Motorola is making its latest smartphone, the Moto X, at a facility in Texas, and Apple is talking more about manufacturing in the United States. Coupled with ongoing issues at some overseas manufacturing plants, it is possible to imagine more smartphones with a Made in USA label.

Manufacturing was once a big business in the U.S., but has been shrinking for some time and was particularly hard hit by the most recent recession. While there are signs that local manufacturing is making somewhat of comeback ? especially for high-end products ? it is still unclear if the benefits of making a smartphone here would outweigh the negatives.

?Made in the USA does have some marketing value, just as it does in some food stuffs,? said Nick Spencer, London-based senior practice director for mobile devices, applications and content at ABI Research.

?There has been some recent publicity around some large tech firms avoiding tax, manufacturing outside of the U.S. and therefore not contributing to the US economy as much as they could," he said. ?Manufacturing in the U.S. is therefore a good PR story.

?Apple has been making noises about manufacturing more in the U.S., so this may be the start of a small trend. The cost base ? eg. labor costs ? in the U.S. is still higher than most parts of the Far East, and the distance from the component suppliers is also a problem and is not going to change any time soon.?

Hero device
The decline in the U.S. dollar and worker uprisings are two factors that are making U.S. manufacturing look more attractive to some companies.

However, U.S. manufacturers still face stiff competition from Taiwan and southern China, where costs are significantly lower.

For Google, which owns Motorola, the decision to manufacture a smartphone in the U.S. suggests that cost is not as much of an issue as it is for other handset manufacturers.

The Moto X will be assembled at a plant in Texas from components made overseas.

The decision to manufacture in the U.S. is likely based on Google viewing the Moto X as a hero device that exemplifies what is possible on Android without competing too heavily with other Android manufacturers.

Additionally, labor costs may not be a significant driver of the end price for consumers if the Moto X is a high-end device.

The strategy will also enable Google to keep a close watch on manufacturing.

?It likely means that Google wants Motorola to keep tight control over manufacturing, another reason for keeping assembly close to headquarters,? said Wally Swain, senior vice president of emerging markets at Yankee Group, Boston.

?For this reason, the first batches of Blackberry Z10s and Q10s were manufactured in Canada, near Blackberry's main facility,? he said.

?It is also consistent with a strategy whereby Motorola builds devices that demonstrate the leading-edge of Google's Android development but which are priced so as not to compete too heavily with other manufacturers like Samsung or LG which are important to the Android ecosystem.?

Brand collaboration
The strategy could benefit Motorola in a number of ways, including as it relates to mobile marketing.

For example, Motorola could collaborate with brands which produce goods domestically with targeted mobile marketing campaigns to amplify this initiative and spread awareness, per Neil Shah, senior analyst for the global wireless practice at Strategy Analytics, Newton, MA

?It?s a great initiative from Motorola,? Mr. Shah said.

?The key benefits are that it will help Motorola rebuild the overall brand equity among the most advanced smartphone users in the world; help it develop and tightly integrate Google software and services with hardware, considering that most of the end-to-end design, development and production will happen domestically, and help it raise awareness as one of the American companies bringing manufacturing back to the Stateside,? he said.

Unfavorable conditions
A similar strategy may not make sense for many other handset manufacturers as, in general, the smartphone category is moving toward lower-priced devices with wide appeal.

Also, there are signs that the market for hero devices is limited. The HTC One, which is supposed to be a showcase for how Facebook Home integrates on an Android phone, has not done very well in the market despite receiving strong reviews.

?The US competes effectively in quality manufacturing but apart from a very small number of 'hero phones' the market is becoming a game of who can build the device with the most features at the lowest cost,? Yankee Group?s Mr. Swain said.

?That needs massive scale and low labor costs,? he said. ?It also needs short supply chains to components most of which are manufactured in the Far East.?

What might make U.S. manufacturing more attractive to other handset manufacturers is if government policies were more supportive from the perspective of taxation and setting up lower-cost industrial zones.

The other issue for handset makers is the growing competition in the smartphone market, which is putting pressure on them to keep costs as low as possible.

?I believe it?s too early to for US based handset or even tablet/PC manufacturers to jump in the bandwagon as it has been difficult for them to generate significant profits (except Apple) even after outsourcing to low-cost manufacturers in China or Taiwan,? Mr. Shah said. ?Additionally, the conditions are slightly unfavorable from government taxation policies, resources and overall costs perspective to produce domestically.?

Final Take
Chantal Tode is associate editor on Mobile Marketer, New York