David Glass, a Successful Successor; Tumbling Tumbleweeds and a First Date

Successful Successor: You probably know the name Sam Walton. He’s the small town Arkansas retailer who turned a five-and-dime chain store operation—the largest Ben Franklin variety store franchise in 1962—into what is now the largest retail company in the world, Walmart. Sam (I’m entitled to call him by his first name because I knew him and, more importantly, he knew me) was as much a showman as a retailer. He knew how to get the most out of people, whether they were store managers, headquarters buyers, truck drivers or cashiers. 

Another aspect of Walton’s success was his ability to spot and employ talent. He chose David Glass years before Glass succumbed to the call from Bentonville, Ark., to become the chief financial officer of a chain with less than a billion dollars in sales. As flamboyant and media savvy as Walton was, Glass was the opposite. Glass was a numbers man. Though he had a dry sense of humor, he was mostly taciturn in public. He let the numbers do most of his talking. 

Glass (I could call him David, for we knew each other, as well) championed supercenters, the cavernous combination of discount stores with a full-fledged grocery, as he had worked for a supermarket chain prior to joining Walmart. His advocacy was spot on. Walmart today sells more grocery items than anyone else in the world. 

When Walton retired as CEO in 1988, Glass succeeded him. During his 12 years at the helm, Walmart sales grew from $16 billion to $165 billion. He pursued international expansion. 

News broke over the weekend that Glass died January 9 from complications from pneumonia. He was 84.

After his retirement in 2000, Glass indulged his passion for baseball by buying the Kansas City Royals. For years the Royals struggled under Glass’ Walmart-inspired low-cost creed. But in 2006 he reversed course, hired Dayton Moore as general manager and started investing in personnel. The Royals won the World Series in 2015. Last year Glass sold the franchise for about $1 billion. Not bad for his initial $96 million investment.

As much as Glass was instrumental for Walmart’s success, it was his time before the NBC Dateline television camera that sticks in my mind. He was not the most approachable of Walmart executives. Behind his resonant baritone voice and wry sense of humor, I always suspected he did not like sharing anything with the press. 

His signature moment with the media occurred in December 1992 on NBC Dateline. Glass was confronted with allegations Walmart suppliers in Bangladesh employed underage child laborers, that the company’s vaunted Made in America program was a sham.

At the time, Glass had bushy, dark eyebrows that slanted up his forehead. With the Dateline camera angled from below his seat, he was the picture of Mephistopheles. He was the picture of evil incarnate.

Glass stormed out of the interview. Though he returned to face the Dateline cameras weeks later, the damage to his and Walmart’s reputation was done. 

Shortly after that incident Walmart professionalized its media relations office. Camera angles were to be scrutinized as diligently as profit and loss statements. 

Tumbling Tumbleweeds: The national weather has been frustratingly crazy of late. Torrential rainstorms. Tornadoes in the heartland and south. Heat waves in the northeast followed by a massive snowstorm blasting across the continent. And earlier this month a mess of tumbleweeds in the Pacific Northwest that buried cars and stalled traffic on a state highway in Washington (https://www.livescience.com/tumbleweed-traps-cars-washington-highway.html).

Have you ever driven as a tumbleweed swirled into you? I have. It was a scary experience.

As I was motoring—okay, speeding—down an interstate outside Reno, NV, on my way to an interview at a JC Penney distribution center a wall of tumbleweeds three lanes wide was blowing towards me. There was no avoiding a collision. I braced for contact. 

When it happened I could do nothing more than smile at my naiveté. Had I not watched so many westerns to know tumbleweeds were mostly air? When my car penetrated the tumbleweed it was as if it evaporated before my eyes. 

It was a surreal experience. 

A Different Drummer: I just finished watching a CNN documentary recorded earlier this month about Linda Ronstadt. Like many I rank her as one of my all-time favorite singers. 

I first saw Ronstadt in concert at Brooklyn College in the fall of 1968. Linda Ronstadt and the Stone Poneys were the opening act for Country Joe and the Fish. I can’t remember much about Country Joe, but from the moment Ronstadt started her group’s set by wailing “Different Drum” EVERYONE knew hers was a voice that couldn’t be contained within the walls of a concert hall. 

As an associate- and eventual chief editor of a college newspaper I scored free tickets, always in good locations, to many concerts. Not that tickets cost a lot back then. For a Joni Mitchell-Tim Hardin concert a month later ticket prices were $3.50, $3.00 and $2.50. In today’s dollars that would be $25.71, $22.04, and $18.37, respectively. 

College concerts back then mostly featured folk musicians and comedians. Gilda’s and my first date was a Tom Paxton-Dick Gregory concert in December 1969. Gilda asked me to accompany her to a Christmas party one of her political science teachers was hosting in his Brooklyn Heights apartment. I said I would go only if she was my date for the Paxton-Gregory concert. The rest, as they say, is 50 years and running history. 

Lessons From Tariffs, Import Quotas and Walmart

Let the trade wars begin.

In an effort to resuscitate American industry, Donald Trump launched the first salvo Thursday in what may become a global trade war by imposing a 25% tariff on imported steel alongside a 10% tariff on imported aluminum. How the world will react, and if Trump has a counter-counterattack, remains unclear at this time.

It is not the first time America has sought to level off its unbalanced trade, particularly with China and other countries that flood—some would say, dump—cheaper alternatives to domestic U.S. production. In a global economy, manufacturers seek out the least expensive raw materials, labor and finished products. Too often, that means consumers at home and abroad think American made goods are overpriced. 

Heck, relocating supply lines has long been practiced by American industry. Textile companies fled the North to establish plants down South where non unionized workers earned less than their northern counterparts. But even lower southern wages could not compete with foreign laborers in Latin America and Asia. Executives fluent in global sourcing minutia shifted manufacturing from country to country to stay below import quotas established by the American government.

Trump champions America First, so it is not surprising he would favor steel and aluminum tariffs, particularly since underutilized plants are mostly located in Rust Belt states Trump won in 2016 and needs to win in 2020—Ohio, Pennsylvania, West Virginia, Michigan, Wisconsin. It seemingly does not bother Trump that prices of many goods that include steel and aluminum components will rise and could cost more jobs in related industries than would be created by the metal makers.

Trump, who spoke out against Chinese dumping practices years before his presidential run, was not the first business titan to see the danger of a depleted American manufacturing base. Back in 1985, Sam Walton positioned Walmart as an advocate of “Buy America.” 

I went to the source—my bound copies of Chain Store Age—to review how the retail industry and I reacted to import quotas and to Mr. Sam’s defensive ploy to combat a growing criticism of his company, at $6.5 billion, the seventh largest general merchandise chain, a little less than a third the size of $21.7 billion Sears, Roebuck and Co. and Kmart’s $21.1 billion. (Today, Walmart is the largest retailer in the world with sales of $485.9 billion in the recently concluded fiscal year. Sears and its now-sister company Kmart have a combined volume of less than $17 billion). 

Not surprisingly, retailers, who normally supported Reagan administration policies, railed against quotas. Under the headline, “Protectionism: Policies leave chains vulnerable,” CSA reported in September 1984 that tighter import quotas fueled dramatic price increases in many merchandise categories. Kmart, for example, estimated the cost of goods from China increased 25%. 

Fast forward to Trump’s imposition of tariffs and the reaction is no less muted. Thursday, National Retail Federation president and CEO Matthew Shay said, “A tariff is a tax, plain and simple. In this case, it’s an unnecessary tax on every American family and a self-inflicted wound on the nation’s economy. Consumers are just beginning to see more money in their paychecks following tax reform, but those gains will soon be offset by higher prices for products ranging from canned goods to cars to electronics.

“The retail industry is extremely concerned by the administration’s apparent desire to ignite a trade war, where the net losers will be the very people the president wants to help. On top of steel and aluminum tariffs, retailers are troubled by the direction of the ongoing NAFTA negotiations and the threat of additional tariffs on consumer goods from China. The true greatness of America cannot be realized when we build walls blocking the free flow of commerce in today’s global economy.”

Importing helped catapult the Bentonville, Ark.-based company into a global powerhouse. To be sure, few if any of Walmart’s competitors disdained importing. But Walmart’s heralded logistical and technological efficiencies accelerated its growth.

When Sam Walton started speaking publicly about imported goods in August 1984, his company was a burgeoning juggernaut but still not near the size of Sears and Kmart. He framed the challenge as dual pronged—reduce the trade deficit by buying American made products, but if that is not possible, develop products and jobs in Mexico, Central America and South America to “improve the standard of living for the average citizen in Central and South America.” 

Within a year Walton launched a “Buy America” program. Skeptics abounded. The program persisted, but in December 1992, five months after Walton died, NBC Dateline confronted company CEO David Glass with allegations products marketed as Made in America really were imported from Bangladesh. The adverse publicity led to the program’s demise.

Several years ago, Walmart started a Made in America program. It proudly touts a claim that “two-thirds of what Walmart spends on products sold in U.S. stores is made, sourced, assembled or grown within the USA.” That is “according to our suppliers,” Walmart acknowledges.

That provides a wide definition of American made. (Sales last year in domestic Walmart stores and Sam’s Clubs totaled $365.2 billion.) It cannot be argued that Walmart’s expansion and buying practices did not gut many a small town of local retailing and small malls, as well as contribute to the closing of many domestic manufacturing plants supplanted by foreign suppliers. 

But it is equally indisputable that shopping at Walmart has stretched consumer dollars and helped keep inflation in check.

It’s too soon to say what lasting impact Trump’s tariffs will have on sales, on inflation, on employment. But it’s safe to say they will not markedly change our balance of trade with the rest of the world.

From Wal-Mart CEO to Owner of the KC Royals

David Glass stood before exultant fans in Kauffman Stadium Wednesday evening. As television cameras recorded the scene, the 79-year-old owner and chief executive of the Kansas City Royals thanked the faithful for their support of his team that, by virtue of their four game sweep of the Baltimore Orioles, is headed to the World Series for the first time since 1985. Indeed, this is the first time in 28 years that the Royals had qualified for any post-season activity.

Glass has owned the Royals since he shelled out $96 million in 2000. For the seven years prior to his ownership he was the CEO of the baseball franchise founded by Ewing Kauffman, who died in 1993. During Glass’ tenure as head Royal, Kansas City was a model of ineptitude, setting records for annual futility. Fans were infuriated, believing the team was more concerned with fielding the lowest paid roster in the sport than with being competitive. This year’s payroll started at $92 million, 19th out of the 30 major league teams.

Paying low wages was something Glass was all too familiar with. You see, from 1988 to 2000, Glass was president and CEO of Wal-Mart. And that’s where my connection to David Glass lies. As head of Wal-Mart, succeeding founder Sam Walton, Glass oversaw its growth from $20.6 billion to $191.3 billion, from 1,381 domestic stores to 4,190 stores in countries as diverse as Great Britain, Mexico, Argentina, Brazil, China and Germany. 

He has a wry sense of humor. He could be self-effacing. He would tell the story of the time Walton tried to recruit him in 1962 when he was invited to attend the opening of the second Wal-Mart, in Harrison, Ark. At the time Glass was a financial officer with a small drug store chain in Springfield, MO. As related by Vance H. Trimble in his biography of Walton, Glass said, 

“It was the worst retail store I had ever seen. Sam had brought a couple of trucks or watermelons in and stacked them on the sidewalk. He had a donkey ride out in the parking lot. It was 115 degrees, and the watermelons began to pop, and the donkey began to do what donkeys do, and it all mixed together and ran all over the parking lot. And when you went inside the store, the mess just continued, having been tracked in all over the floor. 

“He was a nice fellow, but I wrote him off. It was just terrible.”

Fourteen years later Glass joined Wal-Mart.

I met Glass about three years later. He was not the most approachable of Wal-Mart executives. Behind his resonant baritone voice I always suspected he did not like sharing anything with the press. And this was before his signature moment with the media. That occurred in December 1992 on NBC Dateline. Glass was confronted with allegations Wal-Mart suppliers in Bangladesh employed underage child laborers, that the company’s vaunted Made in America program was a sham.

Glass, at the time, had bushy, dark eyebrows that slanted up his forehead. With the Dateline camera angled from below his seat, he was the picture of Mephistopheles. He was the picture of evil incarnate.

Glass stormed out of the interview. Though he returned to face the Dateline cameras weeks later, the damage to his and Wal-Mart’s reputation was done.

Over the last five years the Royals have been more competitive. Their general manager, Dayton Moore, has made many shrewd roster moves. As he stood on the infield stage under a black League Champions hat, David Glass could only hope fans would be more appreciative of his management of their beloved, long-suffering Royals. It would help if they won the World Series.