Motorola Mobility is the latest technology company to announce that it will open a United States factory.
That means more jobs, more high-tech investment, and an expansion of Motorola Mobility's electronic supply chain to accommodate the production of the company's next smartphone.
Motorola Mobility, which was acquired by Google, will provide original equipment manufacturers with a case study that will help them evaluate whether the US is ready to make smartphones and potentially other consumer electronic devices.
For a start, we will see how quickly Motorola Mobility can fill the estimated 2,000 new jobs, and many will be eying the quality of engineers and other highly skilled workers who will be asked to assemble Google's next phone, the Moto X.
In a New York Times article, Dennis Woodside, the head of Motorola, is quoted as saying at the All Things D conference recently that the Texas factory will facilitate Motorola's ability to “iterate and innovate much faster.”
In the world of smartphones, where Apple Inc. and Samsung Electronics Co. Ltd. dominate the market, consumer behavior changes with speed and unpredictability. Motorola must know that it will need talented engineers, prodigious sales, and marketing expertise, and a nimble supply chain network to succeed.
I'm sure due diligence was done before Motorola decided to open the Texas plant, but hovering around Motorola Mobility are reminders of how quickly tech giants can fall and plans can change.
As example, Motorola's 500,000-square-foot building was once the manufacturing plant where Nokia employed 16,000 people 15 years ago.
Then there are the memories of the Nexus Q, a home media player Google had hoped to assemble in California. This was Google's first stab at building its own hardware, but plans quickly disintegrated last year when poor reviews of the product delayed development.
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A closer examination of recent announcements related to consumer electronics manufacturing in the US should cause concern and raise the issue of what OEMs, contract manufactures, and others think is possible and where to draw the line.
Why is it that Lenovo Group Ltd. and Apple are ready to manufacture PCs in the US, a segment of the market that has seen declining sales across the globe? Unlike these two, it seems other technology companies are still opposed to manufacturing products in the US, especially those items that are seeing greater consumer demand and more vigorous supply chain activity.
Lenovo's US manufacturing plans are on a much smaller scale compared to Motorola. The company will create 115 jobs and manufacture PCs at its 240,000-square-foot Whitsett facility, located approximately 10 miles east of Greensboro, NC.
The decision by Apple to invest $100 million this year and shift the manufacturing of Mac computers from China to the US is welcome news, but, like Lenovo, Apple's desire to make products in the US has its limits.
Reports that Apple picked Taipei-based Pegatron Corp. to assemble its new lower-priced iPhone means two things:
- Apple wants to depend less on Foxconn Technology Group and is seeking to diversify the manufacturing of its smartphones.
- Apple is not confident that the US has the manufacturing skills to assemble its leading products.
Apple CEO Tim Cook may still believe his assessment of US manufacturing as told to Brian Williams last year: “Over time, there are skills that are associated with manufacturing that have left the US. Not necessarily people, but the education system stopped producing them,” Cook said.
In the meantime, technology investments in the Asia-Pacific region and other parts of the world continue at a robust pace. Dell Inc. recently began operations at its facility in Chengdu, capital of Southwest China's Sichuan province. The company employs 1,500 workers there. Jabil Circuit Inc. recently announced that last September the company completed construction on a brand new, 273,000-square-foot facility.
Added to this that John Chambers, CEO at Cisco Systems Inc., recently told the Financial Times that he is looking to invest in Canada and Europe.
All indications are that many high-tech companies still don't see the US as an attractive location to open manufacturing operations when compared with other countries. Unfortunately, this may be the case for decades to come.