News Article | 9/25/2013

Lone Star phone: The Texas town where the Moto X gets built

Motorola and Google have teamed with contract manufacturer Flextronics on the first smartphone ever to be assembled in the United States. Crave’s Eric Mack took a tour of the factory, and met the neighbors, too. Along a stretch of Texas highway on the northern fringes of Fort Worth, a small herd of American bison graze in a field as corporate and cargo jets take off from nearby Alliance Airport and hunters outfit themselves to go after lesser game at a giant Cabela’s outlet next door. The giant mammals also count AT&T, Lockheed Martin, and of course, Motorola among their bigger neighbors.

Welcome to Alliance, Texas, Ross Perot Jr.’s master-planned community and foreign trade zone that lies within Fort Worth and three other Texas cities and houses acres and acres of industrial and corporate office operations for other global names like Nestle, Coca-Cola, and Mercedes-Benz. And don’t forget the subdivisions full of affordable homes, the community’s own rail yard and private airport, and a handful of shopping malls. If we were to start building America today from scratch, odds are it would look like Alliance.
It seems kind of fitting that this postmodern mashup of American landscapes is also home to one of the only places in the country where an American smartphone is being assembled on a small American factory floor by more than 2,000 actual American workers.

It is here, where the buffalo roam among the malls and subdivisions, that the Moto X is made to order at a nondescript plant run by international contract manufacturer Flextronics.

In case you hadn’t heard, the Moto X is the first phone designed and delivered by Motorola as a wholly Google-owned company. Part of the marketing pitch for the Android flagship, besides its touchless control, pulsing active notification, and funky camera-access gesture, is the fact that it can be customized in a handful of colorful ways.
That customization is done by a few thousand Texans right here on the brightly lit, pleasantly cool factory floor where I’m currently typing these words.

At the time of my Tuesday visit — an event for press, officials, and guests that Motorola and Flextronics were treating as a grand opening even though the companies have been churning out Moto X orders for a few weeks already — the factory floor was about half empty. The busy side of the room was filled with enough production lines to fill a space roughly the size of three football fields.
Moving right to left, the various components of the Moto X are put together and tested as they move down the line. As each new phone progresses further to the left side of the floor, it becomes more colorful as it moves through stations where the customizable backs and accents are added. Finally, on the far side of the room, gloved hands pack each Moto X in an equally colorful box with accompanying cords and glossy paperwork.

But let’s be real. What’s happening here isn’t exactly a revolution, or even slightly new. After all, Motorola CEO Dennis Woodside pointed out Tuesday that some of the people working for Flextronics on the floor today also worked in this room 10 years ago making cell phones for Nokia.
Those jobs went overseas in the last decade, and Motorola says it’s gone to some expense (partner Flextronics spent $25 million retrofitting this facility) and effort to buck that trend and bring 2,000 jobs back from Asia to employ people here in Texas.
“We were the ones that thought differently. We chose to be optimistic,” Woodside told the audience, seizing an opportunity to take a swipe at Apple just as Motorola’s chief competitor was unveiling its new iPhone 5S two time zones to the west.
Google Chairman Eric Schmidt echoed the sentiment and praised American workers he says are “ready for advanced manufacturing and complex tasks.”
Schmidt said assembling the Moto X in the United States will be the “first in a series of steps” by not only Google but also other companies, that will “change the perception of American manufacturing.”
I’d love as much as anyone else to think that one pretty nifty new phone could solve our nation’s economic and employment woes, but let’s not get ahead of ourselves. This factory is moving a nice amount of devices out to the public — 100,000 per week, according to Flextronics CEO Mike McNamara — but it’s still a tiny fraction of what floats into our ports from Asia, and of what used to be made in this country a generation ago.
Besides, it’s not like Google and Motorola are really setting or following a trend here.
Or are they? Alliance seems to be hopping, after all. I spent some time hanging out at the private airport and more than one area Starbucks and observed plenty of bustle, traffic, and crowded parking lots for a regular Tuesday. Fort Worth is among the fastest-growing cities since the recession, since 2007 adding more than 14 percent to its population, which tallied at more than 750,000 last year.
Some of those people are coming for jobs like those still being offered for between $9 and $17 an hour at Flextronics. Here in the Fort Worth-Arlington area, 5,500 manufacturing jobs were added for the 12-month period that ended in July, according to government statistics — and that doesn’t count all of the more than 2,000 people who have started coming to work on this Moto X factory floor over the past few months.
Silicon Valley has been partially shielded from the economic travails that have blasted the rest of the country for the past half a decade; could it be possible to extend this cloak of invincibility to other parts of the nation and bring back more of the jobs that are supposed to have taken a permanent vacation to places like Shenzhen and Vietnam?
For device manufacturers — particularly wealthy ones like Google — it just might make sense.
“We think the cost gap will narrow as we become more productive at making products and faster at designing (products),” Woodside said.

Production costs tallied
Indeed, analyst firm IHS recently estimated that going the Made in America route amounts to only about an extra $4 in production costs for the Moto X when compared to the iPhone 5 orGalaxy S4. Even with that domestic premium, the Moto X still costs less to produce overall (its total production per unit cost is $226) than the Galaxy S4 (produced in Asia for $237 total) and not much more than the iPhone 5 ($207, also made largely in Asia).

Of course, both of those phones arguably come with meatier and more expensive components, but some surveys have found that consumers wouldn’t mind paying a little more if it went toward employing, say, a mother from Denton, Texas. I can think of plenty of people in my family alone who would rather pay for that than get a few extra megapixels in their smartphone camera.

The reality is that it’s tough not to see what’s happening in Fort Worth and Alliance as an exception to the rule. Just make the not-always-so-quick trip through the maze of highways to the Dallas-Plano side of this metroplex and you’ll find an area where manufacturing jobs have actually been on the decline in recent months, according to the same set of Bureau of Labor Statistics numbers (PDF). Across the state of Texas, they’ve been just above flat.

I could continue to parse the data and anecdotes until every bit of juice in all my mobile devices has been depleted, but actually we’ll know soon enough if a new, tech-driven renaissance in manufacturing centered in Fort Worth has just gotten under way. Because of competition and consumer appetite for the latest and greatest mobile devices, the marketable life-span of a smartphone these days is somewhere between a week and maybe eight months, so these workers aren’t likely to still be working here assembling this same smartphone model a year from now.

In other words, we’ll see in the coming months if Motorola has indeed started a trend that will fill the other half of this factory floor with workers by next summer (there’s a rumor that the new MacBook Pro could be assembled here, and McNamara told me it’s possible different products could soon be coming off the lines in this building).

“Google is a place where we take bets,” Schmidt said here on Tuesday. “We think this is a safe bet.”