Motorola is betting that color-customization, voice-activated software and its homegrown pedigree will help the company narrow the gap with market leaders Apple and Samsung Electronics, even though labor costs are running about three times higher than if the devices were built in China.
Motorola CEO Dennis Woodside said in an interview that the Texas facility, operated by contract manufacturer Flextronics , was capable of producing "tens of millions" of phones a year but expansion depended on demand.
The factory's current output of 100,000 units a week is only the first phase of a larger plan, he said. And the factory's output did not necessarily mean all the phones have sold to consumers.
"When you set up to ramp a factory you need a plan, and we have shipment targets we need to make with our carrier partners, and where we need to be right now is 100,000 units and that's where we are," Woodside said.
He would not say how many of the phones now being shipped were standard models sold by wireless carriers, and how many were custom-designed models that consumers ordered directly from Motorola's website. He said only that custom orders were "substantial" and Motorola was selling the phones at a profit.
The Moto X is coming to market as other handset makers revamp their lineups. On Tuesday, Apple unveiled new iPhones on Tuesday, including a cheaper iPhone 5C available in a variety of new colors and a higher-end 5S that includes a special fingerprint scanner for added security.
Flextronics CEO Mike McNamara said in a separate interview that the labor cost of manufacturing a phone in the United States, where workers are paid about $12 to $14 an hour, is about three times higher than in China, where a typical hourly wage is about $4.
But operating a facility in the U.S. offered other advantages, including the ability to get custom-built phones to consumers in the country in four days, and lower freight and logistics costs.
"You have to offset it with what's the time-to-market savings and what's the fact that you drive your truck down the street to drop it off. You got to add up all these things," he said.
© Thomson Reuters 2013
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