Google’s Motorola Plans to Shutter Manufacturing Plant in Texas

Google Inc. (GOOG)’s Motorola Mobility unit plans to shut down its factory in Texas after about a year amid the high cost of making smartphones in the U.S.

The handset unit, which Lenovo Group Ltd. (992) agreed to buy for $2.91 billion earlier this year, will shutter the plant in Fort Worth by the end of the year, the company said in an e-mailed statement today. The facility, which had more than 3,500 workers at its peak, now has about 700, who are mostly employed by manufacturing partner Flextronics International Ltd. (FLEX)

The plant’s closing follows sluggish sales for the high-end Moto X smartphone, which hampered Motorola’s ability to reach economies of scale, the company said. Costs for shipping parts and labor are lower at overseas operations. The manufacturer has more recently rolled out lower-cost handsets that target consumers in emerging markets.

Motorola’s plant was part of a wave of U.S. companies bringing manufacturing back to domestic plants after years of importing products from Asia. Such moves were greeted with much fanfare and seen as a way to woo customers in the U.S. who prefer to buy locally made products. Apple Inc. (AAPL) has also started some assembly and component work in Texas and Arizona.

The pending sale of Motorola to Lenovo had no bearing on the decision, the company said.

The plant closing was first reported in the Wall Street Journal today.

To contact the reporter on this story: Brian Womack in San Francisco at bwomack1@bloomberg.net

To contact the editors responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net Reed Stevenson

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