and Sam's Club is consistent with existing zoning requirements and does not require public hearings or environmental impact statements.

"We've asked the Zoning Appeals Board to use its authority to reverse the Department's action because we think it violates the spirit and also the letter (of the law)," said retired columnist Jim Becker, one of the organizers for the group.

Cynthia Lin, Wal-Mart spokeswoman, yesterday said Wal-Mart doesn't believe there's any basis for an appeal and still intends to proceed with the project. She said the property is already zoned to permit the project.

The property is zoned for "commercial business mixed use."

The board will meet Dec. 12 to address any procedural issues before the January contested case hearing when the board will discuss the merits of the case. A contested case hearing is a more formal proceeding in which parties can be represented by lawyers, call witnesses and cross-examine witnesses from other parties.

Loretta Chee, acting planning and permitting director, said that her department will continue to review the applications for building, grading and foundation permits Wal-Mart has already submitted. Once issued, she said the Zoning Board of Appeals does not have the authority to ask her department to revoke them.

She could not comment on what would happen if the group won the appeal because she was not certain what the decision the organization is appealing. "The director has not made any decision and hasn't actually issued any permits," she said.

Becker said he is pleased that the city will allow concerned parties the public hearing, which he said "will give us time to let the community understand what's really coming here -— this monstrosity in a densely populated area."

Becker anticipates problems such as noise, increased traffic and nearby small businesses being hurt by the competition. "If at the end of the day that's what people want, then the people will be heard," he said.

Lin, however, said "while some neighbors may oppose the project, many more Honolulu residents support it and are looking forward to the store opening."

In May, Wal-Mart purchased the 10.5 acre property for an estimated $35 million, with plans to build a double-decker Sam's Club and Wal-Mart on the block bounded by Sheridan, Makaloa, Rycroft and Ke'eaumoku streets.

Wal-Mart plans to open the stores in spring 2004.

Reach Treena Shapiro at tshapiro@honoluluadvertiser.com.

[back to top]

Supermarkets Take Tougher Stance with Labor as Non-Union Chains Enter Market

By Delroy Alexander, Chicago Tribune
11/03/2002

Nov. 3-In what promises to be an old-fashioned slugfest between management and labor, the battle lines are being drawn at supermarkets across the U.S.

Grocery chains want to roll back union benefits and limit pay raises as they face fresh competition from non-unionized supercenter stores, led by Wal-Mart Stores Inc.

Chicago, which has two major grocery chains-Albertson Inc.'s Jewel Food Stores and Safeway-owned Dominick's-is right in the eye of the storm.

Arguing that spending on wages and benefits accounts for half of every dollar retail grocers take in, many supermarket giants appear to be growing weary of unions and their demands. For the entire food industry, labor accounts for 38 percent of costs.

For their part, union chapters across the nation are locking horns with grocery-store management in a bid to maintain their hard-won benefits.

Contract talks at Dominick's, which has 113 stores in Chicago, are being watched closely as they could help set the tone for the industry for years to come, analysts say.

The United Food and Commercial Workers union, which represents about half of the estimated 3.5 million supermarket workers nationwide, already is galvanizing the rank and file locally and nationally for a prolonged struggle.

Typically, 1 percent to 1.5 percent of workers' salaries goes toward union dues, a small portion of which is allocated to a strike fund.

On Thursday, the UFCW will poll thousands of local Dominick's workers, asking them to approve a $2-per-week increase in union dues. The national UFCW plans to help build a special "war chest" that would ensure workers would continue to receive wages in the event of strike.

The Chicago vote on increasing the strike fund comes just two days before Dominick's existing three-year pay deal is due to end on Saturday.

Although the negotiations have been described by participants as "excruciatingly painful," neither side will say much publicly about the discussions.

"We are in contract negotiations for the next five or six days," said S.J. Peters, a spokesman for one of two local UFCW chapters that represent close to 10,000 Dominick's workers in Chicago. " The negotiations are tough, but that's all I can say."

David Faustman, vice president of labor relations at Dominick's parent Safeway, also is reluctant to comment on the state of negotiations but said his team of local managers is negotiating in "good faith."

"I don't think its fair to say we are trying to reduce living standards of our workers," said Faustman. "We are just trying to keep competitive in the Chicago marketplace. That's what any responsible company would do.'

However, the pressure is on Safeway to improve Dominick's operating performance, which has become a drag on earnings since its $1.9 billion acquisition four years ago, said Bob Summers, an analyst for Banc of America Securities.

"The Dominick's acquisition really hasn't gone that well," Summers said. "Since [Safeway] acquired the company, they've done nothing but lose market share. They put too many Safeway components into the business, and it wasn't well received by customers."

It's little surprise to Summers that labor negotiations across the network of 1,800 Safeway's stores and elsewhere in the industry are increasingly tense.

Summers points to growing tensions in California, Safeway's headquarters state, where Wal-Mart has aggressively opened up stores with a full grocery component inside.

But it's not just in California where supercenters are popping up in growing numbers.

The number of Wal-Mart Supercenters in Illinois rose by three, to 33, over the past 12 months. In neighboring Michigan, the company has doubled its presence to 14 over the past year, and in Missouri its up to 58 from 53.

In October, Wal-Mart said it would continue its aggressive growth in the fiscal year beginning Feb. 1, 2003. Wal-Mart will open approximately 45 to 55 discount stores and 200 to 210 supercenters.

"This represents a continued acceleration of supercenter unit expansion and reflects the strong consumer acceptance and financial results from the format," said the company in a statement. "Relocations or expansions of existing discount stores will account for approximately 140 of the supercenters, while the remainder will be built in new locations."

One of the biggest advantages of the Wal-Mart Supercenters, say supermarket managers, is in the cost of hiring and keeping its service clerks, bag packers and meat cutters.

In Wal-Mart's California stores, which are not unionized, basic pay for a service clerk is about $8 per hour, compared with as much as $18 an hour for unionized employees at a Safeway store in the same area.

But even where this competitive dynamic doesn't appear to hold true, Safeway and other chains are attempting to contain labor costs, which is the single largest expense in the highly competitive food arena.

For example, Safeway is the dominant player in Hawaii, where its 18 stores accounts for about 60 percent of the market, Nevertheless, the company has taken an especially hard stance in contract negotiations.

Recently, UFCW members in Hawaii completed contract talks with Safeway. Pat Loo, president of Local 480 in Hawaii, said his negotiating team had to swallow some tough concessions. He expects Safeway to make similar same demands in Chicago.

"The company pretty much has a cookie-cutter approach to things," said Loo.

One demand by Safeway was to change progression rates: the speed at which junior staff make it through the ranks to journeyman status.

It typically would take a new service clerk in Hawaii about two years working full time to progress from an hourly rate of about $7.50 up to $14.61. But under the new deal, that time has been extended to about five-and-a-half years.

Dominick's service clerks in Chicago start at about $6 per hour. A similar demand is on the negotiating table, according to sources close to the talks.

Like many chains, Safeway is relying more on part-time staff, so it could take employees as many as 10 years to reach journeyman status, Loo said.

Also under the new Hawaii contract, new employees no longer will be eligible for pension benefits immediately after their 60-day probation is up. Instead, they will have to wait a full year before being eligible. Union health and pension benefits cost Safeway an extra $1.10 per hour. In addition, time and a half for overtime and other premium rates during holidays have been slashed in favor of an extra 50 cents per hour.

One area the union would not compromise on, Loo said, was Safeway'sdesire to build a second tier into the pay structure, which would have effectively created a lower pay scale for new hires.

"We couldn't agree to that," said Loo. "But I can see them trying this elsewhere."

Loo intends to ask his members in November to ratify an increase in dues for their own strike fund.

"I kept in close contact with my Chicago brothers," said Loo, who represents about 1,600 store workers on four Pacific islands.

When the new contract ends on July 31, 2004, Loo will negotiate for the first time as part of the 60,000 strong Northern California UFCW region.

"There is strength in numbers," said Loo. "I am telling my members it's not a question of if [we have to strike] but when."

KRTBN Knight-Ridder Tribune Business News: Chicago Tribune Copyright (C) 2002 KRTBN Knight Ridder Tribune Business News To see more of the Chicago Tribune, or to subscribe to the newspaper, go to http://www.chicago.tribune.com/ (c) 2002, Chicago Tribune. Distributed by Knight Ridder/Tribune Business News. WMT, ABS, SWY,.

Copyright © 2000 Dow Jones & Company, Inc. All Rights Reserved.

[back to top]

MAKIKI RESIDENTS SAY, “NOT SO FAST” TO WAL-MART SUPERBLOCK PROJECT

October30, 2002...HONOLULU 

After saying no to the $35 million Keeaumoku Superblock property a year ago, while under fire from neighborhood residents, environmentalists and the downtown business community, Wal-Mart disappeared from the public radar screen and took its plans to city hall. The resurrected 317,000 sq.ft., doubledecker superstores project, which was announced to the public on May 5, 2002, has made its way to near-ground breaking without meeting any environmental tests or gaining public acceptance.

The community’s response came last Tuesday as an ad hoc group of community activists, calling themselves, Citizens Against Reckless Development (CARD), held a press conference on the steps of city hall, after being denied access to a Planning Committee meeting.

CARD spokesperson, Jim Becker, a resident of the Makiki neighborhood community let it be known that the residents of the impacted Superblock neighborhood will not sit quietly by while Wal-Mart destroys their neighborhood with increased traffic, noise, air pollution and other negative environmental impacts associated with the project.

CARD filed an appeal with the city on the 10.5-acre proposed Wal-Mart site, seeking a delay in the onset of construction, which has been rumored to start in the next week or so.

The lengthy appeal filed by CARD, which now has more than 200 members and growing, contained some 60 pages of expert review and criticism of the project including a review of Wal-Mart’s recent traffic study, health-related air quality concerns and a review of negative economic impacts of the proposed Wal-Mart.

“We have had experts look at this project in view of our city’s general plan and the most recent iteration of the Primary Urban Center Development Plan (PUC), which call for collaborative, neighborhood-based planning to produce livable, walkable, vibrant neighborhoods in this area,” remarked the CARD mentor.

According to Becker, the Wal-Mart project as presented flies in the face of Hawaii’s and Honolulu’s proud tradition of participatory democracy and publicly informed government decision-making. He further believes that the planning and zoning departments’ action in not properly addressing key environmental and community issues is improper as a matter of law and reckless as a matter of policy.

Becker and his community activists are not the only one’s denouncing the project and questioning its propriety. State Senator Carol Fukanaga requested an independent review of the Wal-Mart Traffic study by the University of Hawaii Environmental Center. In a 4-page response to the Senator’s inquiry, Environmental Coordinator John T. Harrison, Ph.D., stated that the project will have “significant environmental and economic effects”, including major impacts on public utilities in the area.

The Center’s letter was critical of the Wal-Mart traffic study agreeing with CARD’s traffic engineer that the traffic impact was understated by 20 percent or more and did not address a number of key traffic-related issues including the impact of the proposed BRT transit that will create a loss of two lanes on Kapiolani forcing even more traffic to King and Beretania Streets, which border the project on the north and south.

The University report also is highly critical of city and county officials “pressing for swift approval of permits for construction … which certainly appear injudicious in performance of their discretionary duties.” The report calls attention to the failure of Hawaii’s state environmental laws to protect the public from bureaucratic loopholes that undermine environmental and public review of such projects.

Wal-Mart, which is the world’s largest corporation, with retail sales of more than $220 billion in 2001 and a bottom line profit of nearly $7 billion, is now faced off with a determined opponent that wants to stop the clock on development until an environmental impact report can be properly prepared on the Superblock project. Wal-Mart already operates seven discount and club stores in Hawaii, including three on Oahu, and now has plans to build another large store in Pearl City, near their existing Sam’s Club operation. It is rumored that Wal-Mart is also looking to build a supercenter in Kihei, Maui, six miles from its store in Kahului.

Only time will tell who will prevail in this David and Goliath battle in the streets of Honolulu, where citizens of the Makiki District are fighting to protect their piece of paradise from the largest proposed Wal-Mart store in the world and the worst traffic congestion in Honolulu.

[back to top]

Bullying people from your town to China

By Jim Hightower

October 2002...Corporations rule. No other institution comes close to matching the power that the 500 biggest corporations have amassed over us. The clout of all 535 members of Congress is nothing compared to the individual and collective power of these predatory behemoths that now roam the globe, working their will over all competing interests.

The aloof and pampered executives who run today's autocratic and secretive corporate states have effectively become our sovereigns. From who gets health care to who pays taxes, from what's on the news to what's in our food, they have usurped the people's democratic authority and now make these broad social decisions in private, based solely on the interests of their corporations. Their attitude was forged back in 1882, when the villainous old robber baron William Henry Vanderbilt spat out: “The public be damned! I'm working for my stockholders.”

The media and politicians won't discuss this, for obvious reasons, but we must if we're actually to be a self-governing people. That's why the Lowdown is launching this occasional series of corporate profiles. And why not start with the biggest and one of the worst actors?

The beast from Bentonville

Wal-Mart is now the world's biggest corporation, having passed Exxon/Mobil for the top slot. It hauls off a stunning $220 billion a year from We the People (more in revenues than the entire GDP of Israel and Ireland combined).

Wal-Mart cultivates an aw-shucks, we're-just-folks-from-Arkansas image of neighborly small-town shopkeepers trying to sell stuff cheaply to you and yours. Behind its soft homespun ads, however, is what one union leader calls “this devouring beast” of a corporation that ruthlessly stomps on workers, neighborhoods, competitors, and suppliers.

Despite its claim that it slashes profits to the bone in order to deliver “Always Low Prices,” Wal-Mart banks about $7 billion a year in profits, ranking it among the most profitable entities on the planet.

Of the 10 richest people in the world, five are Waltons -- the ruling family of the Wal-Mart empire. S. Robson Walton is ranked by London's “Rich List 2001” as the wealthiest human on the planet, having sacked up more than $65 billion (£45.3 billion) in personal wealth and topping Bill Gates as No. 1.

Wal-Mart and the Waltons got to the top the old-fashioned way -- by roughing people up. The corporate ethos emanating from the Bentonville headquarters dictates two guiding principles for all managers: extract the very last penny possible from human toil, and squeeze the last dime from every supplier.

With more than one million employees (three times more than General Motors), this far-flung retailer is the country's largest private employer, and it intends to remake the image of the American workplace in its image -- which is not pretty.

Yes, there is the happy-faced “greeter” who welcomes shoppers into every store, and employees (or “associates,” as the company grandiosely calls them) gather just before opening each morning for a pep rally, where they are all required to join in the Wal-Mart cheer: “Gimme a W!” shouts the cheerleader; “W!” the dutiful employees respond. “Gimme an A!” And so on.

Behind this manufactured cheerfulness, however, is the fact that the average employee makes only $15,000 a year for full-time work. Most are denied even this poverty income, for they are held to part-time work. While the company brags that 70 percent of its workers are full-time, at Wal-Mart “full time” is 28 hours a week, meaning they gross less than $11,000 a year.

Health-care benefits? Only if you've been there two years; then the plan hits you with such huge premiums that few can afford it -- only 38% of Wal-Marters are covered.

Thinking union? Get outta here! “Wal-Mart is opposed to unionization,” reads a company guidebook for supervisors. “You, as a manager, are expected to support the company's position. . . . This may mean walking a tightrope between legitimate campaigning and improper conduct.”

Wal-Mart is in fact rabidly anti-union, deploying teams of union-busters from Bentonville to any spot where there's a whisper of organizing activity. “While unions might be appropriate for other companies, they have no place at Wal-Mart,” a spokeswoman told a Texas Observer reporter who was covering an NLRB hearing on the company's manhandling of 11 meat-cutters who worked at a Wal-Mart SuperCenter in Jacksonville, Texas.

These derring-do employees were sick of working harder and longer for the same low pay. “We signed [union] cards, and all hell broke loose,” says Sidney Smith, one of the Jacksonville meat-cutters who established the first-ever Wal-Mart union in the U.S., voting in February 2000 to join the United Food and Commercial Workers. Eleven days later, Wal-Mart announced that it was closing the meat-cutting departments in all of its stores and would henceforth buy prepackaged meat elsewhere.

But the repressive company didn't stop there. As the Observer reports: “Smith was fired for 'theft' after a manger agreed to let him buy a box of overripe bananas for 50 cents, Smith ate one banana before paying for the box, and was judged to have stolen that banana.”

Wal-Mart is an unrepentant and recidivist violator of employee rights, drawing repeated convictions, fines, and the ire of judges from coast to coast. For example, the Equal Employment Opportunity Commission has had to file more suits against the Bentonville billionaires club for cases of disability discrimination than any other corporation. A top EEOC lawyer told Business Week, “I have never seen this kind of blatant disregard for the law.”

Likewise, a national class-action suit reveals an astonishing pattern of sexual discrimination at Wal-Mart (where 72 percent of the salespeople are women), charging that there is “a harsh, anti-woman culture in which complaints go unanswered and the women who make them are targeted for retaliation.”

Workers' compensation laws, child-labor laws (1,400 violations in Maine alone), surveillance of employees -- you name it, this corporation is a repeat offender. No wonder, then, that turnover in the stores is above 50 percent a year, with many stores having to replace 100 percent of their employees each year, and some reaching as high as a 300 percent turnover!

Worldwide wage-depressor

Then there's China. For years, Wal-Mart saturated the airwaves with a “We Buy American” advertising campaign, but it was nothing more than a red-white-and-blue sham. All along, the vast majority of the products it sold were from cheap-labor hell-holes, especially China. In 1998, after several exposes of this sham, the company finally dropped its “patriotism” posture and by 2001 had even moved its worldwide purchasing headquarters to China. Today, it is the largest importer of Chinese-made products in the world, buying $10 billion worth of merchandise from several thousand Chinese factories.

As Charlie Kernaghan of the National Labor Committee reports, “In country after country, factories that produce for Wal-Mart are the worst,” adding that the bottom-feeding labor policy of this one corporation “is actually lowering standards in China, slashing wages and benefits, imposing long mandatory-overtime shifts, while tolerating the arbitrary firing of workers who even dare to discuss factory conditions.”

Wal-Mart does not want the U.S. buying public to know that its famous low prices are the product of human misery, so while it loudly proclaims that its global suppliers must comply with a corporate “code of conduct” to treat workers decently, it strictly prohibits the disclosure of any factory names and addresses, hoping to keep independent sources from witnessing the “code” in operation.

Kernaghan's NLC, acclaimed for its fact-packed reports on global working conditions, found several Chinese factories that make the toys Americans buy for their children at Wal-Mart. Seventy-one percent of the toys sold in the U.S. come from China, and Wal-Mart now sells one out of five of the toys we buy.

NLC interviewed workers in China's Guangdong Province who toil in factories making popular action figures, dolls, and other toys sold at Wal-Mart. In “Toys of Misery,” a shocking 58-page report that the establishment media ignored, NLC describes:

13- to 16-hour days molding, assembling, and spray-painting toys from 8 a.m. to 9 p.m. or even midnight, seven days a week, with 20-hour shifts in peak season.

Even though China's minimum wage is 31 cents an hour -- which doesn't begin to cover a person's basic subsistence-level needs -- these production workers are paid 13 cents an hour.

Workers typically live in squatter shacks, seven feet by seven feet, or jammed in company dorms, with more than a dozen sharing a cubicle costing $1.95 a week for rent. They pay about $5.50 a week for lousy food. They also must pay for their own medical treatment and are fired if they are too ill to work.

The work is literally sickening, since there's no health and safety enforcement. Workers have constant headaches and nausea from paint-dust hanging in the air; the indoor temperature tops 100 degrees; protective clothing is a joke; repetitive stress disorders are rampant; and there's no training on the health hazards of handling the plastics, glue, paint thinners, and other solvents in which these workers are immersed every day.

As for Wal-Mart's highly vaunted “code of conduct,” NLC could not find a single worker who had ever seen or heard of it.

These factories employ mostly young women and teenage girls. Wal-Mart, renowned for knowing every detail of its global business operations and for calculating every penny of a product's cost, knows what goes on inside these places. Yet, when confronted with these facts, corporate honchos claim ignorance and wash their hands of the exploitation: “There will always be people who break the law,” says CEO Lee Scott. “It is an issue of human greed among a few people.”

Those “few people” include him, other top managers, and the Walton billionaires. Each of them not only knows about their company's exploitation, but willingly prospers from a corporate culture that demands it. “Get costs down” is Wal-Mart's mantra and modus operandi, and that translates into a crusade to stamp down the folks who produce its goods and services, shamelessly building its low-price strategy and profits on their backs.

The Wal-Mart gospel

Worse, Wal-Mart is on a messianic mission to extend its exploitative ethos to the entire business world. More than 65,000 companies supply the retailer with the stuff on its shelves, and it constantly hammers each supplier about cutting their production costs deeper and deeper in order to get cheaper wholesale prices. Some companies have to open their books so Bentonville executives can red-pencil what CEO Scott terms “unnecessary costs.”

Of course, among the unnecessaries to him are the use of union labor and producing goods in America, and Scott is unabashed about pointing in the direction of China or other places for abysmally low production costs. He doesn't even have to say “Move to China” -- his purchasing executives demand such an impossible lowball price from suppliers that they can only meet it if they follow Wal-Mart's labor example. With its dominance over its own 1.2 million workers and 65,000 suppliers, plus its alliances with ruthless labor abusers abroad, this one company is the world's most powerful private force for lowering labor standards and stifling the middle-class aspirations of workers everywhere.

Using its sheer size, market clout, access to capital, and massive advertising budget, the company also is squeezing out competitors and forcing its remaining rivals to adopt its price-is-everything approach.

Even the big boys like Toys R Us and Kroger are daunted by the company's brutish power, saying they're compelled to slash wages and search the globe for sweatshop suppliers in order to compete in the downward race to match Wal-Mart's prices.

How high of a price are we willing to pay for Wal-Mart's “low-price” model? This outfit operates with an avarice, arrogance, and ambition that would make Enron blush. It hits a town or city neighborhood like a retailing neutron bomb, sucking out the economic vitality and all of the local character. And Wal-Mart's stores now have more kill-power than ever, with its SuperCenters averaging 200,000 square feet -- the size of more than four football fields under one roof! These things land splat on top of any community's sense of itself and devour local business.

By slashing its retail prices way below cost when it enters a community, Wal-Mart can crush our groceries, pharmacies, hardware stores, and other retailers, then raise its prices once it has mono-poly control over the market.

But, say apologists for these Big-Box megastores, at least they're creating jobs. Wrong. By crushing local businesses, this giant eliminates three decent jobs for every two Wal-Mart jobs that it “creates” and a store full of part-time, poorly paid employees hardly builds the family wealth necessary to sustain a community's middle-class living standard.

Indeed, Wal-Mart operates as a massive wealth extractor. Instead of profits staying in town to be reinvested locally, the money is hauled off to Bentonville, either to be used as capital for conquering yet another town or simply to be stashed in the family vaults (the Waltons, by the way, just bought the biggest bank in Arkansas).

It's our world

Why should we accept this? Is it our country, our communities, our economic destinies -- or theirs? Wal-Mart's radical remaking of our labor standards and our local economies is occurring mostly without our knowledge or consent. Poof -- there goes another local business. Poof -- there goes our middle-class wages. Poof -- there goes another factory to China. No one voted for this . . . but there it is. While corporate ideologues might huffily assert that customers vote with their dollars, it's an election without a campaign, conveniently ignoring that the public's “vote” might change if we knew the real cost of Wal-Mart's “cheap” goods -- and if we actually had a chance to vote.

Much to the corporation's consternation, more and more communities are learning about this voracious powerhouse, and there's a rising civic rebellion against it. Tremendous victories have already been won as citizens from Maine to Arizona, from the Puget Sound to the Gulf of Mexico, have organized locally and even statewide to thwart the expansionist march of the Wal-Mart juggernaut.

Wal-Mart is huge, but it can be brought to heel by an aroused and organized citizenry willing to confront it in their communities, the workplace, the marketplace, the classrooms, the pulpits, the legislatures, and the voting booths. Just as the Founders rose up against the mighty British trading companies, so we can reassert our people's sovereignty and our democratic principles over the autocratic ambitions of mighty Wal-Mart.

***

More of Jim Hightower's writing can be found in his monthly newletter, The Hightower Lowdown. For more information, see http://www.jimhightower.com.

Also See:

Wal-Mart Watch http://www.walmartwatch.com/

Wal-Mart Dungeon in Red China http://www.calltodecision.com/Walmart%20Dungeon.htm

Working for Wal-Mart in China: Earning 36 cents a month, 8 cents a week or, 1/10th of a cent per hour http://www.nlcnet.org/report00/walmart.htm#earning_little

[back to top]

Wal-Mart says layoffs not related to pay

By LAURA RUANE lruane@news-press.com

10/11/2002...A Wal-Mart official Thursday acknowledged some local layoffs but denied allegations from two former employees that more than two dozen workers were laid off in the past week at a south Fort Myers store.

The workers at the Supercenter at 14821 Six Mile Cypress Parkway say they were let go for lack of work - even as others were being hired at lower, starting pay.

"That particular store has about 620 employees," said Tom Williams, the Bentonville, Ark.-based company spokesman. "They have cut 10 to 15 very recently, due to business conditions.

"As for the allegations we are pushing them out the door to make room for cheaper employees, I would disagree with that," Williams said.

However, Dana Mailloux and Teresa Adkins - dismissed Oct. 3 from the store at Six Mile Cypress Parkway - said they see signs to the contrary.

"They told us they were cutting the work force due to lack of work. But they're doing orientation for new associates," said Mailloux, 33, an eight-year employee, who most recently worked as a cashier.

And, when Mailloux returned Thursday to get her last paycheck, "They still had that sign out that says `Now Hiring.' I think that's a slap in our face." She estimated as many as 35 employees were cut.

"It was wrong, the way they let us go. No warning, no nothing," said Adkins, 39, a stocker who worked for Wal-Mart two years.

Both women said that in the past year, they'd been suspended for a day with pay for different rule infractions. Wal-Mart managers mentioned these violations on their last day of work, they said. However Adkins and Mailloux said they were asked to sign a form that stated they were being dismissed for lack of work. The form did not mention any rule-breaking.

Mailloux refused to sign the form and has retained Fort Myers attorney Geralyn Noonan to look into the situation.

Noonan, who specializes in labor issues, said it appears a number of individuals have been laid off recently.

She said she is concerned about possible violations to the federal Worker Adjustment and Retraining Notification Act.

The WARN Act requires companies to alert certain government agencies about layoffs of 50 people or more, 60 days in advance. It's intended to bring in timely job-placement and retraining help to the affected workers.

"This is a law you don't hear about much in Lee County, Florida," Noonan said. "It tends to be invoked where there is union involvement."

Mailloux said she was told she could reapply for her job in three to six weeks - "and come back at base pay, with no benefits." Adkins said a manager also told her she could reapply for a job at the same store.

Wal-Mart's Williams said that on occasion, stores will rehire workers in good standing when business improves.

If their separation from the company has been six months or less, "I do believe they retain seniority in terms of vacation," he said.

As for pay upon their return, that depends on the job for which a worker is rehired, Williams said.

The Wal-Mart Supercenter in south Fort Myers displays a "Now Hiring" sign despite claims of layoffs.

News-Press 3d(c) Copyright 2002, News-Press. All Rights Reserved

[back to top]

Wal-Mart denies wage, hour abuses Labor suits hit retailer in Michigan, 29 states

BY JENNIFER DIXON FREE PRESS BUSINESS WRITER

October 9, 2002...When Leona Crawford clocked out for lunch at the Wal-Mart in South Haven, she would eat at her desk and keep working. When she clocked out for the night, she couldn't just walk out of the store and go home.

Sometimes, the doors would be locked and Crawford, 50, and other late-shift workers would straighten shelves and aisles until a manager with a key came by and let them out. While she was scheduled to work 40 hours a week, she usually worked at least 45, and five of those were unpaid.

"It makes you feel you're a little worthless, that you're being taken advantage of, " Crawford said.

Crawford's claims are part of a lawsuit against Wal-Mart that accuses the world's largest retailer of holding down its labor costs by forcing hourly employees in Michigan to work for free.

Similar suits are pending in about 29 other states as labor lawyers take on the powerhouse retailer and union leaders try to organize its workforce.

Wal-Mart spokesman Bill Wertz denies the allegations of widespread abuses.

"Our associates are central to our business success, and it makes no sense from a business standpoint to mistreat or cheat the people we depend upon to provide the service our customers expect," Wertz said.

With annual sales of $218 billion and a U.S. workforce of 1 million, Wal-Mart operates more than 3,300 discount stores, supercenters, Sam's Clubs and Neighborhood Markets.

In Michigan, Wal-Mart has 45 stores, 14 supercenters, and 21 Sam's Clubs, with about 22,400 employees combined.

But a retail expert says labor troubles could undermine what seems to be an invincible competitor in the discount and grocery businesses.

"One of the things I've consistently heard is that if there could be a piece to the Wal-Mart puzzle that begins to show a crack in their armor, it could be a people piece," said Frank Gambino, associate professor of food marketing at Western Michigan University.

Wal-Mart has long been known for low prices. It may also be getting a reputation for labor trouble:

Wal-Mart is facing wage-abuse lawsuits in states from Oregon to West Virginia. Richard Feinberg, a retail management professor at Purdue University, says Wal-Mart is sued a thousand times a year, and the number of wins by employees is "infinitesimal. Wal-Mart fights these suits and most people lose."

Nevertheless, Joe Mellon, a Denver lawyer working on the Michigan case, said, "We have not been deterred by what we've seen, and as a result, we are continuing to move forward with these cases."

The National Labor Relations Board has issued about 30 local complaints against Wal-Mart for interfering with labor drives. Wal-Mart is contesting those cases.

The United Food and Commercial Workers Union has made organizing Wal-Mart stores its top priority. "It has to be No. 1," said Al Zack, director of the union's strategic programs. "Wal-Mart is leading a drive to reduce the working standard -- the living standard -- in the retail industry down to the lowest common denominator."

Meat cutters let go The United Food and Commercial Workers Union has organizing drives under way at 96 Wal-Mart locations around the country, including 10 in Michigan.

It has won just a single vote -- the meat department of Wal-Mart's Jacksonville, Texas, store.

But a week after a majority of the meat cutters agreed to join the union in 2000, Wal-Mart said it was going to pre-packaged meats.

All but one of the Jacksonville store's 10 meat cutters were let go or reassigned.

The National Labor Relations Board investigated, but did not issue a complaint against Wal-Mart.

Leonard Page, the NLRB's general counsel at the time and a former lawyer with the United Auto Workers in Detroit, says the timing -- and a lack of corporate records showing the move to case-ready meat had been in the works for six months or a year -- made Wal-Mart's decision "extremely suspicious."

Page says Wal-Mart cooperated with the investigation. He concluded that its decision to go to case-ready meats right after the Jacksonville vote was a coincidence.

Page, however, was also investigating Wal-Mart's response to organizing drives around the country. In early 2001, he began to pursue a national complaint against the company for what he considered a pattern of illegal responses to organizing drives coming out of Wal-Mart's headquarters in Bentonville, Ark.

Two weeks before he was to meet with Wal-Mart to discuss the complaint, the Bush administration called Page and told him he was being let go. Wal-Mart was not mentioned.

"That was the biggest thing I had pending on my platter at the time," Page said. "Perhaps it's just another coincidence."

Page is now living in Cheboygan. An NLRB spokesman said the agency determined last year that there was an "insufficient basis to seek a nationwide order against Wal-Mart."

Wertz, the Wal-Mart spokesman, declined to comment on Page's allegations.

Labor problems in stores Labor lawyers are also wrangling with Wal-Mart over the way it treats hourly employees.

The 30 lawsuits across the country claim Wal-Mart holds labor costs down by forcing employees to work through breaks, and before or after their shifts. The lawsuits also allege that Wal-Mart doctors time cards to avoid paying overtime, and keeps clocked-out, graveyard shift employees locked in the stores until a manager lets them out.

Wertz says the company does not allow employees to work off the clock.

"We have a very strict policy to pay our associates for every minute that they work and for any overtime they work," Wertz said. "We think the instances alleged in these suits are infrequent and isolated, and really are not the consequence of any systematic abuse."

Wal-Mart has settled a labor suit in Colorado -- it is sealed -- and the Oregon case goes to trial in federal court in Portland in November. It covers about 400 current and former workers in Oregon.

In Texas, a judge has declared a similar suit against Wal-Mart a class action, while a judge in Louisiana denied workers there the right to file as a class.

Both rulings are on appeal.

In Michigan, lawyers for seven former Wal-Mart workers from around the state will go to court Nov. 5 to ask that their complaint be made a class action, allowing thousands of past and current workers to sue for unpaid wages.

Filed in September of 2001 in Saginaw Circuit Court, the suit claims Wal-Mart engaged in a "systematic scheme of wage abuse against its hourly employees in Michigan."

Crawford, who has provided sworn testimony in the lawsuit, says employees at her store were reprimanded when they worked more than their assigned hours on the clock. They'd get in trouble if they didn't finish their work.

And as a member of the accounting department, Crawford says, she was asked by other employees to alter their time cards when they went over their assigned hours.

Crawford says she worked off the clock because she needed her job. She has a high school education, and her husband works on a farm, driving a tractor.

"It takes two incomes," said Crawford, who worked at the store for nearly seven years before going out on disability in April 2000 after hurting her back on the job.

Contact JENNIFER DIXON at 313-223-4410 or dixon@freepress.com

[back to top]

Big Box Ordinance Adopted In Martinez

MARTINEZ, CA -- At a standing-room-only meeting last night at Martinez City Hall, a two-year campaign to pass a Big Box Ordinance in this city ended in a 3-to-1 vote in favor of the first ground-breaking Neighborhood Business Preservation Ordinance. The opposition to this ordinance was led by Wal-Mart, who currently operates a 125,000 sq. ft. store in Martinez.

Mayor Mike Menesini introduced the ordinance two months ago and brought it to a public hearing and a vote on September 4th. After a two-hour public hearing, the Council adopted the ordinance on a 3-to-1 vote. Strong support from the labor community helped put the ordinance over the top.

“We were very pleased that the City Council, under tremendous fire and pressure from Wal-Mart and the Chamber of Commerce, did the right thing for our community of 36,000 residents. I have lived in Martinez for over 26 years and I am proud of our City officials who did the right thing for our community and for the 400 UFCW members and retirees who live here,” remarked President Barbara Carpenter following the meeting.

“Many of our members who live or work in Martinez also showed their support at the two Council meetings and helped us get this measure passed,” concluded Carpenter.

The initial attempt to get an ordinance adopted started in August 2000 before Wal-Mart closed its deal to purchase an existing retail store from COSTCO failed. Because of the tax deficit created by COSTO leaving town, the City Council was reluctant to introduce any ordinance that would interfere with getting a replacement operator at the vacant COSTCO location. Wal-Mart also promised the city fathers that they did not intend to expand the existing store into a supercenter or offer a large amount of non-taxable food items in the Martinez store.

At the September 4th City Council meeting, city staff recommended against adopting a restrictive ordinance on big box stores; however, the Council proponents backed by study and survey information provided to them by Local 1179 Legal Council Mark Wolfe of Adams, Broadwell, Joseph & Cardozo.

Wal-Mart says they are not through yet and have indicated they intend to start a referendum ballot measure so they can take their battle for free competition to the voters.

The Martinez ordinance restricts the sale of non-taxable items to 5% in retail stores 90,000 sq. ft. of gross floor space or more.

For additional information, contact President Barbara Carpenter at United Food & Commercial Workrs Union, Local 1179, 4121 Alhambra Avenue, Martinez, CA 94553, email: bcarpenter.local1179@unions.com.

____________________________________________________________________________

Attached is President Dority's letter to the Federal Deposit Insurance Corporation opposing Wal-Mart's application to purchase Franklin Bank of California, a small industrial bank. As noted in the letter, if this application is approved and the Congress approves pending legislation to allow industrial banks to accept demand deposits, Wal-Mart will have successfully skirted the 1999 prohibition on commercial enterprises owning and operating banks. click here > President Dority's letterFrom: "Brenda Holtz" <bholtz@ufcw.org>

Wal-Mart Bank

Please write your Senators urging them to oppose this legislation. In 1999, the Congress passed banking reform legislation which prohibits commercial businesses from operating banks. If Wal-Mart's purchase of a small industrial bank in California goes through, this bill would open the door to a nationwide Wal-Mart bank. It is nothing more than an end-run around legislation which was specifically adopted to prevent an earlier attempt by Wal-Mart to buy a bank.

[back to top]

Exposing the Wal-Mart Corporations relentless war against it's workers who are organizing for better workplace conditions and how you can help!

http://walmartswaronworkers.com/

[back to top]

WAR ON WAL-MART ; GROCER UNION PLEDGES TO RESIST MEGASTORE EXPANSION

Brent Hopkins\ Staff Writer
08/22/2002 Los Angeles Daily News VALLEY

Supermarket workers fear Wal-Mart's preparations to muscle its way into Southern California will quash their high pay and good benefits, and are preparing a campaign to keep the world's largest retailer at bay.

Wal-Mart announced earlier this year that it plans to open 40 of its SuperCenters - massive department stores with huge grocery components - in Southern California. While the number pales in comparison to the 450 stores under the Ralphs banner, for example, the Bentonville, Ark.-based giant can leverage its immense buying power to offer deep discounts.

Union leaders at the United Food and Commercial Workers, long critical of the megastore, fear the cut-rate prices could woo enough customers away from existing stores to force cuts in members' compensation.

"This is war," said George L. Hartwell, president of UFCW Local 1036, which represents Ventura County. "(They) declared it by saying they'll build the 40 super Wal-Marts."

UFCW has decided to fire back, however. Members of its Los Angeles ,County branch, Local 770 voted this week to increase their monthly dues to pay for lobbying campaigns, advertising and the hiring of organizers to establish union contracts at the chain's stores. Local 1036 hopes to follow, petitioning its 12,000 members to chip in an extra hour's worth of pay each month to facilitate the hiring of 18 organizers to supplement the anti-Wal-Mart ads it already runs in Ventura County.

Wal-Mart poses no immediate threat to the grocery clerks and service workers employed by most chains. But union leaders fear that the increased competition will put the heat on Albertson's, Ralphs, Vons and other chains to cut overhead, either by cutting the work force, or less extreme actions as eliminating benefits.

"We have a fight and we know it," Hartwell said. "Our standard of living could go right down the tubes. Right now if you're a full- time clerk, you can buy a home, send your kids to school and still go on vacation. At Wal-Mart's wages, you can't do that. We want to bring them to our standard of living."

Journeymen clerks protected by union contracts earn hourly wages in the $17 range, with attractive medical benefits and vacation. In contrast, most Wal-Mart associates begin near minimum wage and part- time workers don't qualify for medical coverage until a year of service.

"Every job we have nationwide is above minimum wage," said Bob McAdam, Wal-Mart's vice president of communications. "We do market analysis and we pay competitively, but that doesn't necessarily mean it's the same as a union job. We do offer bonuses, stock purchase options and company contributions to a 401(k)."

But that's not good enough for workers like Michael Rosales. A 25- year employee at Ralphs, he worries that if Wal-Mart comes to town, he'll lose the modest, but comfortable, life he's built for himself.

"I feel threatened," the 44 year-old Lancaster resident said. "It's threatening my livelihood and puts a scare to me. Their object is to come in and undermine businesses. They put their prices a lot lower than what the regular supermarket would do, then put them out of businesses and raise prices."

McAdam said the chain - which announced plans Monday to open a 1.3 million-square-foot warehouse with loading docks for 300 trucks in San Bernardino County - seeks only its own niche, not to force out others.

"There's no evidence anywhere we have supercenters where it's lessened competition," he said. "It's been quite vibrant, particularly in the metro markets. We're not out to cause harm to anyone, we believe that there's more than enough competition."

Retail expert David Unter, a senior manager of consumer business practice for Deloitte & Touche's Costa Mesa office, wasn't so sure. "Any time Wal-Mart enters a market, the competition has to take a look," he said. "Because of the way they've positioned themselves as being a low price leader, they've established dominance wherever they've put their footprint. I could definitely see why other retailers would be tense knowing they're coming in."

The California Grocers Association has taken no formal position on the subject, but retailers' actions to gussy up their stores indicate an interest in staving off Wal-Mart. Bobby Ray Oliver, a North Hollywood resident who's clerked for Gelson's for 18 years, already feels the pressure.

"It's a great threat to me," he said. "If Wal-mart opens up and competes against my company, my company's paying realistically $21 an hour with benefits. Wal-Mart doesn't do that, so for my company to stay in business, they'll have to ask me to take less wages or give up my benefits. That would make life harder for me and my children. I might have to work two jobs, and if I'm not home watching my kids, they could go out and get in trouble."

Though the locals don't relish locking horns with Wal-Mart, they're more than ready to take up the cause.

"It's going to be very difficult, but we've got 12,000 members," Hartwell said. "That's 12,000 organizers, and if they're married or living at home, then that's even more. We've got an army to mobilize."

Copyright © 2000 Dow Jones & Company, Inc. All Rights Reserved.

[back to top]

Wal-Mart's biggest bargain? It may be squeezing free overtime out of workers.

By Jennifer Mathieu

Judy Danneman's shift at Wal-Mart started at 6 a.m., before the store even opened, and she always arrived on time. She and fellow employees would have to wait outside in the darkened parking lot until an assistant manager showed up to let them in. But the manager was often up to a half-hour late. When they were finally allowed to clock in, the workers wouldn't get credit for time spent standing outside. Those minutes eventually added up to several hours.

Danneman, a recently widowed mom supporting three young children, was hired in 1990 at $8.10 an hour. She was desperate for every dollar she could squeeze out of an eight-hour shift.

"When you're surviving on a single income, you can't afford to give up a half-hour," she says. "Eight hours paid my phone bill. Eight hours paid my water bill."

In fact, her workday stretched even longer. Even though her shift ended at 3 p.m., Danneman says, it was common to work until 3:30 or 4 p.m. -- and not get a dime for it.

"At three o'clock we dutifully went to the clock and clocked out and went back to our departments for another half an hour, because you could not leave until your department was straightened up," says Danneman. Wal-Mart's policy strictly states that working off the clock is not permitted, but Danneman says a culture of fear pervaded -- employees either worked that unpaid overtime or were fired.

"The company took total advantage of the fact that people would do what they were told because they were desperately afraid of losing their jobs," says Danneman.

Danneman stayed with Wal-Mart for almost ten years, eventually getting promoted to management. Once in the higher ranks, she says, she was regularly instructed to make sure employees' time cards showed only 40 hours -- even if they worked much longer.

She was told to not credit workers for paid sick time and vacation time, and says she got in trouble when she tried to treat them right. She finally quit after being demoted, a move she says Wal-Mart made to try to push her out.

Danneman, a Florida resident, is now part of a legal war being waged in 28 states through lawsuits that accuse the world's largest retailer of taking millions of dollars in unpaid hours from workers by not honoring overtime or breaks for rest or lunches. The Florida resident is among the plaintiffs represented throughout the South by Houston attorney Russell T. Lloyd, a former district judge in Harris County. Wal-Mart (its Sam's Club stores are also defendants) has 349 stores in Texas, and there are roughly 300,000 class members in the Lone Star State alone.

The corporation beat back efforts for class action suits in three other states, although plaintiffs in a Brazoria County suit gained class certification in May from state District Judge Ben Hardin in Angleton. Wal-Mart is appealing Hardin's decision, while plaintiffs are challenging the rulings in the other states.

Attorney Lloyd admits the legal wrangling could go on for years, and that plaintiffs shouldn't expect more than $3,000 to $4,000 each in compensation.

Danneman, whose oldest daughter lives in The Woodlands, and other Lloyd clients say it's not the money that matters. It's getting Wal-Mart to realize they can't treat people like indentured servants.

"On the one hand, their business plan is brilliant," says Danneman. "But on the other hand, you have to look at what they've destroyed as they've built. There was nothing given back. And there was so much taken."

[back to top]

Wal-Mart's Likely Growth Strategies Detailed in New Retail Forward Report

In a recently released report entitled "The Age of Wal-Mart," Retail Forward, a global management consulting and market research firm specializing in retail intelligence and strategies, expects that Wal-Mart will continue to grow rapidly and test the outer edges of its brand reach with consumers.

"The Age of Wal-Mart," authored by Dr. Ira Kalish, Chief Economist for Retail Forward, explores five likely growth strategies Wal-Mart may pursue, examining rationales, prospects, and likely effects on competitors and suppliers.

"In order to grow, Wal-Mart will need to sell new categories of merchandise, operate in new geographic locations (including those in the US that it has not yet tapped), appeal to new consumers, obtain greater share of wallet from its existing customers, and operate in new business sectors," Kalish states.

In the next five years, Retail Forward expects Wal-Mart to focus on five key growth strategies:

1. Food. Wal-Mart's growth in the past decade was largely the result of its enormous foray into the food market. Although Wal-Mart is now the market leader, it still has a long way to go. Retail Forward predicts that, by 2006, there will be over 2,000 Wal-Mart Supercenters in the US and food sales at Wal-Mart Supercenters will account for approximately one-third of the national increase in spending on food.

2. Foreign. "While further foreign acquisitions are expected, Wal-Mart will not be successful as a global retailer if its only advantage is price," Kalish comments. "It must also provide a superior shopping experience, strong localized merchandising, and a clear differentiation from competitors," he adds. However, it is unlikely that Wal-Mart's overseas expansion will move swiftly enough to fuel the company's growth engine. The company's most probable courses of action will be 1) to grow its existing businesses in the US, extending customer reach, and 2) to move into other businesses in the US with the same velocity it moved into food.

3. Fashion and Family. To get more out of existing stores, and to attract a more affluent consumer, Wal-Mart must ramp up efforts in apparel and home goods. Wal-Mart is already a major apparel force in certain categories, Retail Forward's annual shopper survey indicates. If Wal-Mart succeeds in convincing shoppers to view the retailer as a destination for fashion needs, it will have a huge impact on the market. "Wal-Mart will need to focus on expanding its range of merchandise, improving the quality and variety of its non-food assortment, and developing strong private and exclusive labels," Kalish states.

4. Format. To reach more markets and more consumers, Wal-Mart will drive growth through multi-channel delivery of its core businesses. By opening smaller food stores, developing formats for urban shoppers, and potentially leveraging its strengths by developing drug, dollar, and convenience stores, Wal-Mart could overcome the limitations created by its Supercenter focus.

5. Fringe. "Wal-Mart will seek to test the outer boundaries of what consumers are willing to allow Wal-Mart to be," Kalish comments. The company will seek to expand at the fringe of its core business by developing sales in highly new and unusual categories. Wal-Mart's aggressive rollout of fueling stations could be followed closely with the company selling used cars, financial services, home improvement, and foodservice.

The Age of Wal-Mart Awaits

Wal-Mart's growth over the next five years will revolutionize global retail markets and render the retail industry and supplier industries far more consolidated than they are today. However, its size will test the limits of its organizational scale. "The challenge for Wal-Mart will be to sustain growth without straying from its core strengths, and without spreading its wings too thinly," Kalish concludes.

Retail Forward, Inc. (www.retailforward.com) is a globally focused management consulting, market research, and executive development firm specializing in retail intelligence and strategies. The company's syndicated research and executive development program known as the Retail Forward Intelligence Program, provides members with an authoritative perspective on the retail and consumer products industries. "The Age of Wal-Mart" special report can be purchased for $495 (US) at www.retailforward.com

[back to top]

Wal-Mart Ordered to Pay in Dispute

08/13/2002
AP Online

DENVER (AP) - Retail giant Wal-Mart must pay $464,280 to a Nebraska company for patent infringement, a federal judge said in a ruling issued Tuesday.

U.S. District Judge Zita Weinshienk said Wal-Mart infringed on a patent held by Golight Inc. of Culbertson, Neb., for a revolving, portable searchlight. Golight was issued patents in 1996 and 1997 for the light, according to court records.

Golight officials said Wal-Mart, through its Sam's Club stores, began selling a portable light similar to theirs. Golight officials said they notified Wal-Mart in 1998 that they believed the company was infringing on their patent.

No one answered the phones at Wal-Mart's Bentonville, Ark., offices after business hours.

Gerald Gohl said he and Al Gebhardt invented the light based on Gohl's experiences as a cattle rancher in Nebraska. Gohl said instead of using hand-held searchlights during calving season, he had the idea to mount a revolving searchlight on a vehicle.

The two men invented a wireless, remote-control light that could spin all the way around.

Wal-Mart, which imported about 14,600 similar lights from a Hong Kong company, argued Golight's patent was invalid because the device was an obvious solution to a problem. But the judge said the item sold by Wal-Mart was likely a deliberate copy of Golight's product.

Weinshienk also said Golight was due interest and lawyers' fees. The judge rejected Golight's request for extra damages, saying the infringement was not bad enough to warrant the penalty.

Copyright 2002 The Associated Press. All Rights Reserved.

[back to top

Decorah Illegally Approved Wal-Mart, Court Says

By PATT JOHNSON Register Staff Writer
08/01/2002

The new Wal-Mart Supercenter in Decorah is scheduled to open Oct. 16.Opponents of the 184,000-square- foot store hope it never does.

In fact, they hope the giant retailer will be forced to demolish the store built in the Upper Iowa River flood plain."Sometimes big corporations make big mistakes," said Karl Knudson, an attorney representing a group of Decorah residents trying to block the store.

On Wednesday, the Iowa Court of Appeals decided the Decorah City Council illegally allowed Wal-Mart to build the large store on a flood plain.

The Bentonville, Ark.-based retailer filled the area with dirt to prevent flooding, but critics complain that the runoff will flood the northeast Iowa community and surrounding farmland.

The appeals court reversed a district court ruling that supported the city's actions that allowed the store's construction. The higher court sent the case back to the district court to be worked out, saying the city overstepped its authority.

Wal-Mart spokesman Bill Wertz said the retailer is deciding whether to ask the Iowa Supreme Court to review the case. Wal-Mart says it has 30 days to appeal.

The company plans to open the Decorah store in October and close an existing smaller store there, he said. Wal-Mart could be forced to raze all or part of the multimillion-dollar store, Wertz acknowledged. "It's possible. There are a lot of possibilities," he said.

Decorah City Attorney Richard Zahasky said that about 80 percent of the Wal-Mart building and parking lot sit on land that is not in the flood plain. Other remedies could include seeking a special-use permit or paying a fine to allow the store to remain open, he said.

Knudson said his clients feel the appropriate resolution to the dispute would be to take the building down."That is the normal remedy, the usual remedy whether it's a garage or a big building," he said. "The same principle applies."

Frank Holland, a Wal-Mart opponent who owns about 240 acres of farmland across from the Wal-Mart, is pleased with the ruling "because we're right." The retired engineer doubts the company will be forced to remove the building. "You know that's not going to happen," he said.

Holland's attorney said Wal-Mart officials pushed ahead on the project despite legal challenges. "They made the decision to proceed at their own risk," Knudson said. Strategic.Programs@ufcw.org

[back to top]

Wal-Mart lawyers settling customer suits retailer resisted for years

BY BOB VAN VORIS BLOOMBERG NEWS

BENTONVILLE ...Under the watch of Tom Mars, former director of the Arkansas State Police, Wal-Mart Stores Inc's. legal department is settling customer lawsuits it's been fighting for years.

Punished more than 60 times in the last six years by judges for hiding evidence, the company quietly named Mars its top lawyer in May.

In the past three months the country's largest retailer settled long-standing claims ranging from slip-and-fall injuries to abductions of customers in store parking lots, lawyers said. Previously those who sued Bentonville-based Wal-Mart often found they had to spend more money litigating than they might recover in damages because the company fought claims to the bitter end, lawyers said.

Company officials now seem to have more concern than their predecessors about the publicity of sanctions by judges for keeping evidence from customers and have made their legal department more pro-customer, said Burt Flickinger, managing partner of Reach Marketing, a retail-industry consulting firm.

"They're supposedly trying to become a kinder, gentler Wal-Mart," said Lewis Laska, a Nashville lawyer who runs the Wal-Mart Litigation Project, a Web site that tracks lawsuits against the company. "Lawyers are calling me in a mild state of bewilderment, saying, 'They just offered me $75,000.' I tell them to take the money."

Wal-Mart, which has 3,300 U.S. stores, has also dropped a 13-year-old policy of paying many of its outside lawyers a flat, per-case fee, which often discouraged them from doing work needed to move older cases along, according to company and customer lawyers.

"There is a whole new team there," said Bruce Kramer, a Memphis lawyer who recently settled two long-standing cases on behalf of customers abducted at Wal-Mart stores and later raped. "They are tough negotiators, but at least they're talking now."

4,900 SUITS Customers, employees and other companies sued Wal-Mart, the largest U.S. company by revenue, about 4,900 times in 2000, according to a 2001 report in USA Today that cited company figures. Wal-Mart spokesman William Wertz said the company no longer provides such figures to news outlets.

Since 1998, the department has grown from 24 lawyers to about 80, Wertz said. Mars declined to comment on his department's staff and policy shifts. In May, without public announcement, Wal-Mart replaced its general counsel, Robert K. Rhoads, with Mars, its litigation chief. Mars, who used to represent clients who sued companies, took the litigation job in January, replacing Ronald Williams.

After leaving the state police in the summer of 2001, Mars and David Stills opened the Fayetteville office of Kutak Rock LLP, an Omaha based law firm. Stills, who has since left the firm to join Mars' legal team at Wal-Mart, was the former chief counsel of the Arkansas State Police. Before their stint with the state police, the two worked as law partners for the Fayetteville firm Mars and Everett Mars received a bachelor's degree in criminology in 1980 from Arkansas State University and a law degree from the University of Arkansas School of Law in Fayetteville in 1985.

Mars once worked in Little Rock's Rose Law Firm and practiced law in Springdale and Fayetteville before he was tapped to head the state police.

'USELESS EXERCISE' Robert W. Rack, chief mediator for the U.S. court of appeals that has jurisdiction over suits filed in Kentucky, Michigan, Ohio and Tennessee, told Kramer in 2000 that the court had a policy of refusing to schedule settlement talks between Wal-Mart and people who sued it.

Such court intervention was a "useless exercise" because Wal-Mart never settled, he said in a letter to Kramer, who settled a 12-year-old case July 25 after Wal-Mart's change in settlement practice.

Many customers' lawyers blame Wal-Mart's flat-fee arrangement with outside lawyers for discouraging company attorneys from spending time needed to respond to customers' demands to produce documents and other evidence before trial.

In April, Wal-Mart, again without public announcement, abandoned these flat-fee arrangements with outside lawyers, who are now paid on an hourly basis. "The change ensures we have access to the widest range of high-quality outside legal representation," said Wertz.

COURT SANCTIONS Wal-Mart's shifts in policy and staff came after the retail giant was punished repeatedly over the last six years for concealing or destroying evidence and for delaying customer lawsuits. In 2000, Wal-Mart said it had been sanctioned 60 times since 1997. Company spokesman Wertz declined to provide an updated figure.

In Kramer's 12-year-old case, a 37-year-old woman was abducted from a Wal-Mart parking lot in Memphis, then raped and murdered. Her husband, Roger McClung, asked Wal-Mart to turn over any studies of parking lot security. Wal-Mart lawyers said there were none.

Later, McClung discovered from a magazine article that Wal-Mart had conducted a study of its parking-lot safety and started a pilot program that used golf carts to patrol parking lots.

The patrols reduced crime against customers, the article said.

In a 1996 case in Beaumont, Texas, a woman sued after she was abducted from a Wal-Mart lot and later raped. The judge threatened to fine Wal-Mart $18 million for failing to give her lawyers the study that had surfaced in McClung's case.

WAL-MART'S APOLOGY The judge withdrew the fine in 2000 after Williams, then the litigation chief, apologized in court for the company's "misguided conduct." Last year, after Wal-Mart settled the case on confidential terms, a memo from Williams appeared on a legal Web site. It showed he had warned Wal-Mart officials about crime in the company's Beaumont parking lots.

He suggested in the memo that the company start using cart patrols.

In Ohio a woman won a $2 million verdict against Wal-Mart in a suit over a 1992 accident in which a forklift at a Wal-Mart store crushed her husband.

The woman's lawyers discovered Wal-Mart had hidden evidence of similar accidents.

The Ohio Supreme Court let her sue a second time to recover damages caused by Wal-Mart's withholding of evidence. A trial is set for November.

Information for this article was provided by Alex Daniels of the Arkansas Democrat-Gazette.

[back to top]

Wal-Mart: No Reason For German Employees To Strike

July 25,2002
WUPPERTAL, Germany (Dow Jones)

Wal-Mart Stores (NYSE: WMT - News) Inc. said there's no reason for employees at its German stores to go on strike, since Wal-Mart has bound itself to honor union collective bargaining agreements.

Germany 's services union, Ver.di, called on its members who work at Wal-Mart to strike Friday and Saturday to pressure Wal-Mart to become a member of the employers association, which negotiates collective agreements with the union.

"Again this year, we renewed our pledge to follow completely the compensation, blanket and other wage agreements now and in the future. So there's no reason for a strike," Wal-Mart said in a statement.

The union complains that Wal-Mart refuses to make any agreements with the union, either one-on-one or via collective bargaining. Other large retailers in Germany are members of the employers association.

Wal-Mart said Thursday in a statement that managers will do all they can to keep stores in Germany open during the strike.

Ver.di has said it's not yet clear how many workers will participate, but the strike will likely affect at least half of Wal-Mart's 95 German stores.

[back to top]

Wal-Mart Slammed for Firing Worker, Failing to Give COBRA Notice

Date: 7/17/02 8:22:51 AM Pacific Daylight Time

An Ohio court ruled that Wal-Mart unlawfully failed to give a COBRA notice to a terminated worker, even though the worker couldn't have afforded Wal-Mart's health insurance if she had known she had the right to buy it. COBRA, the Consolidated Omnibus Budget Reconciliation Act of 1985, requires companies to notify workers who quit or are terminated that they have the opportunity to continue health insurance coverage under the company's policy at the company's reduced group rates.

After the worker's husband suffered a severe stroke, she requested a leave of absence to care for him full-time. Wal-Mart's Family and Medical Leave Act (FMLA) policy requires workers to provide medical certification within 15 days after they begin their leave. The husband's doctor told the worker that he could not fill out the form for several days. Eight days after she began her leave, Wal-Mart fired the worker for not providing the required certification and failed to give her COBRA notice.

The court rejected Wal-Mart's defense that the worker admitted that she couldn't have afforded the insurance even if Wal-Mart had given her notice. The court explained that workers do not have to prove that a company's failure to provide COBRA notice harmed them. Rather, it said, COBRA notices are necessary to allow workers to make informed decisions about whether to elect coverage, and companies violate COBRA when they fail to provide timely notice period.

The court also ruled that Wal-Mart violated the worker's FMLA rights "by not providing her [with] adequate time to return the medical certification and by terminating her." The court noted that not only did Wal-Mart fail to wait the full 15 days its policy allowed, but FMLA regulations require companies to accept medical certifications workers provide after 15 days if the workers provide them "as soon as reasonably possible under the particular facts and circumstances." (Strategic Programs) Chenoweth v. Wal-Mart Stores, Inc., 159 F.Supp.2d 1032 (S.D. Ohio 2001)

[back to top]

Chickasaw jury awards ex-employee $8.5 million in suit against Wal-Mart

09/19/2002
Associated Press Newswires
Copyright 2002. The Associated Press. All Rights Reserved.

HOUSTON, Miss. (AP) - A Chickasaw County jury has awarded $8.5 million to a former Mississippi state trooper who sued a Wal-Mart in Louisiana after he was accused of shoplifting chewing tobacco. The jury ruled for Lamon Griggs, who was working for Wal-Mart in Hammond, La., at the time the accusations were made. Griggs was hired by Wal-Mart after serving eight years with the Highway Patrol. He was paid about $70,000 a year as a truck driver and accident investigator, said Griggs' attorney, Jim Waide of Tupelo. Waide said his client was wrongly fired in 1997 after he put the tobacco in his pocket and stepped outside to use a pay phone. He said Griggs intended to pay for the tobacco.

Waide said Wal-Mart claimed it had a videotape of the theft but the company admitted at trial that no videotape existed. Wal-Mart spokesman Bill Wertz said the nation's largest retailer won't make a decision on an appeal until the judge rules on post-trial motions.

"We were pleased the claim of wrongful termination was dismissed," Wertz said. "We believe the award was out of proportion on the defamation charge." Waide said Wal-Mart relied upon Mississippi's Employment At-Will Doctrine in its defense. Waide said the doctrine allows an employer to fire an employee without proof of wrongdoing. No charges were filed against Griggs. Griggs was hired by the Chickasaw County Sheriff's Department after he was fired by Wal-Mart.

Copyright © 2000 Dow Jones & Company, Inc. All Rights Reserved.

[back to top]

Woman wins suit against Wal-Mart

 09/14/2002

A San Diego federal jury has awarded $535,000 to a former Wal - Mart employee who said she was sexually harassed because she is gay.

The jury awarded Karla Johnston $35,000 in economic damages for the sexual harassment and $500,000 in punitive damages, which are aimed at punishing the company and detering future harassment.

Johnston, who was hired by Wal - Mart in 1997 to prevent shoplifting at the company's Aero Drive store in the Serra Mesa neighborhood, claimed that Wal - Mart did nothing after she complained about a manager, Kyle Harris, harassing her. She contended he repeatedly asked her whether she was gay, made sexual jokes and passed around pornography during meetings.

Johnston said when she complained about his comments, he ignored her and retaliated against her by leaving her out of company events.

Harris, who was not named in the suit, denied the allegations.

Although jurors found Wal - Mart liable for the harassment, they concluded the company did not unjustly fire her in 1999.

Yesterday, Johnston said she was pleased with the jury's decision to award her damages, although she doubted the verdict would prevent future harassment at the company.

"I wish ( Wal - Mart ) would take some action and not allow other women in my place to go through what I went through," she said. "But I believe that Wal - Mart is not going to do anything."

Bill Wertz, a spokesman for the company, which has headquarters in Bentonville, Ark., said Johnston never complained about being harassed, adding that Wal - Mart takes sexual harassment complaints seriously.

"Our company has a very strict policy against discrimination," he said. "Respect for the individual is one of our company's basic principles."

Wertz said Wal - Mart is deciding whether to appeal.