RUN FOR YOUR LIVES! I'M NOT USING AN LJ CUT!
From the first issue of The Walruss

In Liberty Township, there’s something strange coming to the neighborhood. It’s hailed by some as an economic savior, but when you really need to boost the economy who ya gonna call – Wal-Mart?

By Leonard Glenn Crist
Illustration by Rick Muccio

There was a time, in the late 1980s and early ‘90s, when the Mahoning Valley was flying high on the home-grown success of a large discount retailer. It was a beacon in a sea of unemployed men and abandoned mills, a success story to be proud of and a decent place to shop. And if you had recently found yourself jobless with not much cash, the prices were low. Very low. At its height, there were more than 300 stores around the country. This was Phar-Mor and it was poised to be the one the biggest players in the retail game.

Sam Walton, the late-entrepreneur who, in 1962, founded the Wal-Mart chain of discount stores, once proclaimed Phar-Mor the only retailer in the country he feared. According to a PBS Frontline documentary, for a two year period in the late 1980s, Phar-Mor made undercutting Wal-Mart part of its business plan. It was the only chance the company had of succeeding. In the discount retail wars, if you didn’t have the lowest price you didn’t have the customers.

Phar-Mor was able to offer far more savings than the competition, founder Mickey Monus claimed, through a practice called “power buying.” When suppliers wanted to unload a surplus good at dirt-cheap rates, Phar-Mor would take advantage of the low price and buy as much of that good as possible, passing the savings on to customers.

With its tough anti-union stance, low wages, lean benefits packages, and reliance on overseas exports, Wal-Mart had a similar business plan, one that valued extreme efficiency and slim profit margins. And while Phar-Mor and Wal-Mart both operated on the principal of low profits with high volume, Wal-Mart’s volume dwarfed Phar-Mor’s. Between 1985 and 1987, Phar-Mor increased from 12 to 40 stores. In that same time period, Wal-Mart lurched from 882 stores to almost 1,200. Volume, volume and more volume. That’s how the massive retailer from Bentonville, Ark., achieved its low prices. This exerted tremendous pressure on the competition; most retailers either closed or found a niche that Wal-Mart wasn’t filling. Phar-Mor, however, was taking Wal-Mart head on.

Walton feared Phar-Mor largely because he couldn’t understand how the Youngstown-based chain was able to keep its prices so low and still pull a profit. Wal-Mart’s “always low prices” should have been the lowest in the market; their cut-throat brand of capitalism virtually guaranteed that.

But Monus was determined to be a serious contender on the discount retail circuit, Wal-Mart’s low prices be damned. So he did the only thing he could to successfully compete with Wal-Mart: Mickey Monus cooked the books. He was, after all, from Youngstown.

In the end, Monus got busted. Phar-Mor hadn’t earned a profit in five years and $500 million dollars had been lost. With Phar-Mor’s founder in jail and the company on the ropes, Wal-Mart took this opportunity to enter into the backyard of its once-feared competitor. Between 1994 and 1997, Wal-Mart had opened stores in Poland, Austintown and Warren. Wal-Mart also began opening stores in nearby Mercer and Lawrence Counties in Pennsylvania. By 2002, the last of the Phar-Mors closed and Wal-Mart was the biggest retailer the world had ever seen.

***

Belmont Ave. in Liberty Township, Ohio, has a lot of vacant real estate. A major shopping area at one time, the large plazas that formerly housed Phar-Mor, Ames and Kmart are now basically lifeless. But the town is abuzz with the possibility of a renaissance: word on the street says Wal-Mart is coming. For many of the residents of Liberty, this means they won’t have to drive 15 or 20 minutes to Niles or Boardman any longer to buy a pack of socks.

The Youngstown Vindicator reported in June that Wal-Mart is looking into opening a Supercenter where the current Liberty Plaza sits on Belmont Ave. The plaza used to house a Phar-Mor, and somewhere in the afterlife, Sam Walton is surely soaking up the irony.

According to Liberty Township Administrator Pat Ungaro, the Wal-Mart deal is virtually guaranteed. There are no deal breakers, he says, it’s just a matter of clearing the few remaining tenants. After that, the new Supercenter plan calls for tearing down much of Liberty Plaza. Ultimately, Wal-Mart hopes to have the store open sometime in 2007, Ungaro confides. “It appears like everything is worked out.”

Ungaro says Liberty needs a Wal-Mart because there is no retail left. The convenience of not having to drive 20 minutes to the Eastwood Mall in Niles or the Southern Park Mall in Boardman is worth it, he says.

“I know Wal-Mart’s controversial, and I don’t really care about that. If you get up in Boardman and you want to go to Wal-Mart, you can. If you get into Warren, you can. If you get up into Austintown, you can. We want – I wanted – the same thing for the people in the area here.”

Ungaro is a walking contradiction when it comes to Wal-Mart. On the one hand, he’s willing to concede that traditionally, when a Wal-Mart comes into an area, there are job losses. And he would like to see the company increase its wages and improve its benefits. Ungaro doesn’t even shop at Wal-Mart all that often. But he wants the company and he says the people of Liberty are behind him.

“The only people that don’t like it are some of the unions and the competitors, your Sparkle, your Giant Eagle. The people, 99.9 percent, want it. And I make that real clear what my position is. I’m not ducking from that. I know the controversy.”

“I know they’re predators.” He pauses for emphasis. “I want ‘em.”

***

Wal-Mart built its first Supercenter in 1988. The stores, which average 185,000 square feet in size, combine the traditional Wal-Mart Discount Store with a full service grocery department. Today, Wal-Mart operates more than 1900 Supercenters nationwide, in addition to the more than 1,100 Wal-Mart Discount Stores.

In 2005, Wal-Mart sold $315 billion in goods from its stores, earning profits of $11 billion, according to Fortune magazine. By comparison, Target, Wal-Mart’s closest competitor, sold $52 billion in goods, earning $2.4 billion in profits. In fact, Wal-Mart is bigger than Target, Sears, Kroger, Costco and Home Depot combined.

In Ohio, Wal-Mart operates 131 stores; 87 of those are Supercenters. Within a 50 mile radius of Youngstown there are 18 Wal-Marts. According to Wal-Mart spokesman Ron Mosby, between 30 and 40 new Wal-Mart stores are in some stage of development across Ohio, including the one planned for Liberty.

The three stores that Wal-Mart operates in Mahoning and Trumbull Counties employ just over 900 “associates,” the feel-good name Wal-Mart gives its workers. According to Wal-Mart, the average wage associates earn in Ohio is $9.82 an hour, though the company likes to point out that employees are eligible for performance-based bonuses. Union critics question the validity of that number and suspect it to be lower. Statewide, Wal-Mart employs almost 50,000 people, making them Ohio’s largest employer.

Almost everywhere Wal-Mart goes, controversy follows.

In March, a report released by Ohio’s Department of Job and Family Services revealed that 8 percent of Wal-Mart’s Ohio workforce enrolled themselves or their children in Medicaid, costing the state roughly $11 million dollars annually. Wal-Mart also had the second largest number of employees receiving food stamps, just behind McDonald’s. Union leaders and politicians pounced, noting that fewer than half of Wal-Mart’s employees nationwide receive company healthcare. Wal-Mart counters that basic coverage is available for as little as $11 a month and workers who are not covered make that choice for themselves.

Around the country, Democratic leaders like Sen. Joe Biden are calling Wal-Mart out on their low wages and benefits. According to the New York Times, even Hillary Clinton, who once served on Wal-Mart’s board of directors while living in Arkansas, returned a $5,000 campaign contribution from Wal-Mart in 2005, protesting their healthcare policies.

Other scandals have popped up regularly over the years. Wal-Mart’s been accused of hiring illegal aliens, locking employees in the store during the night shift, using sweatshop labor for its Kathie Lee brand of handbags, discriminating against female workers, polluting the environment and forcing employees to work off the clock

The United Food and Commercial Workers union has spearheaded a campaign to exert pressure on Wal-Mart to change its practices. The Wake Up Wal-Mart campaign includes a Web site chronicling Wal-Mart’s many shortcomings and, this summer, a 35-date cross-country bus tour. According to the group’s web site, Wake Up Wal-Mart is “taking to the streets to fight for a better America”

Mike Martino, an organizer with the UFCW Local No. 880, which covers Northeast Ohio, says that by shopping at Wal-Mart, you may indirectly be putting yourself out of a job.

“It’s important to support the good paying businesses that take care of their workers in your town,” Martino says. “You’ve got to think about the people that work in these other stores. You vote with your wallet. If you’re going to vote and go into Wal-Mart with your wallet, you’re eventually going to hurt somebody else down the street. They have a wall in Bentonville with pictures of employers on it, with yellow police tape on it. There are certain employers in Northeast Ohio that are on that wall. And Wal-Mart claims they don’t target specific companies when they move in. That’s bullshit. Their main focus is to put other companies out of business so they’re the only game in town.”

***

Inside Kravitz Delicatessen, a small, locally owned deli just down the road from the proposed Liberty Wal-Mart, Max Davis finishes up his shift. A recent graduate of Liberty High School, Max says he’s excited a 24-7 Wal-Mart Supercenter is coming to town because that means something worthwhile will actually be open in Liberty past 9 p.m. When you’re bored in the middle of the night, Max says, Wal-Mart is a way better place to hang out than Giant Eagle. He concedes that a new Supercenter might negatively impact local grocers, but Max can’t imagine Wal-Mart hurting Liberty any worse than it already is.

An elderly woman eating lunch with her husband overhears the conversation about Wal-Mart. It’s apparently the first time she’s heard of the plan. “They’re going to bring a Wal-Mart in?” She sounds exasperated. The woman looks to her husband. “They’re going to bring in a Supercenter.” She says this with a “can you believe this crap?” inflection in her voice. The couple gets up and leaves.

A customer comes in, another older woman. She picks up a bottle of wine, pinot noir, and takes it to the counter. She is greeted by Max’s boss, deli operator Jack Kravitz, and they proceed to have a conversation about the finer points of American pinot noirs. The woman says she read somewhere that pinot noir has a number of health benefits. Kravittz notes pinot is a little more expensive but California and Washington State pinots are good wines. After talking for a few more moments, the woman purchases her wine and is on her way. Kravitz is smiling.

Like his employee Max, Kravitz says he’s excited about the new Wal-Mart. He doesn’t think it will hurt business, and it might even help it, he says. “I think business creates business,” Kravitz says. “I’ve seen what happens in a lot of areas where Wal-Mart comes in. And yeah, it might hurt your corner hardware store. But then again, it helps your food service people. It brings more people in the area. Other stores spring up around it.”

“I guess I can point to what happened in Austintown when the Wal-Mart opened up there. New businesses moved in. They built new plazas. The whole area just built up.”

Kravitz has some experience working with Wal-Mart. His family once ran a wholesale business and sold their goods to Sam’s Club, Wal-Mart’s members-only warehouse club. “I sold to them for a lot of years. I didn’t find it any different than dealing with any other large company.”

Kravitz believes the foot traffic generated from Wal-Mart will spill over to his and other businesses on Belmont. “We’re relying on it,” Kravitz says. “Without something like Wal-Mart coming in, Belmont’s gonna die. There really is nothing on Belmont Avenue right now to bring people in.”

Is Wal-Mart going to help keep Kravitz Delicatessen afloat? “It has to help,” Kravitz says.

Will it hurt other businesses? “The North Side of Youngstown doesn’t really have that many independent people who compete with Wal-mart,” Kravitz says. “But around here, in Liberty, if you wanna buy a pair of socks, you have to leave Belmont Avenue to get it. If they don’t carry it at Big Lots you can’t get it.”

In fact, Big Lots, the Ohio-based discount retailer, is sprucing up the exterior of its Belmont Avenue store with a new façade on the front of its plaza. With Wal-Mart coming, you have to put your best foot forward.

And there is at least one prominent independent business on the North Side of Youngstown that will fall into direct competition with a Wal-Mart Supercenter: Sparkle Market.

***

Charles Zander, owner of two Sparkle Markets in Youngstown, is already preparing his employees for Wal-Mart’s onslaught. Inside the store, nearly every shopper has a nearby Sparkle Market employee offering to carry a bag of dog food or answer a question about where the ketchup aisle is.

“I really think that I’m gonna have some serious problems,” Zander says. “I’m going to work as hard as I can to keep it going.”

Sparkle Market is perhaps the most vulnerable business in the shadow of the Liberty Wal-Mart. Small, independent and with a unionized workforce, Sparkle Market is just the kind of grocery store that is likely to close when a new Supercenter comes in.

“The customers will dictate what happens with the store. If they think Wal-Mart is a great panacea of what their needs are, then I probably won’t be here.”

Zander has owned the store on Gypsy Lane since 1987 and he’s worked for Sparkle since 1957. With the real possibility of all that history being undercut by the world’s largest retailer, Zander has a lot on his mind and a lot to get off his chest.

“If you want my thoughts, the politicians have tunnel vision when it comes to bringing [Wal-Mart] to this town. We’ve lost how many thousands of jobs at Packard and General Motors out here? Who’s gonna buy this retail stuff? We’ve got supermarkets on this side of town. I would say probably at least two super marts are gonna have to close if Wal-Mart opens up, if not more. They won’t be able to survive. There’s just not enough retail business.”

Zander says he spoke with Liberty Township administrator Pat Ungaro twice and received little sympathy.

“Pat Ungaro pretty much told me it’s good for Liberty and that’s what’s gonna happen. And he did not say it out loud, but I got the opinion: ‘To hell with the business people that are here that are in the same business. If they’re not good enough to survive, let ‘em go away.’ If he had any concerns about the local business and about the economy, Wal-Mart wouldn’t have been on the forefront of him bringing [a retailer] into this area.”

Zander pauses to look for a letter he sent to Ungaro about the Wal-Mart situation. He has no luck finding it.

“Pat Ungaro is not one of my favorite people right now.”

***

There is definitely some validity to the claim that Wal-Mart forces job losses and wage decreases when it enters a community.

A study released in 2005 by David Neumark, an economist from the National Bureau of Economic Research, found that in counties that have had a Wal-Mart for 30 years or more, earnings per person dropped by 5 percent.

A different, Wal-Mart-sponsored, study showed that American wages dropped 2.2 percent between 1985 and 2004, but prices dropped 3.1 percent, meaning consumers actually increased their buying power by .9 percent.

In fact, some economists have argued that Wal-Mart’s low prices are primarily responsible for keeping inflation in check over the last decade.

According to statistics from Ohio’s Department of Labor Statistics, between 2000 and 2004, Mahoning and Trumbull counties lost 3,417 retail jobs, which amounted to a $15.98 million blow to the local economy in lost wages. While it’s hard to directly attribute one specific reason for the job losses, it would be nearly impossible to argue that Wal-Mart didn’t play at least some role. Even if Wal-Mart isn’t hurting the Mahoning Valley, it certainly isn’t helping it.

When asked about the retail losses, Pat Ungaro says “It’s possible that Wal-Mart, in being as aggressive as they are in pricing, they might have knocked out a lot of businesses. I think that’s possible, yeah. I don’t know the answer, but generally speaking, I’d say Wal-Mart. It’s gotta be.”

But doesn’t encouraging Wal-Mart to come to your city only make things worse?

“No, I don’t see it that way. I don’t think it makes it worse. I think its capitalism. It the way our econmy functions. I think you do it the way the unions are doing it. They’re putting pressure. I think that’s the way you do it.”

Is there a pressure you can exert as a township administrator?

“That’s somebody else’s problem, not mine,” Ungaro says. “I want them here. It’s pretty hard for me to say ‘Come here, build a 225,000 square foot thing, but you better get your healthcare.’ They should have done that in Boardman. They should have done that in Austintown. They should have done that at the Eastwood Mall a long time ago. They didn’t do that then and they didn’t succeed if they tried. I mean, bottom line is, it is the way it is.”

UFCW organizer Mike Martino has tried to fight that battle. Between 2000 and 2005, he helped try to unionize a small division of employees at the New Castle, Pa. Wal-Mart. Despite some initial hope, when the vote was finally taken, the employees voted 0-17 to keep out the union. His union no longer tries to organize Wal-Marts.

To Wal-Mart’s regular customers, all the bad press in the world won’t convince them the retailer hurts local economies.

In the Poland Wal-Mart parking lot, shopper Zara Rowlands says she is thrilled the proposed Liberty Supercenter will be 10 minutes from her home in nearby Hubbard.

“There are a lot of people who need jobs,” she says. “It will do wonders for the economy.”

E-mail Leonard Glenn Crist at lennycrist@gmail.com