Archive for Wednesday, February 4, 2004

L.A. worries about Wal-Mart’s effect on economy

February 4, 2004

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— This city is on the verge of telling the nation's largest retailer to get lost.

In a show of hostility toward a company promising to bring hundreds of jobs and rock-bottom consumer prices to poor, blighted neighborhoods, the Los Angeles City Council this month may ban Wal-Mart from opening its popular "supercenters," sprawling new stores that sell discount groceries along with many other bargain goods.

No other city so big has ever taken on the retailer, which has been facing growing resistance in smaller communities around the country to both the size and the business tactics of its rapidly expanding chain of more than 2,900 stores.

Los Angeles is hardly trying to save its small-town charms. With nearly 4 million people and roads choked with traffic, it has none.

Rather, city leaders here say they fear the arrival of the retailer's biggest stores would drive down local wages, as rival businesses struggle to survive; wipe out more jobs than they create; and leave more residents without health insurance -- and with no choice but to use public hospitals and clinics that already are overrun by demand.

"They're a goliath, but we're a goliath, too -- and we want to send them a message," said Eric Garcetti, the Los Angeles councilman proposing the restrictions against the retailer, which appear to have strong council support. "We don't believe their business model is good for the kind of economic development that we want in the places where we need it most. And we want people to realize that the 10 cents they may save on a jar of pickles could mean paying another $5 in taxes for all the extra visits to local emergency rooms."

In recent years, Wal-Mart has encountered similar objections in communities from Atlanta to Albuquerque. But its plan to bring dozens of supercenters -- which are twice as large as its traditional stores -- for the first time to California is provoking a particularly strong backlash. The company, which is furious with the measures that some cities are crafting to block its expansion, is aggressively fighting back.

Besides filing lawsuits against government entities that block building plans, Wal-Mart is taking the battle to the ballot this spring. In the Los Angeles suburb of Inglewood and in Contra Costa County near San Francisco, two places where local leaders also have sought recently to stop its supercenters from opening, the company has succeeded in getting measures on the ballot that, if approved by voters, would clear the way for its expansion plans.

Company officials are confident of victory. Peter Kanelos, a Wal-Mart spokesman in California, said opposition to the company in the state is quite vocal but small, and that most consumers are clamoring for the kind of discount prices they will find at supercenters. He noted that in 2002 voters in the border town of Calexico easily overturned a measure their leaders had passed to block Wal-Mart and similar retailers from doing business.

"The reality is that this is not some huge grass-roots uprising," he said. "Most communities in the state do not believe that government should be restricting the shopping choices of their residents."

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