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Wal-Mart's expansion doesn't come without a fight


From the outside, the local community association on the west side of Chicago doesn't look like much. The only sign on the shabby one-storey building is a piece of paper stuffed inside a clear plastic jacket on the front door. The building was supposed to be a temporary home but somehow years have gone by and the organization is still there.

The South Austin coalition community council, run for 26 years by Bob Vondrasek, is in one of Chicago's grittiest neighborhoods. It has taken on slum landlords, insurance companies, utilities firms, the board of education and the big banks over predatory lending policies. In recent months, though, the coalition and other community leaders in the city have confronted an opponent of an altogether different magnitude; Wal-Mart, the biggest company in the world, which is looking to open its first store within the city limits.

Its plans have provoked an emotionally-charged response from politicians, civic leaders and the church. Supporters argue that local people in the rundown neighborhoods where it plans to open are in desperate need of cheap goods as well as jobs. Those against protest that Wal-Mart represents the very worst in American business and that it destroys small businesses and pushes down labor standards. The low prices, they argue, come at too high a cost.

"People ask why are we targeting Wal-Mart?" says Vondrasek. "The reason is because they are so influential and once you knock out the big bully the others tend to fall in line."

At the last count, Wal-Mart employed 1.3 million workers in the US. This month alone, it is opening 12 stores across the country. It also owns businesses in Europe and Japan, including Asda in Britain.

Last year it had sales of US$256 billion, accounting for 2 percent of US GDP. If it were an independent nation, Wal-Mart would be the eighth biggest trading partner with China.

The ramifications of the company's spread have even made the presidential election campaign. John Kerry recently called its health care benefits "disgraceful." Consumer advocate Ralph Nader, running an independent campaign for the White House, described it as "a cancer on the economy". Vice-president Dick Cheney, however, praised Wal-Mart during a visit to its head office in Bentonville, Arkansas.

The Chicago case is not isolated. Local resistance in Inglewood, California, earlier this year prevented Wal-Mart from opening there.

Local groups are also preparing for battle in Washington DC as the company looks for its first location in the capital.

The argument for Wal-Mart is compellingly simple -- it creates jobs and provides low prices to consumers. Its store in Forest Park, just outside Chicago, is selling Wrangler jeans for US$14.94, a flat screen TV for US$96.94 and a microwave oven for US$29.87. Economists believe Wal-Mart has played a significant role in keeping US inflation down.

On the west side of Chicago low prices and jobs are both welcome. The predominately black and Hispanic neighborhood of Austin was once a vibrant manufacturing community but has fallen into decline as the factories have closed and the service industry moved out. The community wrestles with poverty and is rife with drugs and gangs.

Wal-Mart had planned for two stores in the city; the other, in the equally rundown south, was blocked. It hired local public relations and legal firms, including the law firm of Michael Daley, the mayor's brother, and won approval for the Austin store only after heated hearings.

Alderwoman Emma Mitts was a key supporter. "All of my community pretty much wanted to have the Wal-Mart," she says. "The low prices are good for my community. They help keep food on the table. Because Chicago is a union town, they say Wal-Mart shouldn't be here. That's what the fight was really about. Well, some job to me is better than no job at all."

Opponents question the long-term impact of a Wal-Mart store. They quote numerous studies that claim to prove its deleterious effect. A report by the University of Illinois suggests the store on Chicago's west side would create 200 local jobs but lead to the loss of 265 jobs as smaller shops were forced to close.

"Any city that allows a Wal-Mart in under the guise of creating jobs and economic development should be wary," says Nik Theodore, director at the university's center for urban economic development.

"A new store doesn't add new jobs -- it is redistributing consumer spending and jobs from other local retailers."

A recent report from the University of California claimed that the company's employees in the state received an annual US$86 million in public assistance including public health insurance and subsidized housing because they earned so little. "We keep telling people, `You are getting cheap products but you are having to subsidize this enormously profitable company in other ways,'" says James Thindwa at Jobs for Justice in Chicago, a nationwide organization that campaigns for workers rights.

"There is a disconnect in people's minds."

The irony that Wal-Mart is building on the site of a closed factory on the west side of Chicago is painfully clear to many local residents. "Wal-Mart wraps itself in the American flag, but even the flags they sell are made in China," Thindwa says.

"It is complex. You look at an area where adults are on the corner unemployed and Wal-Mart is promising jobs. There is an immediacy about it, which is quite compelling until you start getting into the arguments."

Wal-Mart's response to growing criticism has been a public relations blitz. It has been running advertising campaigns featuring female and ethnic minority workers talking about how great it is to work there. It is sponsoring public radio and set up bursaries for journalists. It has commissioned its own economic studies that claim it benefits the economy. It claimed that if Wal-Mart could take 20 percent of the market in Los Angeles, it would save shoppers US$3.6 billion and create 36,400 jobs. It recently announced that senior management bonuses would be tied to achieving certain diversity targets, to ensure the fair promotion of women and minorities.

"There is a lot of misinformation out there," says Wal-Mart community affairs manager Mia Masten. "We offer competitive wages and benefits."

There was no diktat ordering suppliers to shop for parts overseas -- "our mantra is everyday low prices and to achieve that we just want the best price possible from suppliers."

The low percentage of workers covered by health benefits is due to the high number of "seniors and students" doing part-time work, and people already covered by their partner's health benefits from other companies.

Opposition to the company continues to grow, however. The National Trust in the US has put the state of Vermont on its list of most endangered historic places because of plans to build more mammoth stores there. Its president, Richard Moe, says there are "communities all over America whose downtowns have been devastated by the arrival of big-box retailers."

Campaigners are preparing a national plan to engage Wal-Mart. Community groups in Chicago put together a series of demands to put to the company, including guarantees that it would pay a living wage, not take public subsidy, allow unions and use local contractors to build the store. They had hoped the local council would present them to Wal-Mart before granting approval, but it didn't. The hope now is for ongoing hearings into a similar "big box ordinance" that could yet derail Wal-Mart's plans. It would force guarantees from stores over 22,860m2 including a minimum wage of US$10.50 an hour, US$3 an hour in benefits and freedom of speech.

"I think we all feel good that a tremendous amount of awareness has been created about Wal-Mart," Vondrasek says. "We're not telling people not to shop there, but let's push them to be better corporate citizens."

For every victory, though, there continue to be other defeats. People living in Contra Costa County in the San Francisco Bay area recently voted to repeal a council-passed rule banning the construction of "big-box" stores. Wal-Mart is planning to build 40 stores in California.

The difficulty unions face is overcoming the short-term fix for poor urban areas that Wal-Mart appears to promise with what is essentially a macro-economic argument. "Its strategy is to take the path of least resistance," Theodore says. "It targets African-American neighborhoods. The west side of Chicago has been hard hit by plant closures and you reach a point where you start to take it personally. It's a community that feels the growth elsewhere in the city has passed them by and it's kind of unfair for that community to be told `no' again."




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