According to a Wall Street Journal report, Motorola Mobility announced today that they will shut down their assembly plant in Fort Worth, Texas. This was the assembly plant responsible for assembling the Android smartphone, the Moto X. WSJ spoke with Motorola CEO Rick Osterloh, who stated, “What we found was the North American market was exceptionally tough.”
Motorola is one of the only major phone companies where the manufacturing of devices was centered in the United States, which has been key to their somewhat modest success with the Moto X. One of the strategies adopted by Motorola with the Moto X was fast delivery. With a plant centered in the US, the guarantee of the product being ready to ship within four days of ordering assisted the sales of the Moto X tremendously. A plant centered in Asia would not have accommodated such fast delivery.
Similarly, the plant opened up possibilities for unrivaled customization for devices. This was something sorely lacking when it came to competitors such as Apple or Samsung who don’t offer such extensive customization. The options presented to customers in terms of customizing their Moto X with the Moto Maker tool were very strong. The company also utilized the “Made in USA” angle very effectively, which gave them a leg up in marketing.
However, even with all of these advantages, the company was simply not selling enough phones. A report made by Motorola after the the Moto X launch said the company was shipping 100,000 Moto X units. According to this report, the plant had the capacity for tens of millions of annual orders. Unfortunately, the demand was just not there, resulting in the closure of this plan. According to this report, about 700 employees worked at the plant.
Despite the overall positive reception of the device from most outlets, the lukewarm response from consumers hindered sales. Following the release of the Moto X, it was found that in the US, only 900,000 units were sold in the first quarter of it’s release. Compared to devices from Apple, Samsung and HTC, the Moto X simply was not performing as well. This is clear in the constant price drops for the device. The Moto X initially retailed at $549 USD. Currently, it retails for close to $300 internationally.
It’s likely that production will shift assembly back to Asia where it’s owner Lenovo has strong relationships with supply chains and manufacturing units. This will definitely help them scale more efficiently for better sales in other regions.