As Trump pushes Apple to make iPhones in the U.S., Google’s brief effort building smartphones in Texas 12 years ago offers critical lessons

·AppleAs Trump pushes Apple to make iPhones in the U. , Google’s brief effort building smartphones in Texas 12 years ago offers critical lessonsBY Verne KopytoffBY Verne KopytoffSenior Editor, Verne KopytoffSenior Editor, Verne Kopytoff is a senior editor at Fortune overseeing trends in the industry

Mike Fuentes/Bloomberg via Getty ImagesThe executives were well aware of the difficulties they would face in manufacturing a smartphone in the U

As with any great industry moonshot, the challenge was part of the appeal—and they embraced it. “Conventional wisdom said it wasn’t possible,” the company crowed defiantly in a blog post announcing the new America-made smartphone. “Experts said that costs are too high in the US; that the US has lost its manufacturing capability; and that the US labor force is too inflexible. ” Soon, tens of thousands of shiny, new touchscreen phones began rolling off the assembly line at a plant in Fort Worth, Texas every day, and what seemed a risky endeavor began to look it could be a milestone—a bold bet on American manufacturing at a time when smartphone giant Apple relied on factories in China, to cheap labor and legions of suppliers eager to duce electronic components

And the company behind the bet was Google, which had acquired legacy phone maker Motorola Mobility and was leveraging its modern wess and vast resources to make the Moto X smartphone a success

Just a year later, it was all over

Google sold the Motorola phone and pulled the plug on the U

It was the last time a major company tried to duce a U

The story of Google’s short-d on-shorting experiment has been largely forgotten, a footnote in the internet giant’s nearly three-decade history of initiatives and jects

But Google’s experience, particularly where it succeeded, where it discovered unexpected benefits, and where it stumbled, are newly relevant amid President Trump’s campaign to pressure Apple, and other companies, to build their gadgets on U

Mike Fuentes/Bloomberg via Getty Images The Google Motorola case study vides critical lessons U

Smartphone manufacturing that are still applicable today, as well as numerous intriguing what ifs

Was the ject doomed by the economic realities of globalization, the competitive landscape in the smartphone, or were Google’s shifting corporate priorities ultimately to blame

Could more time, or more effective marketing, have made a difference

To piece together the history, Fortune spoke with five former Motorola employees who were directly involved in the company’s U

Assembly push, as well as numerous industry experts and analysts. “We felt scrappy and felt we could carve out a niche for ourselves,” recalled Steve Mills, who was Motorola Mobility’s chief information officer at the time and who is now chief operating officer at Foresite Cybersecurity

Many of the former Google insiders described starting the effort with high hopes but quickly realized that some of the assumptions they went in with were flawed and that, for all the focus on manufacturing, sales simply weren’t strong enough to meet the company’s ambitious goals laid out by leadership

Looking for an edge The phone at the center of the plan, the Moto X, stood out from the pack not just because of where it would be duced

Motorola would offer consumers who purchased the phone directly on its website the option to customize the device, with dozens of colors and materials, eventually including bamboo and walnut backs, as well as special touches personalized engraving

The company hoped that offering customized phones would give it an edge over rivals Apple and Samsung, which sold only standardized lineups

And the customization was well-suited to the on-shoring plan: By making phones in the U. , Motorola would be able to der them to domestic customers within four days, instead of making them wait, while also saving on shipping costs

In its marketing, Motorola played up the device’s pedigree as a patriotic alternative to the foreign-duced competition

The plant’s opening celebration was such a big deal that then-Texas Gov

The Moto X phone could be customized in different colors and materials, including backs made out of wood Mike Fuentes/Bloomberg via Getty Images The factory in Fort Worth, an hour’s drive from Dallas, was operated by Flextronics, a contract manufacturer now known as Flex

To on costs, workers at the plant handled only final assembly, using components that were imported from Asia

The cost of labor was of course higher than in China – workers were paid an hourly wage that was three times more than in China, company executives said at the time

But it was an acceptable trade-off, given the other advantages

Dennis Woodside, who was then the CEO of Motorola Mobility, said in an interview at the time that the customized phones were being sold at a fit

In addition to the customized models, Motorola sold standardized versions of the Moto X to wireless carriers – an arrangement that helped ensure a base level of demand and duction at the factory

Trump While Apple does not duce customized versions of its iPhone, the company would ly face many of the same complications, plus new ones, if it quickly shifted iPhone manufacturing to the U

As Trump has called for

Higher labor costs are still a reality

And domestic suppliers are limited, with most based in China

As a result, Apple would have to raise iPhone prices astronomically—at least initially—to make a fit, experts said

Rather than China, its main manufacturing hub and initially the target of Trump’s highest import taxes, the company now ships most of its U. -bound phones from India, where tariffs are lower

MANDEL NGAN/AFP via Getty Images How the trade war will ultimately play out is still in flux

Trump has delayed some of his import taxes and is still negotiating others

But his s in May on conservative social network Truth Social show he opposes Apple’s current workaround

In his message, he insisted Apple’s iPhones ‘must be built in the United States, not India, or anyplace else. ” Apple CEO Tim Cook has described Asia as better for manufacturing than the U

China stopped being a low-cost labor destination years ago, according to Cook

Rather, the country’s advantage is the far greater availability of skilled workers, such as the tooling engineers who create designs and molds for components, and who he praised for their precision. , you could have a meeting of tooling engineers and I’m not sure we could fill the room,” Cook said on stage. “In China you could fill multiple football fields. ” In an effort to appease Trump, Apple this year mised to spend $500 billion in the U

Over the next four years

Some of that money, the company said, will go to ducing servers in Houston for its data centers

But Apple hasn’t mentioned anything bringing iPhone manufacturing back to the U

Imported workers and equipment When it came to the Moto X, Flextronics, from the outset, anticipated a shortage of skilled engineers in the U

To get around the blem, it drafted engineering talent from its factories across the globe, including from Hungary, Israel, Malaysia, Brazil, and China, and splurged on moving them to Fort Worth just to get the operation running as quickly as possible. “We had to bring in a very cultural cast of characters,” said Mark Randall, who led Motorola’s supply chain and operations

Rank and file assembly line workers, along with supervisors and managers, were easier to recruit locally because of the area’s as a telecom manufacturing corridor, he added

The operation was in a former Nokia phone factory, in an industrial park designated as a foreign trade zone and with its own airport for cargo

The location meant that Motorola would pay lower tariffs on certain components it imported from Asia

The savings would only kick in, however, if the company decided to export some of the phones it duced there to other countries

Randall, who is now a supply chain consultant and startup board member, described Texas as a friendly for manufacturing

In just one example of the warm welcome, the state gave Motorola a tax break for worker training, he said

Mike Fuentes/Bloomberg via Getty Images Setting up the Moto X plant required installing a massive amount of equipment, including conveyor belts and other machinery

Some, certain testing machines, were shipped from China

Workers wearing smocks and gloves to tect the electronics from dirt and lint stood at blue tables set in neat rows while they went through the many steps required to finish a phone

Computer screens glowed above each station

Fitting plastic parts, the phone’s back cover, t to be done by hand

Robotics was used for adding components touch screens and for testing certain parts during assembly to make sure they worked perly

As duction ramped up, cess engineers, who sometimes patrolled the assembly line with stopwatches, looked for bottlenecks and rejiggered the assembly line

With any plant, the effort to squeeze out more efficiency was a constant focus

As the first Motorola phone designed under Google, Moto X generated considerable buzz

Users merely had to say “Okay, Google now” to activate the feature, to set up reminders and get driving directions “It was a cool sexy phone,” said Mills, the CIO. “I got it for my kids. ” The mobile network carriers were also excited by the Moto X, though at least partly for self-serving reasons, according to Randall, the supply chain guru

If the device sold well, it would vide the carriers more leverage over Apple in negotiating the wholesale prices they paid for future iPhones

But ultimately, critics gave the Moto X mixed reviews

While they praised the ability to customize the device and its overall design, they dinged it for having underwhelming storage in the basic model (16GB) and inferior screen quality compared to the competition

Initially, the plant’s staff was overwhelmed, forcing Motorola to briefly backtrack on its mise to der phones to customers within four days

But over time, the volume dipped considerably

In the first quarter of 2014, Motorola sold 900,000 Moto X handsets worldwide compared to Apple selling 26 million of its new iPhone 5s during the same period, according to Strategy Analytics

Within the first few weeks, Randall said it was to leadership that the Moto X was underperforming

The team had to ramp down duction

While not a complete failure in terms of sales, the phone wasn’t a huge success either

Employees said they expected future models to do better, after imving the phone’s design

Many blamed a limited marketing budget compared to the big money that Samsung and Apple spent on ads and TV commercials

Because Moto X was a brand new model, they argued it needed a splashier ad campaign to get the word out or a more convincing message

One of the company’s big assumptions the phone had turned out to be wrong

After betting big on U

Assembly, and waving the red, white, and blue in its marketing, the company realized that most consumers didn’t care where the phone was made. “One of the learnings was that assembled in America wasn’t resonating,” said Mark Rose, a senior director of duct management with Motorola at the time who now coaches duct managers as a consultant

Apple wouldn’t necessarily face the same challenges as Motorola, if it opened a U

Their vast difference in size could make a big difference

Because of sluggish demand, Motorola struggled to achieve the cost savings from making Moto X in huge numbers

Apple, on the other hand, with annual U

For Motorola, the challenge it faced was compounded by its decision to let shoppers customize their phones when ordering them online

Fully assembling those devices ahead of time, which would have helped make the plant run more smoothly, was impossible

It also led to higher return rates, an expensive blem for any company, because customers were more ly to be disappointed with the color scheme they chose

Apple, with its standardized lineup, doesn’t have the same worries

Thanks to its successful track record, Apple also has significant control and leverage over its suppliers to negotiate lower prices for its iPhone components

Motorola, with its back-in-the-pack position and the uncertainty whether its new Moto X phone would be a hit, had little sway in comparison

Meanwhile, Motorola, along with most other Android phone makers, operate in an environment of intense competition that translates into low fit margins

Any extra costs, such as is the case with U

Manufacturing from higher wages, can be financially painful

Apple’s iPhone, however, is a premium duct that sells at a high margin

A few months later, with the sale of the phone.