FORT WORTH, Texas – The mobile phone in Dennis Woodside’s hand looks like something Captain America would carry, with a cherry red back, glossy white front and thin rings of metallic blue around the side buttons and camera lens.
“There are 150 million smartphones in the U.S. today, and not one of them is built here,” said Woodside, chief executive of Libertyville, Ill.-based Motorola Mobility.
The patriotically hued device is Motorola’s attempt to change that status quo and venture a comeback in a market in which it is woefully behind. Here, on a former cow pasture turned into a massive industrial park, workers at a 480,000-square-foot facility are snapping the final components into place for the Moto X, the company’s first major new product under Google Inc. ownership and, officials said, the first smartphone assembled in the U.S.
In opting to retrofit a Fort Worth plant, Motorola became the latest big technology company to recognize that China’s low-cost wage advantage was slipping as the Asian giant’s economy heated up, opening the door for a return of some manufacturing to the States. This year, Chinese computer company Lenovo started producing desktops and laptops at an expanded facility in Whitsett, N.C., where it added 115 manufacturing jobs. And Apple is investing $100 million to build a line of Mac products in Texas, CEO Tim Cook told a Senate subcommittee in May.
“Google is a place where we take bets,” Google Executive Chairman Eric Schmidt said Tuesday, when Texas Gov. Rick Perry and others gathered for a tour of the facility. “This is a bet we’re taking on America, on Texas, on this incredible work force that’s assembled here. We think this is a safe bet. The reason is, the math works.”
The Fort Worth facility is operated by Flextronics International Ltd., a Singapore-based equipment-maker that signed a manufacturing agreement with Motorola in December. Full production of the Moto X was launched in early August, and the 2,500 employees at the factory are shipping 100,000 phones a week.
When measured against the number of manufacturing workers in China, Taiwan and elsewhere churning out electronic gadgets, the several thousand jobs represented by these tech giants’ recent decisions don’t amount to much. And it will take more than a handful of companies in one sector to reverse years of declines in American manufacturing. But experts say the companies’ moves go beyond patriotic window dressing, instead speaking to larger economic dynamics at work that could gain momentum.
“On a macro level, the situation hasn’t changed,” said Scott Paul, president of the Alliance for American Manufacturing, an industry group representing U.S. manufacturers and the United Steelworkers. “But from a business decision level and a managerial perspective, the equation has changed a bit. We’ll see more results of that in five or 10 years than we will today. There’s a lot of things that could go awry. … But the arc does seem (headed) toward more production in the United States.”
The basic business logic underpinning Asia’s dominance in electronics manufacturing is that American companies can produce goods more cheaply there than they can at home. But that calculation is beginning to change as wages in China continue to rise. Electricity and natural gas costs are also on the upswing.
The Boston Consulting Group projects that by 2015, average manufacturing costs in China will be just 5 percent lower than in the U.S.
“A lot of what I’ve seen is based on real economics and good business, not PR,” said Hal Sirkin, a Chicago-based senior partner at the consulting group who co-authored a 2012 book about the return of the U.S. manufacturing sector. He also sees companies’ supply chains relocating with them over time.
“A fundamental shift is happening faster than we thought,” Sirkin said. “And companies that three years ago would never even have thought about it are not just thinking about it, but building the plants.”
A preliminary analysis of the Moto X by research firm IHS Inc. determined that the company was able to build the device in the U.S. without a significant spike in costs.
The firm estimated labor and other assembly costs for the Moto X at $12, about $3.50 to $4 more than Apple’s iPhone 5 and the Samsung Galaxy S4, which are produced overseas. But the Moto X’s components are similar to what is found inside those other high-end smartphones, making Motorola’s total cost for its flagship device – $226 – fall between the iPhone 5’s $207 and the Galaxy S4’s $237. The Moto X is available at all major carriers for a subsidized $200 with a two-year contract.
Companies have motivations beside costs for bringing manufacturing closer to home, such as the ability to assert better quality control and protect intellectual property.
“There are 150 million smartphones in the U.S. today, and not one of them is built here,” said Woodside, chief executive of Libertyville, Ill.-based Motorola Mobility.
The patriotically hued device is Motorola’s attempt to change that status quo and venture a comeback in a market in which it is woefully behind. Here, on a former cow pasture turned into a massive industrial park, workers at a 480,000-square-foot facility are snapping the final components into place for the Moto X, the company’s first major new product under Google Inc. ownership and, officials said, the first smartphone assembled in the U.S.
In opting to retrofit a Fort Worth plant, Motorola became the latest big technology company to recognize that China’s low-cost wage advantage was slipping as the Asian giant’s economy heated up, opening the door for a return of some manufacturing to the States. This year, Chinese computer company Lenovo started producing desktops and laptops at an expanded facility in Whitsett, N.C., where it added 115 manufacturing jobs. And Apple is investing $100 million to build a line of Mac products in Texas, CEO Tim Cook told a Senate subcommittee in May.
“Google is a place where we take bets,” Google Executive Chairman Eric Schmidt said Tuesday, when Texas Gov. Rick Perry and others gathered for a tour of the facility. “This is a bet we’re taking on America, on Texas, on this incredible work force that’s assembled here. We think this is a safe bet. The reason is, the math works.”
The Fort Worth facility is operated by Flextronics International Ltd., a Singapore-based equipment-maker that signed a manufacturing agreement with Motorola in December. Full production of the Moto X was launched in early August, and the 2,500 employees at the factory are shipping 100,000 phones a week.
When measured against the number of manufacturing workers in China, Taiwan and elsewhere churning out electronic gadgets, the several thousand jobs represented by these tech giants’ recent decisions don’t amount to much. And it will take more than a handful of companies in one sector to reverse years of declines in American manufacturing. But experts say the companies’ moves go beyond patriotic window dressing, instead speaking to larger economic dynamics at work that could gain momentum.
“On a macro level, the situation hasn’t changed,” said Scott Paul, president of the Alliance for American Manufacturing, an industry group representing U.S. manufacturers and the United Steelworkers. “But from a business decision level and a managerial perspective, the equation has changed a bit. We’ll see more results of that in five or 10 years than we will today. There’s a lot of things that could go awry. … But the arc does seem (headed) toward more production in the United States.”
The basic business logic underpinning Asia’s dominance in electronics manufacturing is that American companies can produce goods more cheaply there than they can at home. But that calculation is beginning to change as wages in China continue to rise. Electricity and natural gas costs are also on the upswing.
The Boston Consulting Group projects that by 2015, average manufacturing costs in China will be just 5 percent lower than in the U.S.
“A lot of what I’ve seen is based on real economics and good business, not PR,” said Hal Sirkin, a Chicago-based senior partner at the consulting group who co-authored a 2012 book about the return of the U.S. manufacturing sector. He also sees companies’ supply chains relocating with them over time.
“A fundamental shift is happening faster than we thought,” Sirkin said. “And companies that three years ago would never even have thought about it are not just thinking about it, but building the plants.”
A preliminary analysis of the Moto X by research firm IHS Inc. determined that the company was able to build the device in the U.S. without a significant spike in costs.
The firm estimated labor and other assembly costs for the Moto X at $12, about $3.50 to $4 more than Apple’s iPhone 5 and the Samsung Galaxy S4, which are produced overseas. But the Moto X’s components are similar to what is found inside those other high-end smartphones, making Motorola’s total cost for its flagship device – $226 – fall between the iPhone 5’s $207 and the Galaxy S4’s $237. The Moto X is available at all major carriers for a subsidized $200 with a two-year contract.
Companies have motivations beside costs for bringing manufacturing closer to home, such as the ability to assert better quality control and protect intellectual property.