Tuesday, October 25, 2016
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Onshoring Gets Huge Boost from Motorola

Ft. Worth, TX — In an unprecedented move that will probably draw many copycats, Google's Motorola has opened a large manufacturing plant in Ft. Worth, Texas, to manufacture the company's newest breed of smart phone, the Moto X. The facility is already up and running, doing pilot runs of small telephone quantities. But Motorola is hiring, and expects that the new endeavor will employ at least 2,000 workers when it is up to full strength by the end of August.

This move is just another demonstration of the increasing amount of frustration and dissatisfaction with manufacturers in the Far East, as well as the increasing cost of doing business there. On-shoring has become more palatable partly due to rising labor and materials costs in China and other high-tech, low-wage nations. Other elements to the change involve the stress and difficulty of shuttling designers and engineers back and forth between U.S.-based offices and the Far East manufacturing facility, and finally there's the cost and time factor in getting finished product back to the USA. OEMs are increasingly finding that on-shoring production is now becoming an almost even match with the costs of producing in China, Singapore or India.

Empty Building
Starting with an empty and ready-to-use factory building, new assembly lines have been installed, and offices have been built in anticipation of a summer launch of the new smart phone.

Originally announced by Dennis Woodside at the AllThingsD conference on May 28, the move will not affect Motorola's other global operations. The company's relationship with its manufacturing partner, Flextronics, will continue, making phones in China and Brazil for distribution in those markets, as well as its new venture — making phones in the USA for distribution in North America.

Motorola reportedly will not stop at 2,000 employees. The building has lots of room for further expansion, which may well continue as the company develops the North American market for the new phone, and very likely other new products. Long term, the facility has the expected capacity to produce 20 million devices a year or more, depending on product type and technology.

The new Moto X phone will be launched across multiple service providers, so no one single provider is being given any special marketing advantage. While the company cannot reveal any further re-shoring operations, it does expect to see elements of the extended supply chain follow the assembly back to the USA. This will probably become a new search for made-in-USA sources when buying component parts.

The building was empty when Flextronics leased it, and the company has had to refit it with equipment for its lines and staff it from scratch. The ultimate goal is to turn it into a world-class facility.

Made in USA
There are currently more than 130 million smart phones in use in the U.S., and not one of them was made in USA — until now. There are several business advantages to having Motorola's California- and Illinois-based designers and engineers much closer to the factory. It will also shake down to simply getting product to market that much faster, without all of the hassles normally attributable to manufacturing on the other side of the globe.

The big question now is how this new phone will fare in competition to the many smart phones that are already out there. It reportedly has some very captivating new features that will make it very desirable. Then there is the cost; how much will the major service providers charge for this new kid on the block along with new service contracts? Stay tuned.  

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