Motorola will close Texas factory, stop assembling phones in the US

May 30, 2014
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And just like that, Motorola is wrapping up its grand US manufacturing experiment.

Last year, Motorola opened a phone assembly facility in Fort Worth, TX, hoping that economies of scale would help it offset the higher labor costs associated with making phones in the United States, compared to China and other developing countries. At its peak, 3,800 workers were employed in the factory, and most of them were tasked with assembling the Moto X.

Today Motorola announced that it would be closing the Fort Worth factory by the end of the year. According to Mark Randall, VP for supply chains and operations, the closure is the result of weak sales of the Moto X, associated with high costs.

Currently, the factory employs 700 workers; it’s not clear what will happen with these workers, as some of them may actually be employed by Motorola’s manufacturing partner Flextronics.

Motorola’s President Rick Osterloh, who took the reins over from Dennis Woodside earlier this year, blamed poor market conditions for the company’s failed venture in home-based manufacturing. “What we found was that the North American market was exceptionally tough,” said the executive.

The Moto X came with some interesting new features and a customizable appearance, but ultimately the device failed to make a meaningful impact. Motorola found more success with the no-frills Moto G, and hopes to repeat the performance with the Moto E, which is even cheaper, at $129 unlocked. According to Strategy Analytics, Motorola managed to sell just 900,000 Moto X units in the first quarter of this year.

In the future, the Moto X will be assembled in factories in China, Brazil and other locales, said Motorola, who later this year will become a unit of Lenovo, one of the world’s biggest PC and smartphone makers.

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