Those who are against Wal-Mart more often than not cite the corporation’s buying practices as its Number One evil. To perpetuate their argument they use the closing of Rubbermaid’s Wooster, Ohio plant to make the point that when Wal-Mart flexes its muscles people suffer. Wal-Mart was unhappy with Rubbermaid’s constant price increases and thusly pulled from their shelves certain Rubbermaid products. We are led to believe that only because of that ongoing situation the plant was shuttered in 2002, leaving 1,000 people without a job.

It’s tragic when a plant of that size and stature closes, especially in a city of 25,000 people. Nevertheless, they shouldn’t be used as martyrs against Wal-Mart. The whole story really needs to be taken into context.

Wal-Mart really had little to do with Wooster’s demise. At the peak of the relationship, Wal-Mart was only 20% of Rubbermaid’s sales. Not being able to adjust to a shrinking or loss of a customer that size shows there was a much larger problem at Rubbermaid, namely corporate management. In a five year period during the 1990’s then CEO Wolfgang Schmitt and his crew made the once-great Rubbermaid a laughingstock on Wall Street: It lost 24% of its value while the S&P 500 Index went up by almost six times that amount. Many analysts stated the company was improperly managed with no attention to being lean and mean. Despite far too many divisions and products they were not very responsive to customers’ needs and seemed to be peddling old, tired products while at the same time never focusing on streamlining their internal processes. These problems (oversizing and staleness) are encountered by many businesses that address the problems to live another day. But Rubbermaid chose not to. So when Newell bought them out it was up to the new management to do what needed to be done, shed some waste and maximize operations.

What makes this all so ironic is that for decades (prior to Wal-Mart even becoming a powerhouse nationally) Rubbermaid utilized the same sort of buying tactics that Wal-Mart is guilty of. It was always a common belief throughout the plastics industry that those who would manufacture for Rubbermaid were selling their souls and were destined for failure. In many cases, it was true. Too many plastics companies put all of their eggs in one basket for Rubbermaid and closed shop after Rubbermaid left them for a cheaper supplier. Other companies suffered significant losses by trying to sell at the dollar value Rubbermaid wanted and not at a level that provided the manufacturer appropriate (if any) profit.

Buying at low prices and holding vendors to rigid demands is not unique to Wal-Mart. Or Rubbermaid. It’s an outcome of a large corporation mentality. Once corporations gain a sense of grand scale ($1 billion?) and distance themselves from the principles of their founders, this behavior takes over because the board and management are in an endless struggle to please everybody (stockholders, distributors, consumers, business partners) and they look for pennies wherever they can get them.

No market sector is free from such practices and it could easily be said that the automotive industry is even more insatiable than Wal-Mart could ever dream of being. The Big Three browbeat their Tier-One suppliers who then have to beat on their suppliers creating a very bad business model where the only one who does well is the one at the top: they can sell their cars at the price they want while the suppliers can’t sell the parts or components at the price they need. It’s because of this that many automotive suppliers have gone by the wayside over the years, mirroring what happened to the one-time Rubbermaid suppliers.

To verify what we always knew to be true, my company quoted some products for a Tier One supplier in 2007. During the process they said they required a 4 or 5 % decrease in their cost every year, a "normal" request in the auto industry. It didn’t take much thinking to turn away their business, indicating in our letter to them that no business can logically accept such demands with resource and materials costs continuously skyrocketing.

Their purchasing manager politely and knowingly replied with, "I appreciate your honesty."

I would appreciate some honesty, too, out of those who find fault with Wal-Mart’s buying practices, which are no better than the rest: If you choose not to shop at or allow Wal-Mart in your neighborhood, do you feel the very same way about Ford or GM?