Editor's note: On May 30, 2014, Motorola announced plans to close its Texas assembly plant by the end of the year.
The Moto X is a return to form for Motorola, and it represents the first device it has produced from start to finish as a Google company. But while the Moto X is a good smartphone in its own right, half of the story is Motorola's surprising decision to move its final assembly to the US. This, according to the company, is what enables it to offer a quick turnaround time and direct fulfillment for customized, built-to-order devices.
To accomplish this, Motorola partnered with Flextronics to refab a factory in Texas formerly used by Nokia. In a mere six months, the factory was completely updated and transformed to Motorola's specifications, which included the hiring of 2,500 workers to make it run. Motorola did not actually make a final call to do manufacturing in the US until late 2012, but the factory was operational by August 6th of this year. The factory currently puts out about 100,000 devices per week, but Motorola says that it's possible to scale it to tens of millions of units. Given that more than half of the over 400,000 square foot factory floor sits unused right now, that's not too hard to believe.
Motorola CEO Dennis Woodside tells us that having the factory in the US was crucial for the MotoMaker customization program to even exist, but it also offers other benefits to the company from an engineering standpoint. Since Motorola's devices are designed in the US, having the manufacturing close by lets engineers make quick changes and tweaks to the design and look of the device much faster than if it were located overseas.
"There is a premium [with building in the US] but it's not material to the economics of the business. It's a myth that you can't bring manufacturing here because it's too expensive," says Woodside. "We've observed that wages in Asia are going up, wages here are relatively steady, consumers care more about where their products are being built, and you have advantages of having design close to your manufacture. Those advantages will well outweigh the costs that we have today and those costs will go down over time."
For Motorola, final device assembly in the US is just a start. The next step the company hopes to accomplish is to move the fabrication of the external components — the back casing, the bezels surrounding the display and the camera, and the volume and power buttons, etc. — to the US. It also expects other companies in the consumer electronics industry to follow suit. "If you look at the automotive industry or home appliances, manufacturing is coming back to the US, and there's good reasons for it," says Woodside.
Motorola isn't shifting all of its manufacturing to the US just yet. As it is, the Texas factory is only used for final assembly — most of the external and visible parts of the phone are built in Asia and then shipped over (Woodside says that other internal components are already sourced from about 15 states across the country). Motorola is also maintaining its factories in China, Brazil, and Argentina. "There are some products for which that cost differential is significant, and it does change your economics," notes Woodside. "For a high-tier phone like the Moto X, it doesn't."
Whether other consumer electronics companies jump on the bandwagon being steered by Motorola remains to be seen, but the company says it is playing the long game. "We're committed to Moto X here and we're thinking for future generations of product and how we're going to use this facility," claims Woodside. "It's going to take some time for us to deliver the kind of innovation that Google aspires to and for the world to see that, but we're taking a very long-term view."