Business
1:16 pm
Fri May 30, 2014

Google's Motorola Mobility To Shut Down Fort Worth Smartphone Factory

Google's Motorola Mobility smartphone unit will shutter its Fort Worth factory by the end of 2014, barely a year after it opened with much fanfare as the first smartphone plant in the U.S.

Motorola Mobility spokesman Will Moss says sales of its flagship handset, the Moto X, were too weak and the costs of running the plant too high to keep operations going.

Gov. Rick Perry and Google executive chairman Eric Schmidt were in attendance in Fort Worth last fall on opening day. Also there was Mike McNamara, CEO of Flextronics Ltd., the Singapore-based international contract electronics manufacturer that runs the Alliance plant.

Moss says the factory employs about 700 workers who assemble the Moto X smartphones for the U.S. market. He declined to comment on whether Motorola would retain the workers.

"It's a very good phone"

KERA's Lauren Silverman has more:

Part of the sales pitch for the Motorola’s flagship handset – the Moto X – was that it was American made, the only smartphone to be assembled in the U.S. But sales of the phone, according to a Motorola spokesman, were too weak and the costs of running the plant too high to keep operations going.

“I can’t say I was surprised, I was disappointed," said Chris Davies, executive editor with SlashGear.com. “I think Motorola’s plans were ambitious. I don’t think it was ever going to sell enough Moto X devices to warrant the kind of investments that manufacturing in the U.S. would require.”

The problem, Davies says, isn’t the phone.

“It’s a very good phone, the user experience itself is very, very good," he said.

The small, compact device has a Google Now integration so you can set it on the desk and speak to it, without touching any buttons. Still, Davies says it was up against some big names and marketing budgets with Apple and Samsung.

“The smartphone industry is very low margins," Davies said. "You get the best bang for your buck, I would imagine, if you outsource everything to other countries."

So the factory that employs about 700 people in Fort Worth will close by the end of this year. A spokesperson declined to say whether the workers will still have jobs.

 

Google, Motorola and Lenovo

Google announced in January that it intended to sell Motorola Mobility's smartphone business to Lenovo Group for $2.9 billion. That deal is expected to close later this year, The Wall Street Journal reports.

Lenovo officials told KERA in January: "There are now no plans to change Motorola’s approach to manufacturing." Lenovo said earlier this year it's "highly committed to the U.S. market and Motorola Mobility’s U.S. presence."

"Lenovo has a strong record of investing in U.S. hardware companies, and creating growth," Lenovo officials said at the time.

KERA gottour of the Fort Worth Moto X factory last year.

The Wall Street Journal reports:

At its peak late last year, the plant employed as many as 3,800 people, most on behalf of contract manufacturer Flextronics International Ltd. FLEX -0.49% Today, the factory employs about 700 workers who assemble high-end Moto X smartphones that are sold in the U.S., a Motorola spokesman said.

Why Fort Worth?

KERA's Lauren Silverman reported last year on Motorola choosing to open a plant in Fort Worth:

Mark Randall is Motorola’s senior vice president of supply chain and operations. He says rival companies have shied away from manufacturing here in recent years because of high labor costs. But those are dropping, and Google-owned Motorola sees other advantages.

“We factor things like transportation, and other value added services that we’re able to offer our customers in the future.”

Fort Worth might not seem like an obvious choice, but Randall says the city is logistics heaven. There’s an industrial airport with a low tax rate, access to a large freight rail network and the factory Motorola is moving into used to be a Nokia facility.

“It’s designed perfectly to be a cell phone manufacturing facility,” Randall says.

The area is also home to the so-called “telecom corridor” – where companies such as Verizon, Ericsson and AT&T have offices. Fort Worth Mayor Betsy Price says Motorola will bring the city 2,000 jobs.