Could mobile manufacturing be heading back to Europe?

Motorola's announcement of a new plant in the US suggests the West could make a comeback when it comes to mobile manufacturing

The mobile industry is a tale of two types right now. More devices are being sold than ever before, with many more millions of people getting connected every day. Yet a rise in budget handsets, as emerging markets come onto the scene, means profits are smaller and increased competition in the smartphone world is taking its toll on once dominant players.

These trends have had quite an effect on where devices are manufactured. Gone are the days when Europe was the centre of the mobile industry; now the big guns such as Apple are heading east to large plants such as Foxconn to make in bulk for a cheaper price tag.

Other firms such as BlackBerry are reining in the costs in this area by shutting plants and narrowing product ranges, which again means mobile manufacturing takes a hit in the West.

In contrast, however, Google-owned Motorola has announced plans to open a factory in Fort Worth, Texas, to build the first ever US-manufactured Motorola device – the Moto X – and create 2,000 new jobs.

Is there a chance for the US, and perhaps Europe, to bring back some of the much-needed cash from manufacturing hubs such as China when it comes to making mobiles, or is Motorola's move a one-off unlikely to be replicated?

You can give people what they want, when they want it

Rob Bamforth, Quocirca

Benefits of manufacturing close to home

First up, there is the green element of making devices in the country where they are designed and, ultimately, where a lot of them are sold.

“If you make the devices where they are going to be sold, they don’t have to be shipped half way round the world,” said Rob Bamforth, principal analyst at Quocirca.

“And having local facilities for recycling and extracting the precious metals from obsolete versions is not only a WEEE directive fit, but might also save some costs, especially as some of these materials are becoming even harder to get hold of.”

Going green might have fallen down the agenda in recent years, as people have become more obsessed with cost-cutting in an age of austerity, but a positive marketing message can still be gleaned from being environmentally friendly.

Second, there is an opportunity for making a tailored device for the individual if you are closer to home, giving them a way to stand out from the crowd by avoiding the same three devices in everyone else’s pockets.

“[Manufacturing in the West means] you can give people what they want, when they want it, rather than waiting for the tens of thousands of identical ones to hit the shops at once,” added Bamforth.

If you make the devices where they are going to be sold, they don’t have to be shipped half way round the world

Rob Bamforth, Quocirca

He admitted this would lead to losing the economies of scale, but the benefits could bolster those mobile companies struggling to make their mark, many of which are from Europe.

“It picks up on the 'premium' economies of chic, cool and choice. Why else are there so many custom cases for smartphones? People want to show their individuality, [even if they are] all choosing the same device.”

Finally, one of the biggest issues facing mobile manufacturers could also be lessened by the move closer to home.

Control of intellectual property could be a benefit, according to Bamforth: “It's a tricky one to keep a lid on, and despite lawyers, patents and lawsuits, things do get cloned, copied and cribbed.”

He admitted this could happen wherever the devices are built, but added: “Perhaps if production is closer to design there are fewer gaps to mind, and again changes can be made more readily.”

There is no denying that manufacturing is booming in Asia, and with set-up costs and labour considerably cheaper there than in the US or Europe, it is unlikely all the mobile firms are set to jump ship and sail to factories the other side of the Pacific.

However, if these motivations affect a few key players, there is surely a chance the industry here could build again and entice others to form a stronger relationship with manufacturing handsets in their home regions.

Image: iStockphoto/Thinkstock

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