Motorola Mobility, still owned by Google until the sale to Lenovo completes, announced today that it’s closing the Texas-based manufacturing plant that it opened in May of last year to build its Moto X smartphone. The plant, which employees approximately 700 employees, is said to be closing its doors by the end of the year, according to a report from The Wall Street Journal:
The factory opened in May 2013. A few months later, former Motorola Chief Executive Dennis Woodside said it would challenge conventional wisdom that manufacturing in the U.S. is too expensive. At its peak late last year, the factory employed as many as 3,800 people, most on behalf of contract manufacturer Flextronics International Ltd.
“What we found was that the North American market was exceptionally tough,” Motorola President Rick Osterloh said in an interview.
So why exactly is it shutting down? According to Motorola’s senior vice president for supply chain and operations Mark Randall, it was mainly thanks to poor Moto X sales and higher costs for shipping and labor than abroad:
Mark Randall, Motorola’s senior vice president for supply chain and operations said the company opened the plant to configure devices quickly for U.S. consumers. Poor Moto X sales meant the company couldn’t achieve economies of scale, he said, while costs for labor and shipping parts were higher than in overseas plants.
Motorola will officially be in the hands of Lenovo, which agreed to buy the company minus some of its employees and patents for $2.9 billion, when the previously announced sale completes regulatory approval later this year.
Motorola President Rick Osterloh reportedly told The Wall Street Journal that the decision to close the plant “was independent of the planned sale.”