Motorola’s Attempt to Produce Smartphones in the USA
In 2013, Motorola tried to gain a larger share of the smartphone market, dominated by Apple and Samsung, with a unique selling point: "Made in the USA." The company’s former CEO, Dennis Woodside, told CNN that there was a segment of customers who preferred to buy products made in the USA.
Challenges Faced by Motorola
However, Motorola’s efforts were short-lived. The company shut down its Texas factory the following year and abandoned domestic assembly of the Moto X, which was supposed to compete with the latest iPhone and Samsung Galaxy devices. Woodside’s experience underlines why many tech products, such as smartphones, are largely assembled in Asia and South America, rather than in the USA. The proximity to key suppliers and lower labor costs are only part of the problem. The gap in necessary skills and the difficulty in filling factory jobs make it challenging to bring smartphone production to the USA.
The Puzzle of Producing Smartphones in the USA
The puzzle that Motorola faced over a decade ago is suddenly relevant again, as President Donald Trump puts pressure on Apple and Samsung to produce their mobile devices in the USA or face tariffs. Higher taxes for imports from China, where many electronics are assembled, are set to take effect unless the two economic powerhouses agree to a deal or an extension. India, now the world’s leading exporter of smartphones to the USA, will face tariffs of 25% if the new prices come into effect.
Lessons from Motorola’s Experience
Woodside, who was sold to Lenovo from Google in 2014, has advice for any company trying to produce smartphones in America today: do not underestimate how difficult it will be to find the right specialists. "You have to have a very strong promise of value for the employee," he said. "You have to think about how to use automation and be really clever about economics to ensure that you can be competitive at the end of the day."
The Tech Company’s Ambitious Bet
The tech company made an ambitious bet in 2013 to produce its Moto X smartphone in Fort Worth, Texas. This not only appealed to US buyers who wanted to buy domestically but also allowed the company to offer more customization options than what was possible with the latest iPhone or Galaxy phone. On the Motorola website, consumers could customize certain details of the phone’s aesthetics, such as the color of its keys and back panel, which was one of the most important sales arguments of the device.
The Difficulty of Finding Skilled Workers
However, the phone did not sell well enough to support the efforts to assemble it in the USA. According to a Wall Street Journal report at the time, only 500,000 units were sold in the third quarter of 2013. By May 2014, Motorola confirmed plans to close the factory and assemble the phone elsewhere. Woodside said that there were definitely higher costs, which were a challenge, and that the company was dealing with a supply chain that was very fragmented.
The US Production Sector’s Struggles
The US production sector lost an estimated 11,000 jobs in June and July, according to the US Bureau of Labor Statistics. This is lower than the approximately 15,000 manufacturing positions that were removed between May and June, but it is still one of the toughest sectors in terms of job cuts last month. While Trump’s tariff policy made it difficult to create new factory jobs, there is some evidence that factories were struggling to find the right people beforehand, and that Americans may not want factory jobs.
China’s Approach to Workforce Development
China’s approach to developing the talent necessary to fill workplaces is different from the USA, where technical training and vocational training vary by state or industry. This can make it difficult to increase a qualified workforce on a scale. According to Sujai Shivakumar, director and Fellow for strategic and international studies, the workforce is as important as electricity and transport infrastructure for a production strategy. China anticipates this and builds it into their planning, he said.
The Importance of Skilled Workers
Many new manufacturing jobs will probably require new skills, such as coding and data analysis, since artificial intelligence and automation play a larger role in factories. Woodside warns that companies thinking about building electronics in the USA should carefully consider whether they can find the right staff with the necessary skills. "Understanding the nature of the product that you create and thinking about… do we have to train the workforce to understand this special product? This is something that we didn’t expect exactly," he said.
