Motorola Mobility will shutter its Fort Worth, Texas manufacturing plant, the Wall Street Journal reported on Friday. The plant, which currently employs 700 people, opened last September and will close by the end of 2014. Motorola President Rick Osterloh told the Wall Street Journal the decision to close the plant was not related to Motorola’s impending sale from Google(s goog) to Lenovo.
The Fort Worth plant, operated in conjunction with Flextronics, primarily assembled the Moto X, Motorola’s high-end smartphone, which can be customized with a variety of bezel colors and case backings. In addition to allowing Motorola to tout its phones as “Made in USA,” the U.S. factory was intended to help Motorola ship out customized devices quickly. But disappointing Moto X sales and higher costs compared to overseas plants made the Fort Worth factory unnecessary.
In addition, Motorola has been pursuing a different global strategy: instead of high-end devices targeted towards the U.S. consumer, it’s been making less expensive phones for emerging markets. Motorola currently has two value-priced phones for sale, the Moto G, which costs $220, and the Moto E, which costs $130. Neither of those devices are assembled at the Texas factory because at those prices, there’s a lot of pressure to keep production costs down. Instead of the Moto X’s customizable back, the Moto E and Moto G come with colorful battery covers which can be swapped out and retail separately.
When the plant opened less than a year ago in September 2013, while giving a tour to Texas Governor Rick Perry, Google Chairman Eric Schmidt said, “Google is a place where we take bets. This is a bet we’re taking on America, on Texas, on this incredible workforce that’s assembled here. We think this is a safe bet. The reason is, the math works.”
But assembling smartphones in the United States is a tricky proposition. Few American device makers handle both design and assembly. Most choose to focus on the design and leave the production to companies like Hon Hai Precision Industry, better known as Foxconn. Not only does Foxconn enjoy the benefit of lower labor costs, most of the components of a phone are produced in specific regions of China, so it makes sense to also do the assembly in the same region.
Lenovo is expected to complete the purchase of Motorola Mobility from Google later this year. Although Motorola may be closing manufacturing plants in Texas, earlier this year it opened a giant new office in downtown Chicago which employs nearly 2,000 engineers and executives.
Image courtesy Google Street View/Via 360