How low should you go?

Industry experts say it won't be long before US retail giant Wal-Mart opens a subsidiary here, but a new documentary accuses it of gross exploitation in achieving its goals. Pavel Barter reports.

Wal-Mart giveth and Wal-Mart taketh away. This is the message from a new US documentary which rakes plenty of muck on the world's largest corporation, and it's causing outrage. But Wal-Mart: The High Cost of Low Price eschews the high docudrama of Michael Moore in favour of a sedate exploration of a big corporation in small-town America. The film's talking heads are mostly plaid-shirted Red-Staters: less angry liberals, more broken-hearted Republicans.

"When a Wal-Mart comes to town they knock the value down because sooner or later there's going to be a bunch of empty buildings and no one will be able to sell," one retailer complains. Says another: "They don't get it. When we start talking about quality of life, they start talking about cheap underwear."

From the decimation of local economies to the miserable treatment of employees, from environmental ignorance to overseas exploitation, from racial to sexual discrimination, this celluloid David hurls a barrage of allegations at its retail Goliath. Wal-Mart doggedly pursues an "everyday low prices" business model whether it is retailing groceries, clothes or CDs. It is also staunchly anti-union.

Director Robert Greenwald was first alerted to Wal-Mart's practices by an acquaintance who worked for the retailer but could not afford its in-house health insurance; store managers had instead advised him to apply for state-subsidised coverage. "As my research progressed I realised the size, scope and impact of Wal-Mart. Their aggressiveness in exploiting workers, devastating communities and working to obtain subsidies put them in a league of their own," he says.

Size matters and Wal-Mart envies few. The corporation's profit topped $10 billion last financial year, while overall revenue rose 11 per cent to $285 billion (or €237 billion, more than twice Ireland's annual GDP); the company employs 1.6 million associates worldwide and serves more than 138 million customers every week. In the Fortune 2005 Global 500, Wal-Mart was number one for the fourth year in a row. By the end of 2005, Wal-Mart had even set up shop in Northern Ireland, with the opening of 12 Asda stores.

According to Asda spokesman Dominic Burch, "reaction from workers and customers alike has been fantastic", and now Asda, Wal-Mart's UK subsidiary, intends to open a further eight stores (including a "Supercentre") in the North by 2008. However, Burch could not comment on plans for the Republic. Donald McFetridge, School of Business, Retail & Financial Services, University of Ulster, believes that such a move is more a case of "when" than "if". "Like Tesco, Asda wants to gain a foothold on the island, so the next logical move is to enter the Republic."

Tara Buckley of RGDATA, the representative body for independent Irish grocers, adds: "[Asda] will probably acquire a group already in the market rather than start from greenfield sites." Sources suggest the retailer - whose Northern Ireland model of down-sized outlets would skirt the Republic's planning restrictions - already approached an Irish supermarket chain, but the offer was rejected.

If Robert Greenwald's documentary is taken at face value, will local Irish communities be in store for the same treatment as those in the US? Where does Asda stop and Wal-Mart begin?

In September 2005, charity War On Want and British general union GMB released a report accusing the retailer of planning a "strategic assault" on the working conditions of Asda staff. In their race to cut costs at any cost, Asda were squeezing communities and suppliers, the report further alleged.

"We subsequently met Asda and asked them whether or not Asda and Wal-Mart were the same company," explains John Hilary, director of campaigns and policy, War on Want. "It was clear that Wal-Mart is a centralised company, working out of a strong nucleus in Arkansas, and it dictates the working practices and basic principles for its affiliates across the world."

Greenwald agrees that Asda is at the beck and call of its mother organisation. "Wal-Mart are top down in the companies they buy and control. They decide practices in terms of paying employees, overseas sweatshops, and constant expansion. I'm sure Ireland will be subjected to the same tactics. This is a multinational corporation with one goal, which is to squeeze every nickel no matter what the consequence to workers, family business or local communities."

In the US, Wal-Mart's anti-union philosophy has accompanied accusations of in-store propaganda classes and even worker surveillance. Such reports unnerve Irish organisations such as SIPTU, says Noel Downing, national organiser. "We would deeply regret to see Wal-Mart in the Republic because of its reputation for poor pay and conditions. If it does arrive, we will do everything we can to unionise it, but we recognise it is extremely difficult because it has such an aggressive policy."

Do not tar Asda with the same brush, insists their spokesman. Asda has a healthy relationship with UK unions, and Wal-Mart maintains unions in Germany, Brazil and Argentina. In the US, Wal-Mart lawsuits are as much a volume business as general merchandise, but Asda claims nothing but happy customers and partners from their new Northern Irish operation.

Michael Bell, executive director of the Northern Ireland Food and Drink Association, agrees that despite the ongoing problem of food deflation, all his members were trading successfully with Asda, and the retailer's establishment of a regional buying office bodes well for local suppliers. Likewise, Rosemary Garth, director of Food & Drink Industry Ireland, would welcome Asda. "From a supplier's perspective, the more retailers and competition in the Irish market, the better."

But profit from food and drink is proving increasingly limited and major multiples are gradually shifting toward a US model where return is found in insurance sales, financial services, clothes (such as Asda's George line), electrical items and other general merchandise. Asda sources such goods through the same supply chain as Wal-Mart: from China and Bangladesh, where allegations of continual pay cuts and poor working conditions are rife.

To date, Wal-Mart has been unable to establish its modus operandi in foreign markets as successfully as it has in the US, simply because such markets have no similar pre-existing models. But should the American footprint dig deep, will our furore over "rip-off" Ireland lead us in a race to the bottom? Will Wal-Mart's business model one day become industry standard?

"I understand the need and desire for low prices but ultimately the consumer is going to pay the price: Wal-Mart is leading the charge to a suicide economy all over the world," says Robert Greenwald. "If you continue to pay people less and less - whether they are your employees, the manufacturers you work with, or the sweatshops you get your material from, the consumer will ultimately pay the price."

Wal-Mart: The High-Cost of Low Price will be screened at the Berlin Film Festival in February. An Irish release date is scheduled for April