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US: Wal-Mart's Detractors Come In From the Cold

by MICHAEL BARBARONew York Times
June 5th, 2008

Over the last several months, a confidential report has circulated within the headquarters of Wal-Mart Stores, proposing sweeping changes to its employee health care plans.

It looks like a typical corporate planning document, but it is not. The nine-page report, written by an Emory University professor, Kenneth Thorpe, was commissioned, paid for and given to Wal-Mart by its longtime foes, the Service Employees International Union, and a group the union finances, called Wal-Mart Watch. They are known for attacking the chain, not cooperating with it.

But after waging an aggressive public relations campaign against Wal-Mart for three years, the company's full-time, union-backed critics, who once vowed never to let up, are lowering their pitchforks.

Shrill condemnations and embarrassing leaked documents are giving way to acknowledgments of progress - and, in the case of Wal-Mart Watch, free advice.

"It's fair to say we have been less in-your-face," said David Nassar, the executive director of Wal-Mart Watch, which had hammered the company in stinging newspaper advertisements and provocative reports with titles like "Shameless: How Wal-Mart Bullies Its Way Into Communities Across America."

The mellowing of the anti-Wal-Mart movement is an unexpected development for the retailer, whose public image and share price were bruised by the well-financed union campaigns. On Friday, when the chain holds its shareholder meeting in Arkansas, investors are likely to applaud Wal-Mart for fending off these detractors.

"It definitely has helped the company," a retail analyst at Deutsche Bank, Bill Dreher, said. "Those attacks hurt Wal-Mart."

The union-financed campaigns were started in 2005. As the groups turned up the heat on the company, Wal-Mart was at first defensive, but eventually it responded in ways few of its critics expected. The company expanded its health care plans to cover more workers, though still not enough to satisfy the unions. And it made commitments to the environment, such as becoming the country's biggest seller of more efficient light bulbs.

Indeed, Wal-Mart has gone so far on some initiatives, like the environmental programs, that it has started to draw scattered attacks from the right, particularly from a group called the National Legal and Policy Center that has accused the company of giving in to political correctness.

Now, the union-backed groups appear to have concluded it would be more constructive, sometimes, to engage Wal-Mart. That leaves them navigating a complex situation in which they have to decide, issue by issue, whether to shake hands with the company or to slap it.

Since late 2006, the head of the union that provides the majority of financing to Wal-Mart Watch, Andrew L. Stern, has met repeatedly with the chief executive of Wal-Mart, H. Lee Scott Jr., to discuss solutions to the country's health care crisis.

Mr. Stern said his dialogue with Mr. Scott "does not end the need for the vigilance of Wal-Mart Watch."

Wal-Mart Watch has always insisted that it does not take orders from Mr. Stern, even though his union provides most of its financing. But those with knowledge of Wal-Mart Watch's operations say Mr. Stern's growing relationship with Mr. Scott has inevitably influenced the group's behavior.

They point to the health care report Wal-Mart Watch commissioned from Mr. Thorpe that was handed over to Wal-Mart this year, rather than published to embarrass Wal-Mart, as it might have been in the past. It is unclear whether the report will influence the company to alter its health plans.

Mr. Nassar said that it was the service employees union, not Wal-Mart Watch, that gave the report to Wal-Mart. Even within the labor movement, Mr. Stern's work with Mr. Scott has raised eyebrows, with some worried that he has obtained too few concessions while allowing Wal-Mart to claim support, however limited, from an old foe.

The less antagonistic approach from the union-backed groups is evident inside Wal-Mart, which had hired dozens of new employees to combat the negative public relations onslaught.

Over the last several months, the company has disbanded a campaign-style war room set up in 2005 to do battle with Wal-Mart Watch and another group, WakeUpWalMart.com, which is financed by the United Food and Commercial Workers Union.

And Wal-Mart has disbanded an advocacy group, called Working Families for Wal-Mart, intended to rally support for the company (and serve as a counterbalance to the anti-Wal-Mart groups). A company spokesman would not comment for this article.

Wal-Mart Watch and WakeUpWalMart.com still level occasional attacks against Wal-Mart, and remain potent watchdogs on some issues. That was made evident this year, with the case of Deborah Shank.

Ms. Shank, a shelf stocker at a Wal-Mart in Missouri, suffered brain damage in a car accident and won an insurance settlement of $700,000. Wal-Mart then tried to recoup more than $400,000 from her, to cover what the company had spent on her medical expenses.

Wal-Mart Watch and WakeUpWalMart.com quickly swung into action. Wal-Mart Watch, for example, set up a Web site that allowed thousands of people to e-mail the top 40 executives at Wal-Mart, expressing their opposition to the company's position.

After the groups' efforts drew heavy - and overwhelmingly negative - media attention to Wal-Mart's conduct, the company backed down in April, saying it would forgive the expenses.

Such campaigns, many of them created by the union-backed groups or amplified by them, seemed to materialize every few weeks beginning in 2005.

That year, the newly formed Wal-Mart Watch obtained a copy of an internal Wal-Mart memorandum proposing ways to cut employee health care costs by hiring fewer unhealthy workers.

That same year, when WakeUpWalMart.com was founded, the group paid for TV commercials that questioned whether Christians should shop at Wal-Mart, given its wages and benefits. "Jesus would not embrace Wal-Mart's values of greed and profits at any cost," it said.

But such flare-ups are far rarer now, and they tend to attract significantly less attention.

Leaders of both groups said their original burst of activity was never sustainable, and was intended as a quick way to attract attention.

"You can't keep up that white hot level of energy," Meghan Scott, the communications director at WakeUpWalMart.com, said.

Mr. Nassar, of Wal-Mart Watch, said his group needed to "transition away from being a campaign into being an organization that is here for the long haul."

Much like a political campaign after Election Day, the groups have reduced their staffs. Wal-Mart Watch, which once had 40 workers, now has 10. WakeUpWalMart.com had up to 12 workers, but has about 6 today. And its aggressive founders, the former political operatives Paul Blank and Chris Kofinis, left in early 2008.

Both groups insist that, even if there is a change in their tone or size, they have not wavered from their mission of fighting to make Wal-Mart a better employer that pays higher wages and offers more generous health care.

"I don't think there has been significant progress," on those fronts, Ms. Scott said. Wal-Mart, she said, still requires workers to meet deductibles ranging from $700 to $4,000 a year for their health insurance. And most workers earn less than $20,000 a year.

But Mr. Nassar and Ms. Scott acknowledge that the appetite for criticism of Wal-Mart, which seemed insatiable at first, has waned, especially in the news media. "There has been a certain amount of fatigue about writing the Wal-Mart-is-bad story," said Mr. Nassar. Ms. Scott described "a cooling down of the Wal-Mart story."

Both said their groups are pursuing different, perhaps less high-profile, strategies than they did in 2005 and 2006. Wal-Mart Watch, for example, wants to be viewed as the best source of outside research on Wal-Mart; WakeUpWalMart.com is reaching out more to regional news outlets, rather than big national newspapers.

Both said they would remain critical when it made sense. "As the company makes changes, it becomes harder to be critical," Mr. Nassar said, "because our critique has to become more nuanced."

"But that's O.K.," he added. "We didn't sign up for an easy job."




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