Phillips Industries Expands Its Mexico Facility

Phillips Arteaga Mexico
Phillips Industries

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ARTEAGA, Mexico — Phillips Industries has unveiled a newly updated, 500,000-square-foot production operation that’s intended to bring manufacturing and supply chain capacity closer to its North American customers.

The site, which the company opened to media on March 8, will produce Phillips Industries and Phillips Connect products, and will take on production operations that previously had been located in China.

The expansion is a part of Phillips’ growing manufacturing footprint in Mexico, which stretches to 2007. The electrical and air brake system components manufacturer opened the Arteaga facility in 2015 to accommodate growing demand.

Completed last year, a 380,000-square-foot building will house manufacturing operations and production lines relocated from Phillips’ Santa Fe Springs, Calif., location. The upgrades include three high-speed wire and cable extruders, 36 injection molding machines and various applicators. The original 120,000-square-foot Arteaga building has been reconfigured to manufacture, test and ship electronic telematics products for the Phillips Connect business.

“Our experience in Mexico has proven to me that it’s the absolute best place to manufacture Phillips and Phillips Connect products,” commented Rob Phillips, CEO and president of Phillips Industries and Phillips Connect.

He noted that Phillips Connect is relocating manufacturing from China and near-shoring product assembly to reduce costs, prevent supply chain constrictions, improve quality control and speed delivery to North American customers. Phillips noted that the transition is “probably 30-40% on the way there.”

He added, “This has been one of our big initiatives … to move out of China, to localize our sourcing. Every product that we deliver — 190,000 smart trade solutions, the 2 million sensors — they’ve all come out of China. Most of those are going to airfreight because we’re selling faster than we anticipated. We can’t keep up.”

Phillips robot

Phillips Connect is using robots for assembly. (Phillips Connect) 

The new Phillips Connect facility includes 21,000 square feet of controlled ambient environment that meets ANSI ESD S20/20 standards for electronic assembly. Production capabilities of the new facility include in-circuit device programming, automatic, fully automated glue dispensing, assembly using S-Y and 6-axis robots, automated torque drivers, leak detection systems up to IP69K, functional testing, and customer acceptance testing.

By the end of 2023, Phillips expects to employ 2,100 people in Arteaga. Phillips said Mexico presented opportunities in contrast to the challenges of retaining U.S. workers. In California, he said, the company has to utilize temporary employees on a daily basis.

“If we lose anybody in California, we can’t get anybody back,” he said. “We don’t have the same issues in Mexico. We’re doing a lot of work right now. We’re continuing to localize our suppliers, expanding our team.”

Phillips headquarters will remain in California and serve as the base for customer service, accounting, research development and other support functions.

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