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Phillips Industries Announces Plans to Move Manufacturing to Mexico in 2023

Phillips speaks at the Technology & Maintenance Council Annual Meeting and Transportation Technology Exhibition in Orlando, Fla., on Feb. 26. (John Sommers II for Transport Topics)

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ORLANDO, Fla. — Phillips Industries by the end of 2023 will move its manufacturing base from China to North America with the launch of full-time operations near Monterrey, Mexico, the company announced.

“China has been really good for us for a long time, but China is no longer good for us,” CEO Rob Phillips said Feb. 26 during a media event at American Trucking Associations’ Technology & Maintenance Council Annual Meeting and Transportation Technology Exhibition. “From tariffs to having ships stuck at the ports floating, and having a lot of cash tied up in inventory because it’s floating. [Plus] the difficulty with supply chain and the COVID shutdowns.”

Phillips, whose company makes electrical and air brake system components, also expressed frustration with China’s lingering COVID-19 related supply chain delays, lockdowns, labor and parts shortages. He also noted that February factory shutdowns during the country’s annual Lunar Near Year make it difficult to keep up with demand for the company’s products. He added that while cost advantages compelled the company to move to China in 2006, those advantages ended, “two or three years ago, four years ago.”

The shift to Mexico brings with it new opportunities, he noted.

“Mexico is a great place to operate, incredible leadership, a great college system,” Phillips said. “We don’t have any challenges with employees. We have people lined up every day looking for a job.” He said the company already has 1,600 employees in Mexico, and that number will expand with the manufacturing shift.

“We’re making everything there. There’s not much we’re not making there,” Phillips emphasized. “I’m very bullish on North America, and as fast as we can move everything out of China, we will.”

In addition, Phillips announced the creation of a new subsidiary division, Phillips Innovation, that initially will work with three companies to create off-the-shelf technology that will be used predominantly on trailers.

Phillips Innovation will focus on three areas: improving trailer visibility with cameras and radar units, developing EV power systems for trailers and sustainable energy systems for tractors and trailers.

The first partnership is with Spartan Radar, a Los Alamitos, Calif.-based aerospace and defense contractor that Phillips said is creating a small radar system to help improve a driver’s visibility and provide early warnings to drivers if a vehicle is near the truck.

“What Spartan has created is a multizone system that uses a patented radar technology that gives you an audible alert as things moved closer into each of the zones,” Phillips said, emphasizing that the system can be installed in a few hours, and the radar units can be integrated with Phillips’ existing camera systems. “This is going to dramatically improve safety,” he said. “This is about the size of two iPhones, put on top of each other. It’s a very easy installation.”

The second partnership is with San Jose, Calif.-based Merlin Solar, which is already putting solar panels on the roofs of trailers. Hudson, Ill.-based Nussbaum Transportation has put some into use, and Phillips said one of the fleet’s drivers recently powered his truck for an entire 34-hour rest break solely with power supplied by the panels.

“Nussbaum has about 70% of their fleet installed with solar panels,” Phillips said. “They’ve completely eliminated idling time, and this driver was able to produce enough power from the solar panels that he never had to idle.” Phillips suggested power from solar panels could eventually be able to power a trailer’s lift gate and the power drive axles on trailers.

The third partnership is with ProEV, a Pointe-Claire, Quebec-based company that manufactures high-voltage harnesses. Phillips said the goal of this relationship will be to layer his company’s existing low-voltage harnesses with the higher voltage units for the industry’s future development of hydrogen and battery/electric powered vehicles.

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