In These Times: Will Wal-Mart Mexico Bribery Scandal Help Build Support for Labor?

Friday, April 27, 2012

By Roger Bybee

Read the article at In These Times.

"Wal-mart [is] a company that, more than any other on earth, sets labor standards across industries that feed its vast global supply chain,” observed Spencer Woodman in The Nation.

From factories in China and Bangladesh to transportation hubs where “perma-temps”  labor for dirt-cheap wages to feed supply lines to the company's ubiquitous stores, Wal-Mart has successfully resisted unions and kept wages low. Disclosures about Wal-Mart’s brutal but sophisticated low-wage strategies have failed to seriously dent the company’s image as a friendly provider of low-cost goods. And Wal-Mart has been essentially impervious to attacks by organized labor and the Occupy movement, two marketing professors argue.

But Wal-Mart's smoothly-running PR machine seized up this week when a major front-page New York Times investigation revealed that top Wal-Mart de Mexico executives shelled out approximately $24 million in bribes to speed up permits for its rapid expansion in Mexico during the last decade. (Wal-Mart is the largest private employer in Mexico, with 200,000 workers and one-fifth of all Wal-Mart stores.) The newspaper presents detailed evidence that top Wal-Mart officials knew about the illegal behavior, but effectively shut down the investigation and did not notify authorities in the U.S. and Mexico.

The bribery scandal threatens to shatter Wal-Mart’s carefully-manufactured image as a company based on strong moral principles and concern for the public. The bribes represent a flagrant violation of the Foreign Corrupt Practices Act which forbids payment of bribes by U.S. businesses to foreign governments. "What's perhaps worse, top executives in the U.S., including the current and former CEOs, allegedly knew about this and covered it up,“ NPR reporter Chris Arnold noted.

It remains to be seen how deeply Wal-Mart’s image will be wounded and if the corporation’s loss of legitimacy may lead to increased public awareness of and support for Wal-Mart workers' struggles for justice. Joe Hansen, president of the United Food and Commercial Workers (UFCW) union, which has been seeking for years to organize Wal-Mart workers and to alert the public to a wide range of alleged abusive practices (e.g., wage theft, sex discrimination), issued a blistering statement on the meaning of the bribery disclosures:

Walmart senior management exposed its lack of corporate morality and internal ethics to workers, shareholders, consumers and community members. Walmart has spent millions of dollars to rehabilitate its image and buy the support of key allies in an effort to break into new markets while making promises about the benefits of its business model.

But by pursuing a relentless strategy in the U.S. and abroad of ‘growth at any cost’ in pursuit of profits, Walmart’s senior management has proven that it is willing to trample on worker rights, discriminate against women, damage small businesses and the environment, and now potentially violate laws in the U.S., Mexico and other countries.

On Wednesday Hansen called on Walmart Chairman Rob Walton and CEO Mike Duke to "resign immediately in an effort to restore integrity and accountability for Wal-Mart associates, shareholders, customers, and communities."

David Newby, chair of the Wisconsin Fair Trade Campaign and a labor leader who has learned about Wal-Mart labor practices during the past 30 years, likened the firm to Apple’s notorious  supplier Foxconn in China.  “Wal-Mart’s slogan ‘Always Low Prices’ means the lowest wage always,” Newby says. “They are the Foxconn of world retail."

Wal-Mart has had a devastating impact on locally-owned small businesses and communities in both the U.S. and Mexico, Newby notes. “Wal-Mart has wiped out family-owned businesses in Mexico just as U.S. agribusiness destroyed the livelihoods of Mexican agricultural workers who were forced to head north to the U.S. to find work.“ North of the Rio Grande, says Newby, “Most Wal-Mart stores in the U.S. are built with the bribes going the other way, with government subsidies flowing to Wal-Mart to encourage them to locate in communites that don’t realize the impact that this giant will have on local businesses and wages."  

A 2004 report by the Labor Council for Latin American Advancement and Public Citizen calculated the toll wrought by Wal-Mart and other “mega-retailers":

An estimated 28,000 small-to-medium-sized Mexican businesses were...destroyed, as NAFTA’s services sector rules guaranteed access for the Wal-Marts and other mega-retailers that have undercut local small shoe, candy and toy manufacturers and small retailers with their cut-price goods imported from China.

While skillfully making concessions to environmentalists and some other critics, Wal-Mart has remained unswerving in its dedication to preventing unionization at all costs.  As Woodman recounts:

In 2000, the UFCW won an election at a small meatpacking unit at a Texas Walmart, only to learn that the company would dissolve all in-store meatpacking company-wide. Five years later, an entire Quebec Walmart was shuttered just weeks after its employees voted to unionize. The fines the $400 billion company incurs from such boldly illegal retaliations are minimal compared with the potential cost of raising wages.

Despite these hard-line tactics against workers, Wal-Mart’s image has suffered little among a consumer base composed largely of low-wage working people. Extensive publicity efforts by labor have failed to leave a lasting impression. But recently, UFCW and its offshoot OURWalmart, have adopted nontraditional strategies centered on winning worker support through door-to door contact and preparing for potential shop-floor actions in warehouses and other settings along Wal-Mart's supply chain. They have essentially recognized the futility of the customary route of gathering union-recognition cards and filing for an election with the federal National Labor Relations Board.

Woodman quotes the remarkable organizer, Wade Rathke, founder of ACORN and  a former organizer against Wal-Mart, on labor’s astute shift in strategy:

Walmart is very effective in dealing with a classic union strategy, where there’s an election coming that it can plan around. But when there’s no election coming, they don’t know how to deal with these noncertified workers’ associations.

The corruption exposed by the New York Times may help to build worker solidarity and seriously erode the public's image of the retail Leviathan.

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