Motorola Mobility’s experiment in US-based manufacturing will be coming to the end of the road at the end of this year, as the manufacturer is set to shut down the Texas-based plant where final assembly of the Moto X is based at the end of the year due to the consistently low demand for the handset and the high costs involved in maintaining final production and the Moto Maker customization program in the US.
The plant opened to huge fanfare a year ago as an example of Motorola Mobility’s ambitious plans to challenge the perception that US-based manufacturing was too expensive to sustain compared to outsourcing, with the plant also serving as the central shipping point for the Moto Maker customization program. However, the overall higher cost of the plant and labor coupled with continually weak demand for the Moto X resulted in lower than expected sales volume, volume that never recovered even as Motorola Mobility took steps to cut Moto X pricing over the past year in order to spur sales.
Motorola initially launched the Moto X at $599 unlocked, and then launched the Moto Maker customization program as a timed AT&T exclusive product, which led to lower than expected sales volume, as many waited for other carriers to launch the phone with the customization program, or further price cuts before buying the phone, despite strong critical praise at the launch. Motorola then took further steps to drive Moto X sales and volume by holding frequent 1 day flash sales where the phone would be discounted heavily to $350 and even subsidizing Moto Maker customization in selected flash sales.
With Motorola Mobility being sold to Lenovo earlier this year, the fate of the Motorola assembly plant became an open question, as the manufacturing initiative was heavily subsidized and Lenovo currently emphasizes overseas manufacturing in order to cut hardware costs. As Motorola could never achieve the economies of scale needed to make the plant work, many industry observers were proclaiming that it was only a matter of time when the plant would shut down and not a question of if it would last.
While Motorola Mobility is going on record stating that the closure of the plant was planned long before the Lenovo purchase owing to the steady reduction of the contracted workforce from its initial peak of 4,800 workers to its current 700-person workforce, many observers will likely point to the closure as the beginning of Lenovo’s influence on the purchase, when all of the evidence states otherwise.
Motorola will continue to manufacture the Moto X after the shutdown of the Fort Worth plant by moving production to Brazil and China, among other countries and the Moto Maker customization program is also expected to continue, though the delivery times are also expected to increase as a result of the imminent closure.
With the recent success of the Moto G and Moto E, the brightspots for Motorola in the newfound focus on value-priced smartphones are paying off in the developing markets where those phones are targeted, but the shift in focus means that it still struggles to attract high-end smartphone consumers, while its competitors experience success with yearly Android flagships.