PORTLAND — Just two years ago, Microsoft cast its Wilsonville factory as the harbinger of a new era in American technology manufacturing.
The tech giant stamped, “Manufactured in Portland, OR, USA” on each Surface Hub it made there. It invited The New York Times and Fast Company magazine to tour the plant in 2015, then hired more than 100 people to make the enormous, $22,000 touch-screen computer.
But last week Microsoft summoned its Wilsonville employees to an early-morning meeting and announced it will close the factory and lay off 124 employees — nearly everyone at the site — plus dozens of contract workers.
Panos Panay, the vice president in charge of the Surface product group, traveled from corporate headquarters in Redmond, Washington, to tell the staff that Microsoft was moving production to the same place it makes all other Surface products.
Though workers present say he didn’t disclose the location, Microsoft has previously said it makes its other Surface computers in China.
The company hasn’t explained, in public or to its Wilsonville employees, why it gave up on domestic manufacturing so quickly and didn’t respond to repeated inquiries for comment. But the only thing surprising about Microsoft’s decision is that it tried to make its computers in the U.S. in the first place.
“Domestic manufacturing is difficult because costs are high and qualified engineers are scarce,” wrote Mitsuru Igami, a Yale economist, in an email.
Microsoft is just the latest to go, following an exodus by Tektronix, InFocus, Hewlett-Packard and many others that used to employ substantial numbers of Oregon factory workers.
Originally, tech companies went overseas in search of low labor costs. And that’s still a major pull, according to Igami. But eventually a critical mass of manufacturers arrived and brought the supply chain with them. Component parts, industrial supplies and other production essentials are now more readily available in China and Vietnam than they are in the Willamette Valley.
Microsoft may have thought it was doing something different with the Surface Hub, a niche product that sold for ten times the price of a laptop. It designed the jumbo, touch-screen computer for conference rooms and command centers. The company apparently concluded that it could be economical to make the high-cost, low-volume computer in Oregon.
“We looked at the economics of East Asia and electronics manufacturing,” Microsoft vice president Michael Angiulo told Fast Company in a fawning 2015 article that heaped praise on the Surface Hub and Microsoft’s Wilsonville factory.
“When you go through the math, (offshoring) doesn’t pencil out,” Angiulo said. “It favors things that are small and easy to ship, where the development processes and tools are a commodity. The machines that it takes to do that lamination? Those only exist in Wilsonville. There’s one set of them, and we designed them.”
