Volume 39, Number 3: May/June 2005

Wal-Mart’s Culture of Control

Photo by Mike Mozart of JeepersMedia

Last June, 16,000 cheering shareholders participated in Wal-Mart’s annual shareholder’s meeting. The event, which took place in the Bud Walton Arena in Fayetteville, Arkansas, was one part business, one part pep rally and one part Billy Graham revival. The darkness of the stadium was punctured only by spotlights, video projections and several thousand blinking buttons that the company gave out to its employees. Rock-and-roll success anthems blared alongside spontaneous outbursts of cheering and chanting from the countless Wal-Mart “associates,” who flew into the area from the company’s operations in other countries.

There was a distinct air of non-negotiable power surrounding the proceedings. Police dogs, roof-top snipers and a heavy contingent of local law enforcement gave the event a paranoid security that contrasted sharply with the ecstatic rapture inside. Non-negotiable, too, was debate around the company’s corporate practices. Six “activist motions,” which included a sustainability audit, an equal-employment opportunity report and mandatory labeling of GMOs, were defeated by sweeping majorities. At the same time, shareholders used the question-and-answer period to demand shorter line-ups and larger bottles of Febreze from the company. Clearly, this was not the venue to provoke change.

It’s safe to say that the issues of the meeting were scarcely issues at all, and the biggest thing on nearly everyone’s mind was the outlandish success of “Our Company.” Wal-Mart reported U.S. $256 billion in sales that year, accounting for two per cent of the U.S. gross domestic product. By this scale, it is the largest company in the world, and employs over 1.3 million people – more than the entire U.S. military.

A culture of control

The culture of Wal-Mart can be defined in one word: control. The company has grown to be the world’s largest retailer through a process of tightly-managed aggressive expansion. From the supplier’s stockrooms to the store’s shelves, the corporate model of Wal-Mart is one that permits little deviation. It is therefore unsurprising that attempts to compel the company to change its ways have been doomed to failure.

From a flagrant disregard for domestic and overseas labour laws to fanatically egocentric conduct with city halls, Wal-Mart is indicative of an underlying change in the way North Americans are choosing to do business with big box.

“It’s definitely a shift in the structure in world capitalism,” says Nelson Lichtenstein, professor of history at the University of California at Santa Barbara and organizer of a 2004 conference on the subject of Wal-Mart. “The retailer is now the central engine of both growth and control in the world capitalistic economy. They’re setting the prices, constructing the new markets, and the manufacturers – they’re the ones who are really conforming to the standards set by the retailers.”

From their initial entry into Canada, it was clear that Wal-Mart wasn’t here to play by the rules. The company purchased 122 Woolco stores from the ailing chain in 1994, but notably absent from their purchase were any and all stores that were already unionized. Now, eleven years later, the company has 256 Wal-Marts and six Sam’s Club stores in Canada, and in that time they’ve managed to keep their stores union-free, with few exceptions.

Wal-Mart and Labour

It has long been argued that Wal-Mart profits off the backs of its employees. According to a study by consultants A.T. Kearney, Wal-Mart’s three biggest sources of cost advantage are low corporate overhead, an efficient supply chain and, above all, low labour costs. One Canadian retail analyst placed Wal-Mart’s labour costs at six per cent of sales, roughly half of the national average.

Right now, the big news surrounding Wal-Mart Canada is the impending closure of its recently unionized store in Jonquière. The move comes as an affront to traditionally labour-friendly Quebec, where 40 per cent of the work force is unionized – more than three times the U.S. rate. Slated for May 6, the Jonquière closure follows a breakdown in talks between the Bentonville, Arkansas-based retailer and the United Food and Commercial Workers. “What we were left with was a store that was not going to be viable,” Andrew Pelletier, director for corporate affairs at Wal-Mart Canada, said in an interview with the New York Times. “We felt the union wanted to fundamentally change the store’s business model.”

These fundamental changes came in the form of regularized scheduling, a redefinition of “full-time” (Wal-Mart currently considers 32 hours a week full-time) and the hiring of 30 additional employees, according to the UFCW.

“There’s no doubt that they’re one of the most anti-union employers that exist,” says Michael Fraser, UFCW Canada’s national director. “We believe that they used it simply to send a message to all their employees in Canada and North America, that if you join a union they’ll close the store down.”

Lichtenstein agrees. “In North America, Wal-Mart is making it very clear that they will not truck with unionization in any way, shape, or form,” he says. “There’s no doubt about that, and shutting down a store or two is no problem to do so. There’s no doubt in my mind that Wal-Mart is winning this.”

Quebec recently became home to another unionized Wal-Mart in St. Hyacinthe, just outside Montreal. Once again, the company and the UFCW are preparing to face off at the bargaining table. Fraser indicates that he feels the company will think very closely about how they’ll handle the situation, in light of recent denunciations of Wal-Mart by both the premier and former premier of Quebec.

“At what point do we allow a foreign company to come in and violate the laws and mistreat Canadian workers?” asks Fraser. “At what point does somebody come in and say: ‘Wait a minute, you either follow the rules, or you aren’t allowed to conduct business in this country’?”

Changing the rules

It’s not that Wal-Mart always breaks the rules. Take regional and municipal development as an example, where Wal-Mart does a fine job of following the rules – providing it gets to decide what they are. In some cases, they’re invited; in others they just keep knocking until they get in, but in nearly all cases it inevitably comes down to a question of zoning. City councillors, afraid of losing Wal-Mart’s magnetic allure, continue to ratify radical amendments to their urban plans in an attempt to appease the American company.

“Without a doubt, big-box development has exerted a huge amount of pressure on municipal governments, because it’s municipal governments who rule zoning,” says Justin McGrail, professor of art and architectural history at Malaspina University College. “Wal-Mart, Home Depot – they like locations that are close to freeways, highways. They’re suburban, not urban. They tend to be put out in these green-field areas.”

In Stratford, Ontario, First Pro Shopping Centres recently submitted a proposal to construct a shopping complex with a large Wal-Mart store as the anchor. Located in the east end of the city near the junctions of two major highways, the proposed location is currently zoned as industrial land.

“They’re asking for a zone change because the land is currently industrial, and they’re asking for an amendment to the official plan,” says Stratford city councillor Chris Rickett, adding that the current plan identifies downtown as the retail focus. “If they open the east end of the city, the majority of the citizens will have to drive across town. It will significantly make the east end of the city the retail focus.”

Rickett believes that the city should stick to its official plan. “It’s something that’s been created through extensive public process and is supposed to be the guiding document,” he says. “It’s what should be followed instead of listening to corporations telling you that this is where it’s going to go.”

The situation in Stratford is a near mirror image of what the citizens and council of nearby Guelph have been wrestling with for over a decade. As with Stratford, the question is not whether the company should be allowed to set up shop in the southern Ontario city, but rather where the company can set up. Once again, Wal-Mart, through its developer First Pro Shopping Centres, set up a subsidiary corporation that purchased non-commercial territory in Guelph’s north side. City council stuck to its original plans, offering Wal-Mart a location in an area zoned for heavy commercial use. The company declined the offer.

“They bought this cheap industrial land in the north end – it’s the least-populated part of the city,” says Ben Bennett, president of Residents for Sustainable Development in Guelph. “You’re going to have more people on the roads trying to get to Wal-Mart. That means more congestion and pollution.”

The situation is further complicated by the proposed store’s proximity to the Ignatius Jesuit Centre of Guelph. The Jesuit Centre is located just north of the proposed Wal-Mart, on 600 acres of farmland, wetland, woodland, gardens and naturalized landscape. The Centre has an extensive trail system and houses the Jesuit Ecology Project, a Community Shared Agriculture program, a certified-organic farm, an Aboriginal sweat lodge complex, several hermitages, St. Ignatius Jesuit Cemetery and Loyola House, a world-renowned Ignatian retreat house.

“Obviously, the traffic and noise and hubbub of a big-box power centre are physically incompatible with the peace and serenity people expect,” says Reverend James Profit, the Centre’s director. “It goes without saying that the big-box mentality – defining meaning and value in possessions – is incompatible with the Jesuit spirituality defining meaning and value in seeking the Divine in all things.”

Ultimately, the case wound up at the Ontario Municipal Board (OMB). The question became an issue in Guelph’s 2003 city elections. Incumbent mayor Karen Farbridge, characterized by her opponents as an anti-Wal-Mart candidate, lost the election, and Kate Quarrie, a development-friendly candidate who received one fifth of her campaign contributions from developers and real-estate companies, won.

“From a city perspective, it’s been a planning issue of who determines how a city grows,” says Farbridge. “Is it the people that live there, or is it some private interest that has different plans than what you’ve identified as a community?”

Shortly after the election, the pro-development municipal government had a change of heart. “They reversed the city’s stance on the whole thing in May and moved from opposing the development to supporting it,” says Bennett. “That pretty well iced the cake.”

The OMB ruled in favour of Wal-Mart and First Pro this January. However, many people in the city remain vigilant. Bennett says the downtown board of management is opposed to the development, and adds: “Wal-Mart offered them $1 million to change their position. And they didn’t.”

It’s not the first time the company has tried to offer “incentives” to resistant groups. Wal-Mart made a similar offer to Waterloo to quell an ongoing resistance, and it worked. The company paid out $1.5 million over three years, divided between the city and the local business improvement association.

But there is at least one high-profile case where Wal-Mart has made concessions. While the company’s stronghold has long been in small-town North America, its attempts to manoeuvre the urban markets have met with limited success. Facing overwhelming public pressure in Vancouver, the company has decided to build what is being billed as a “green” Wal-Mart. The 128,000-square-foot energy-efficient store features wind turbines, geothermal heating and climate-controlled skylights. The company is planning to reduce noise by using sound-absorbing asphalt and a grove of 180 dogwood trees.

It’s obvious the company is willing to change its plans in the face of an equally stubborn and resistant population. Its strategy is to break down potential barriers in the city’s rezoning and development-approval processes, and to weaken and divide opposition on the Council of Progressive Electors (COPE)-led city council.

Effects/Strategies

For smaller competitors in small markets, the addition of a Wal-Mart to the retail landscape can be a mixed blessing. A 2001 study by the Centre for the Study of Commercial Activity at Ryerson University tracked economic growth of regions with and without Wal-Marts over a five-year period. The study found, overall, that a Wal-Mart could boost the economy of a small town. The report is often cited by the company to deflect criticism that Wal-Mart harms small-town economies.

“The town that gets chosen by Wal-Mart is the town that’s going to get ahead,” says Dr. Jim Simmons, the study’s author. “They really are a major attraction to consumers.”

But a closer look at the study indicates that, while overall economic growth in a small town is indeed boosted, it comes at the expense of neighbouring towns, with Wal-Mart absorbing most of their growth.”

As well, while stores located near the Wal-Mart that aren’t direct competitors stand to gain a lot from the increase in consumer traffic, it’s a different story for those stores that directly compete.

The Key? Remain Equally Stubborn

According to Kubas Consultants, 88 per cent of Canadians shopped at Wal-Mart in 2004, and some estimates say the store commands 25 per cent of the general retail market. But the company’s success here is in stark contrast to the icy reception it received in Germany. After its entry into the German market in 1998, Wal-Mart has consistently lost money and is only now beginning to make an upward turn. Germany’s strict price controls, rigid labour laws and tough zoning regulations have made it difficult for the store to thrive.

Canada could stand to learn from Germany’s example. The emergence of big-box enterprise marks an important turn in Canadian capitalist expansion, and, if Canadians are going to maintain control of their urban space and labour conditions, they’re going to have to take a lesson from the big guy. In dealing with the non-negotiable culture of Wal-Mart, Canadians could stand to develop a little non-negotiability of their own.

Jason Gondziola is a Montreal-based poet, photographer, musician and journalist. He is pursuing an honours degree in philosophy at Concordia University, and is currently developing mapping software to allow community groups to develop meaningful maps.

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Some of Wal-Mart’s labour troubles

Beyond the current union issues in Jonquière and St. Hyacinthe, the company, which boasts “Our people make the difference,” has a long tradition of legal difficulties with its employees, both dead and alive.

  • In 1997, The United Steelworkers organized Wal-Mart workers in Windsor. This came on the heels of an Ontario Labour Board decision that found the employer guilty of using “subtle but effective” threats of store closure. Under Ontario law at the time, an automatic certification for the union was granted, but the employees of the store later voted to de-certify. Shortly afterward, the business-friendly Harris government removed the law allowing automatic certifications.

  • In 2000, after a group of butchers unionized at a Wal-Mart in Jacksonville, Texas, the company implemented a policy to begin using pre-packaged meat, resulting in the closure of butcheries in their stores. The company vehemently denies the closures were related to the Jacksonville store, despite the fact that its new policy was implemented only two weeks afterthe certification.

  • In May, 2003, Wal-Mart was again found guilty of violating local labour laws. During a drive to unionize a store in Quesnel, British Columbia, the Labour Relations Board ruled that Wal-Mart had committed an unfair labour practice by “interfering with the formation of a trade union by attacking and facilitating others to attack the character and reputation of Local 1518’s organizer.”

  • In California last year, 70,000 food workers from competing chains went on strike in protest of Wal-Mart’s reductive effects on their wages. At around the same time, Inglewood, California, was added to the list of communities that have successfully rebuffed the big-box giant.

  • Between 1994 and 2000, the company received $30.7 million from life-insurance policies that the company had taken out on 380 Wal-Mart employees. Earning between $65,000 and $80,000 for every staff member, and upwards of $100,000 for the managers, Wal-Mart was taken to court by the families of the dead employees. Wal-Mart settled out of court for $10.4 million.

  • Wal-Mart is currently facing over 30 employee class-action lawsuits across the United States. The company is also the defendant in the largest class-action suit in American history, consisting of 1.6 million current and former Wal-Mart employees. Between 1996 and 2001, women working at Wal-Mart made approximately five per cent less than men doing similar jobs. Wal-Mart argues that this tendency can be attributed to different job descriptions and rogue managers, but, for a company that relies so strongly on a homogeneous corporate culture, it’s hard to write this off as mere coincidence.

  • This March, Wal-Mart Canada pleaded guilty to 25 charges of failing to notify the Ontario Workplace Safety and Insurance Board within three days of learning about injuries to its workers. The board fined Wal-Mart Canada $500,000, plus a $125,000 victim-fine surcharge.

  • Wal-Mart has also been caught using illegal immigrants to clean its stores, and recently agreed to pay an $11-million fine, which equates to about 20 minutes of sales.

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The Wal-Town Tour

Quebec, to Courtenay, British Columbia, may have encountered an unexpected sight as they went about their shopping: protestors. Dubbed the Wal-Town Tour and supported by the United Food and Commercial Workers Union, the Quebec Public Interest Research Group, Amnesty International Concordia and the U.S.-based CorpWatch, the group focused on 28 small communities on or near the Trans-Canada highway in an attempt to bring attention to Wal-Mart’s questionable behaviour in labour and municipal affairs.

“Mostly it’s a question of raising awareness into the larger aspects of Wal-Mart,” saysJohanne Savoy, treasurer and co-organizer of the Wal-Town Tour. “We’ve met with lots of different business owners to talk about how it affected them. We’ve learned a lot since being on the tour.”

In addition to conducting research, the tour members are in the early stages of setting up the Wal-Mart Information Network to enable small communities to learn about how to deal with the big-box company.

“Because these situations were so localized, you feel somewhat alienated,” she says. “Starting with the tour, we wanted to let people know that the same things were going on in other cities.”

The group is currently in the early stages of planning its activities for the upcoming spring and summer, and will be present at the May 6 closure of the Jonquière Wal-Mart in solidarity with the local workers, before beginning a ten-day tour of eastern Canada.

For more information, go to www.wal-town.com.