Advice for contemporary firms attempting to manufacture smartphones domestically, provided by an individual who initiated such efforts over a decade past
In 2013, Motorola made an attempt to produce its Moto X smartphone in Fort Worth, Texas, with the hope of capturing a bigger market share by offering a patriotic, US-assembled product. However, the factory faced several economic challenges that ultimately led to its closure and the shift of production overseas.
According to Dennis Woodside, the former CEO of Motorola, domestic manufacturing faced high labor and production costs, logistical challenges, and difficulties in finding skilled workers. These factors made domestic assembly unsustainable compared to cheaper overseas production.
The Moto X smartphone assembly attempt in Fort Worth faced challenges in training and retaining employees, as workers had plenty of other job options. The factory employed fewer workers over time, leading to a significant reduction before closure, indicating diminishing economic viability.
The situation is different in China, where the labor market to assemble smartphones is plentiful and the manufacturing sector has been booming. China offers a combination of craftsman skills, sophisticated robotics, and expertise in the computer science world, making its workforce ideal for smartphone manufacturing. In 2023, roughly 113 million people were employed in manufacturing in China, the most of any industry, according to China's fifth economic census.
The Moto X was designed to offer more customization than the latest iPhone or Galaxy phone, with consumers able to tailor certain details of the phone's aesthetic through Motorola's website. However, the customization appeal wasn't enough to offset the economic challenges faced by the domestic assembly.
The high costs contrasted sharply with global competition largely based in Asia and South America where labor is cheaper and suppliers are closer. Motorola's example illustrates broader challenges faced by tech companies trying to manufacture smartphones in the US, including expensive wages, a shortage of skilled labor, and reliance on major components sourced from Asia.
This situation remains relevant today, as policymakers like former President Trump have urged companies like Apple and Samsung to manufacture in the US, though analysts point out the difficulty of doing so profitably and at scale without automation. The US is grappling with a skill and demand shortage that makes it difficult to fill factory jobs or onshore production of tech products like smartphones.
Despite the challenges, some tech startups like Purism continue to make efforts to manufacture their products in America, albeit on a smaller scale. As artificial intelligence and automation play a bigger role in factories, many new manufacturing jobs will likely require fresh skills such as coding and data analytics. The approach to developing the talent required to fill these jobs varies significantly between the US and China.
In conclusion, Motorola's attempt to assemble the Moto X in Texas serves as a valuable lesson in the challenges faced by companies trying to manufacture smartphones domestically. Economic factors such as labor costs, logistics, and the availability of skilled workers make overseas production a more viable option for many tech companies.
Tech companies like Motorola often face economic challenges when attempting to manufacture smartphones domestically, as proven with the Moto X assembly attempt in Fort Worth. China, on the other hand, offers an ideal workforce for smartphone manufacturing due to its abundance of skilled labor, sophisticated robotics, and strong presence in the tech and computer science world.
