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US: Wal-Mart Tries to Enlist Image Help

by Michael BarbaroThe New York Times
May 12th, 2006

Wal-Mart, having helped start an advocacy group that trumpets its contributions to America, is now helping that organization recruit Wal-Mart's suppliers to join the public relations offensive a move that some vendors say puts improper pressure on them.

The campaign to encourage suppliers to join the advocacy group, called Working Families for Wal-Mart, challenges Wal-Mart's longstanding policy of keeping suppliers at arm's length and shows how eager the company is to fend off a well-organized union-backed campaign critical of its wages and benefits.

Though Wal-Mart provides the advocacy group with significant financial help, the five-month-old Working Families for Wal-Mart describes itself as autonomous, boasting 100,000 members around the country and a 16-member national steering committee that includes a musician, a filmmaker and a minister.

But at least half of the steering committee's members have business ties to Wal-Mart or Working Families for Wal-Mart. Among them are the group's chairman, Andrew Young, who served as both ambassador to the United Nations and as mayor of Atlanta. His firm has a contract with the group.

In addition, Wal-Mart has helped with the recruitment of its suppliers by Working Families for Wal-Mart, even distributing a letter to thousands of suppliers, ostensibly from the group, that began "Wal-Mart is under attack and Wal-Mart and Sam's Club suppliers have the power to do something about it and help protect their businesses."

Wal-Mart denies that its support for the advocacy group constitutes unfair pressure on its suppliers to join the cause. The letter was provided to The New York Times by WakeUpWalmart.com, a group backed by unions that have previously tried to organize Wal-Mart workers in the United States. The group said the letter was sent to them anonymously.

As a result of the close relationship between the company and the Working Families for Wal-Mart, some current and former suppliers say, the advocacy group's membership drive amounts to Wal-Mart's leaning on its suppliers to help burnish the company's image a request many said would be hard to turn down, given the company's importance to their business.

"The smaller vendors will feel some level of pressure to do this," said Willie Pietersen, the former president of Tropicana, a longtime Wal-Mart supplier, and now a business professor at Columbia University. "The question is, If you say no, are you out of the game?"

Another executive, who sits on the board of several Wal-Mart suppliers, said that given Wal-Mart's size, a company faces "implicit pressure to join" the group if asked. The executive spoke only after receiving anonymity, saying he was not authorized to speak publicly about Wal-Mart.

Wal-Mart said it has put no pressure on suppliers to join the advocacy group, and has made clear that membership is voluntary. Robert McAdams, a Wal-Mart spokesman who exhorted suppliers to join Working Families for Wal-Mart during the annual company meeting for suppliers in January, said he explained that "there is no tie between joining Working Families for Wal-Mart and a supplier's ability to do business" with Wal-Mart. Wal-Mart buyers, he added in an interview, never see the list of suppliers who join the advocacy group.

Mr. McAdams said suppliers, tired of watching the company come under attack, are eager to tell stories about the retailer's positive impact on their businesses and communities. The group "is a vehicle that our friends and allies can join," he said.

Ron Johnson, who runs the Wal-Mart office of the Walt Disney Company's consumer product division, learned about the group at the annual company meeting and immediately signed a card left on his chair. "I feel gratitude toward Wal-Mart," Mr. Johnson said. "They have definitely been good to me and my family."

Mr. Johnson, who lives in Bentonville, Ark., where Wal-Mart has its headquarters, said he felt no pressure to join the group nor has any Wal-Mart executive spoken to him about Working Families for Wal-Mart.

"I can see how somebody from the outside might see this as strong-arming," he said. "But it did not feel that way from my side of the desk."

Working Families for Wal-Mart was created in December as part of a broad response to a well-financed campaign waged against the company by two large unions. The United Food and Commercial Workers Union has financed WakeUpWalmart.com, while the Service Employees International Union has created a group called Wal-Mart Watch.

Both groups, which have former political operatives on staff, have attacked Wal-Mart's business practices, its treatment of workers and its impact on communities. In response, Wal-Mart has hired Edelman, a major public relations firm, which has created a public relations war room at the company headquarters and reached out to bloggers who support the company.

The members recruited by the Working Families group have, among other things, spoken in favor of Wal-Mart at zoning meetings and testified before a federal agency reviewing Wal-Mart's application to open a bank.

Catherine Smith, a member of the Working Families for Wal-Mart national steering committee, said the group might have started with a mandate from Wal-Mart but "it has grown its own legs and it's happening organically."

Ms. Smith, a vice president at Diversity Best Practices, a work force development firm in Washington that counts Wal-Mart as a member, said she joined Working Families for Wal-Mart after observing the company's commitment to diversifying its management. "The improvement is dramatic," she said.

Wal-Mart will not disclose how much money it has provided to Working Families for Wal-Mart. Asked if the group received financing from a source other than Wal-Mart, a member of the group's national steering committee, Martha Montoya, said, "No, not that I know of."

Wal-Mart has allowed Working Families for Wal-Mart to recruit suppliers twice at the annual company meeting, held in Kansas City, Mo., and at a small gathering in Irving, Tex. The Working Families for Wal-Mart representative who made the Texas presentation in late April is Terry Nelson, the former political director of the 2004 Bush presidential campaign, whose firm, Crosslink Strategy, consults for both Wal-Mart and Working Families for Wal-Mart.

In a recruitment letter that Wal-Mart helped send to thousands of suppliers, Mr. Nelson wrote that "Working Families for Wal-Mart is recruiting a standing army of supporters from all aspects of Wal-Mart's business." Suppliers, he added "are strong and credible voices in this national debate."





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