Keeping Austin Running (for Hi-Tech Manufacturing) – TechCrunch

Motorola’s Fort Worth, Texas assembly plant lasted almost exactly a year. The message from the Google-owned smartphone brand was simple: the whole exercise had proved too difficult. “We found that the North American market is extremely tough,” said Rick Osterloh simply at the time.

When the news broke in May 2014, the writing was already on the wall. Two months earlier, Google had agreed to sell the brand to Lenovo for a fraction of what it paid three years earlier. The plant had also begun bleeding staff, by thousands to hundreds of figures, before the closure was officially announced.

It was certainly not due to a lack of ambition. The ability to label its phones as “Assembled in the USA” was a category where “Designed in California” came as close as anyone has come in the past few decades. Moto Maker’s custom color scheme surpassed Samsung’s current push for “bespoke” everything by almost a decade. Ultimately, however, the sales weren’t there.

And while Motorola CEO Dennis Woodside enthusiastically declared, “It’s a myth that you can’t bring production here because it’s too expensive,” it quickly became clear that the company’s ambitions did not align with consumer interests .

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Motorola’s Texas roots run deep. Three hours away and 40 years earlier, the company had flown its flag in Austin when the population of the state capital’s metro area was nearly 300,000 — about 15% of the population in 2022. But the seeds of a tech scene were planted by the late ’60s at IBM when Motorola joined a class that included names like Texas Instruments. In the 1990s, Motorola began manufacturing semiconductors in Austin, investing more than $1 billion in five plants and hiring thousands of employees.

Around the turn of the millennium, development was scaled back or discontinued in various places, culminating in the spin-off of the semiconductor division and the subsequent founding of Freescale. Plants were closed under the new model and Freescale was restructured, a shadow of its former self becoming Dutch company NXP.

Much of Motorola’s Austin office space remained untouched by the early 21st centurySt Century. Though City Council approvals during the pandemic have got the wheels turning to sanitize the space for new residents. Renamed Tech 3443 (a nod to the Motorola campus address, 3443 Ed Bluestein Blvd.), the development envisions catering to today’s Austin tech scene. Rather than bother with the monoliths of the past, the owners plan to rent it out to a wider range of mostly smaller clients.

However, the giants still lurk in the Texas capital. Apple came to Austin in the early ’90s, just as Motorola was expanding its local chip manufacturing business. The fortunes of the two companies were of course dramatically different during this time. In the ’90s, Apple found itself caught between Steve Jobs and trying to combat growing Windows dominance with Macintosh clones and the Newton. In 2014, just as Motorola was closing its Maker factories, Apple began producing the Mac Pro in Austin. It was perhaps the sort of big ticket item that made more economic sense to produce domestically.

While that iteration of the Mac Pro itself eventually dried up, the company announced again in 2019 that the long-awaited reboot of the product would be manufactured at the same Austin facility.

“The Mac Pro is Apple’s most powerful computer ever, and we’re proud to build it in Austin. We thank the administration for their support in making this opportunity possible,” said Tim Cook at the time. “We firmly believe in the power of American innovation. That’s why every Apple product is designed and engineered in the United States with parts from 36 states supporting 450,000 US supplier jobs and we will continue to grow here.”

With yet another redesign of the Pro expected later this year, it’s unclear if the company will produce the product in Austin again. However, the company’s presence in the city remains strong. In 2019, ground was broken for a new 133-hectare campus with space for around 5,000 employees. However, plans to actually put those bums in seats have almost certainly been delayed by the ongoing pandemic.

The company also offers other, less conventional, operations around town, including Daisy, the iPhone disassembly robot. The system, which lives in a local warehouse, is part of Apple’s larger sustainability push, in which the phones are being dismantled to reuse components.

Look at most companies, Apple’s domestic manufacturing operations remain quite modest. There’s probably more room around the edges for a smaller, more expensive, and physically larger product like a Mac Pro versus a handset. In general, it is understandably still the case that the economics are simply too difficult to crack when it comes to onshoring mass production.

Discussions about offshoring have primarily revolved around employment issues. Understandable given the 34% net job loss the sector has seen over the past 40 years. Employee training programs — like the one Apple recently announced — can hopefully help move workers into other (hopefully better-paying) roles. While this is a difficult conversation, we need to keep engaging as increasing automation continues to make disparate positions obsolete. One can argue (as humans do) that robots and automation are not currently replacing “quality” jobs, but even if one were willing to accept that premise, a lost job is a lost job – even if it’s not a “good” job.

Meanwhile, we’ve heard a development talking about domestic manufacturing. In addition to ongoing concerns about job relocation, a pandemic-related supply chain and chip crisis have spurred talks of increasing domestic component production. Look no further than aerial photos of unsold cars lining Michigan racetracks awaiting the increasing number of semiconductors in today’s automobiles.

The most prominent example of this is Intel’s $20 billion investment in two chip manufacturing facilities outside of Columbus, Ohio. Closer to home, Samsung is having its own $17 billion moment. In 2019, the world’s largest phone maker (the second largest in the US) laid off 290 employees as it closed an R&D facility in Austin. However, the company has preserved around 3,000 jobs at the nearby chip factory.

Late last year, Samsung confirmed reports of another expansion, this time in Taylor, Texas — about 30 miles outside of Austin. The company expects to bring the site online in 2024, creating an additional 2,000 jobs for the area.

“By adding a new facility at Taylor, Samsung is laying the foundation for another important chapter in our future,” said Samsung’s Kinam Kim in a press release. “With greater manufacturing capacity, we will be able to better serve our customers’ needs and contribute to the stability of the global semiconductor supply chain.”

As with Intel’s announcement, the factory likely won’t arrive in time to address the current chip shortage, but just as pundits are anticipating more pandemics in our lifetime, another supply chain crisis is all but guaranteed. These issues, coupled with strained external relations and security concerns, all point to a growing interest in domestic manufacturing. We have the motivation, and as automation and technologies like additive manufacturing continue to advance, we certainly have the tools.

Despite these advances, economics remain a major hurdle that will likely make the domestic product a smaller piece of the overall production puzzle, despite the safety, availability, and good PR that come with building here. But hey, in a world where Motorola just secured third place in the US smartphone market behind Apple and Samsung, maybe anything is possible.

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