Motorola Mobility’s effort to bring smartphone manufacturing to the United States has failed, and the company says it will close its Fort Worth factory by the end of the year. By that time Motorola Mobility expects to be owned by China’s Lenovo, which is buying the handset business from Google for $2.9 billion.
The Texas manufacturing facility, which has been open for one year, currently employs 700 people who make the Moto X Android smartphone. Manufacturing in the U.S. has helped Motorola offer custom-designed Moto X handsets, but consumers have not been enthusiastic. Fewer than a million Moto X smartphones were sold worldwide during the first quarter, according to Strategy Analytics. Now both AT&T and Verizon are offering it for no money down with a two-year contract.
Motorola is no longer one of the world’s top five smartphone makers, but Lenovo is, and the combined companies will become the world’s third largest smartphone maker, behind Samsung and Apple. Currently Lenovo is in fourth place, behind Chinese competitor Huawei, according to IDC.
Lenovo may have seen little value in a U.S. manufacturing operation. Analysts at IHS iSuppli said last year that the labor cost of each Moto X smartphone was $12, about $4.00 more than it costs to make a similar smartphone in Asia. Motorola apparently sourced lower-cost components in order to keep its total manufacturing costs in line with those of its competitors.
But the Moto X has failed to keep up with competitors in the marketplace. Despite a number of very positive reviews, the phone never gained a strong following. The Moto X’s lower-cost cousin, the Moto G, has outsold the Moto X worldwide by about 3-to-1 according to Strategy Analytics. More recently Motorola launched an even cheaper Android phone, the Moto E.
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