It was with great fanfare that Motorola launched its factory in Fort Worth, Texas, in May 2013. It was where U.S.-bound custom Moto X orders were assembled and shipped from. But the “Assembled in USA” dream appears to be coming to an end with The Wall Street Journal today reporting that Motorola will close the factory by the end of the year. Two simple reasons are provided to explain the decision: weak sales and high costs. “What we found was that the North American market was exceptionally tough,” Motorola President Rick Osterloh explained.
While the factory employed some 3,800 workers at its peak, that number has dropped to 700 today. With Motorola selling about 900,000 Moto X smartphones in the first quarter of 2014 (according to IDC), the factory was not able to hit the volumes necessary to reach the economies of scale that would have kept it going. Its higher labour and shipping costs than those at plants in China and Brazil probably made for an easier decision when it came time to deciding which factory to close down.
Motorola was quick to point out that the closure of the Texas Moto X factory was independent of the deal that will see Lenovo acquire Motorola later this year for US$2.91 billion. It’s likely that Lenovo, with its well established manufacturing and supply chain systems, would have announced a similar decision had Motorola not done so today.
It’s not clear what today’s decision will mean for the upcoming Moto X+1. Will Motorola be able to continue to offer the range of customization options albeit with longer shipping times and costs? Or will it move to accessories such as customizeable backplates as we have seen with the lower-cost Moto G and Moto E?
Sources : The Wall Street Journal // The Verge