'Just getting warmed up': Phillips expands operations in Mexico

March 10, 2023
A new 500,000 sq.-ft. facility in Arteaga, Mexico, will produce Phillips Industries and Phillips Connect products for North American commercial truck and trailer customers.

ARTEAGA, Coahuila, Mexico—Phillips Industries first arrived in Saltillo, Mexico, 15 years ago, manufacturing its commercial truck and trailer products in a facility that measured 35,000 sq. ft. Over the years, that facility grew to 70,000 sq. ft. before doubling in size again.

Now, the company is celebrating the grand opening of a new 500,000-sq.-ft. facility that lies in an industrial valley amid the mountains here in Arteaga. The reconfigured and newly constructed buildings on the Phillips campus will produce products destined for Phillips Industries and Phillips Connect customers in North America. 

"We are not done growing," Phillips CEO Rob Phillips said during a ceremony March 8. "In fact, we are just getting warmed up."

Phillips first came to Mexico for production of wiring harnesses in 2007 and moved to a larger location in Arteaga in 2015 to meet the growing demands of its Phillips Industries OEM customers.

The new building in Arteaga, completed in 2022, now will house all Phillips Industries manufacturing operations, including those already in Mexico, and all production lines relocated from their former location in Santa Fe Springs, California. Phillips currently is in the process of transferring all its California production lines and capacity to the expanded facility in Mexico—a move prompted by workforce challenges in the U.S.

"It is very hard to get any employees to show up to work," Phillips said. "At Phillips, we flexed our manufacturing for years. We have a 24-hour lead time—we take the order today, build it tomorrow, and ship it tomorrow night. That’s what we’ve done for years, and we’ve had challenges the last three years because we can’t get employees like we used to. If we lose anyone in California now, we can’t get anyone back. The workforce challenges in California are real. We are not having those same issues in Mexico."

The company pointed to various technical school and internship programs in the area in Mexico, as well as connections with main industrial cities in Mexico that provide easy access to seaports and airports. 

See also: Phillips expands, adds new business unit to group of companies

Phillips Industries also invested more than $1 million in the last two years in new equipment for its trucks and aftermarket business. And in 2022, Phillips added new production lines to its facility in Mexico to further increase capacity. For trailers, Phillips Industries invested more than $2 million in the last two years, with five extra production lines expected to be added by the end of March. 

Currently, Phillips manufactures 11,000 products per week for commercial truck OEMs, including cables, air hoses, harnesses, lighting, and coils. The company also enhanced its mold tool shop capabilities at the new facility. By Q2 2023, the company intends to ramp up production to 20,000 truck parts per week. For the aftermarket and after adding additional production lines from its California location, Phillips expects to produce 28,000 pieces of equipment per week, ramping production capacity up to 40,000 parts by Q2. 

Directly across the street from the new factory is Phillips Connect, the former home of Phillips Industries, where the company will manufacture various sensors and telematics gateways for trailers. Phillips also just launched a new business unit, Phillips Innovations, during American Trucking Associations' Technology & Maintenance Council's 2023 Annual Meeting just a week prior.

"With all of this together, we will really be able to support the industry, the region with new jobs, plus investments in solar and radar technologies," Phillips noted.

By the end of 2023, Phillips expects to employ 2,100 people in Arteaga. Phillips headquarters will remain in California and serve as the base for customer service, accounting, research development, and other support functions for North America, Europe, Phillips Connect, and Phillips Innovations.

About the Author

Cristina Commendatore

Cristina Commendatore was previously the Editor-in-chief of FleetOwner magazine. She reported on the transportation industry since 2015, covering topics such as business operational challenges, driver and technician shortages, truck safety, and new vehicle technologies. She holds a master’s degree in journalism from Quinnipiac University in Hamden, Connecticut.

About the Author

Jason McDaniel

Jason McDaniel, based in the Houston TX area, has nearly 20 years of experience as a journalist. He spent 15 writing and editing for daily newspapers, including the Houston Chronicle, and began covering the commercial vehicle industry in 2018. He was named editor of Bulk Transporter and Refrigerated Transporter magazines in July 2020.

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