Phillips Industries is celebrating its 90th anniversary in 2018. It got its start in 1928 when a patent was awarded to founder Hugh Wallace Phillips for a reflective signal arm. You may know them best for their coiled electrical and air hoses. But today, Phillips offers a wide variety of trucking products, a vendor to nearly every major tractor and trailer manufacturer in the U.S. and a leading parts aftermarket supplier, with a global presence.
We talked to the third and fourth generation leadership of the company, CEO Bob Phillips and his son, President and COO Rob Phillips, about the company's past and future. This interview has been edited for clarity and length.
HDT: Bob, tell us about the company’s beginnings.
Bob Phillips: It started out in 1928 with my grandfather. He started out with a Model A panel truck he used to take parts to the LA produce area. He would go around to the trucks while they were parked and sell them headlights, signal arms, chains, ropes, fan belts, mudflaps, and would install them on the trucks while they were parked there. A couple of years later he opened a store around the corner from the produce market on 8th and Central in Los Angeles. It was there until 1956. My dad worked with him for a while but passed away from TB when I was 2 years old, in 1943. My grandfather had cataracts and retired in 1946; the company had grown to eight employees. From 1946 to 1956 my grandmother and mother ran it. They were the only two women in the industry as far as I’ve heard. In 1956 my grandparents passed away the same year and it was put into an estate for me. When I inherited it in 1962 at 21, we were down to two employees, my mother and one other person.
I dreaded making sales calls, but one day I finally did it, and fortunately the first customer I called on bought something. It was at 5:00 at night, and at 6:00 I made my second sale. It’s not as easy as that. But over time we picked up some business. I would sell product in the morning and at noon would bring orders back up. Mom would call the orders in to various distributors in town. I would hop in the pickup truck and go out and pick the parts up then deliver them.
As we grew I added more salesmen, more parts drivers. In 1968 we moved to our first standalone building. We evolved from a jobber to a fleet specialist.
HDT: At what point did you become a parts manufacturer rather than a distributor?
Bob Phillips: In 1968 I picked up Western Gillette, a large fleet in southern California, and part of what he wanted me to supply him was seven-way [connector] cables. I said, ‘We can do that,’ not knowing how to do it. That went along fine till the guy making them started making more than what Western Gillette could take, so we started going out to different fleets [to sell the excess], and the idea kind of caught on.
HDT: What did fleets do before that?
Bob Phillips: Before that they were making [connector] cables themselves. They would buy a 10-foot roll of 7 way cable and put on the Berg plugs – what would eventually became Haldex – they owned the market for electrical and brake business and component parts.
But the Berg plugs had a stamped pin for making contact that wasn’t completely round, so strands of wire would come out and cause a flickering short. I met with the VP of engineering and said, ‘I’d like to see you change your pins for us.’ I was 26 at the time, and he said, ‘Kid, we’re not going to do anything for you.’
So I came back from Chicago and got with our sales guys and said, ‘We’ll make our own.’ We had a great advantage because we weren’t locked into any preconceived idea. We looked at the six or seven plugs on the market and created our first plug. The plug was so successful that we sold it throughout Southern California and started selling it across the United States. Next thing we started getting specs from International Harvester and Freightliner, who had fleets asking for our plug and cable, so that started our OEM business.
In 1974 or 75, we came to a crossroads of what should we be, a distributor or a manufacturer. We came to the conclusion that our future was stronger as a manufacturer, even though that was a much smaller business, because we could go across the country. As a distributor we were locked into our geographic area.
Along that same period of time we were doing repair work for Consolidated Freightways, selling them new cables and repairing them, and realized that they were making a lot of repairs. The lifespan was down to six weeks. There was a company out of Rhode Island that made heavy-duty neoprene-jacketed seven-way cables with a plug on the end, but it was so heavy it didn’t sell. I said, ‘Wouldn’t it be great if we could come up with a lightweight plastic that would stretch and wouldn’t break?’ So we went to a cable manufacturer in town outside of our industry and tried different compounds. We tried to coil the cables, and the first year was a disaster. We would put it into a freezer and take it back out and try to stretch it and it would shatter. Finally we found a compound that would stretch and re-coil. That became our trademark product.
And the rest is history.
It’s not always all roses; it just caught on, we pushed hard, and our philosophy became making better products, not cheaper products. We still live by that.
In 2013 I made [my son] Rob president of the company. He and his brother Dave, who’s executive VP, have taken the company from a coiled electrical plug-and-socket tractor-trailer connections to a broad electronics type company.
With Rob and Dave now running the company, I’m the chairman, which doesn’t mean a lot except I come in and check the mail.
HDT: Rob, tell us about how you got involved in the business.
Rob Phillips: We got involved at an early age. In the summertime, if my mom needed a break she would send us to work with my dad. We would skateboard through the warehouse. We learned to drive forklifts, put stuff away and helped with inventory. We used to take family vacations and load the back of the van with coiled cables and sockets and take a different route just to hit the truck stops, and my dad would teach us as we were driving. He’d say, ‘See if you can give away this coiled cable.’ People looked at us like we were nuts, but we had to be able to talk about the benefits.
We learned the business pretty early and we were really raised in it – but that doesn’t mean I wanted to go into the business. I thought our parts were not that exiting, and wondered how I was going to meet a girl if we’re making truck parts. So I was studying restaurant management and failed an accounting class. My dad said if he wanted me to continue to pay for college I could come home for the summer and be tutored by our accountant.
I lasted about three or four days in accounting before our head of marketing, John Callas, who retired in 2000, took me under his wing and said, ‘Robbie, no one wants to do accounting. Let’s launch a product.’ I tell you, I had more fun that summer. I got to work with engineering and customers and marketing and advertising. I worked with a lot of different people and realized this is really a fun business. It’s more than just making truck parts. I really fell in love with the business, when I wasn’t expecting to. I got to learn how the real business worked, the product from concept all the way through to production and selling it to customers, in a 90-day period.
That product was what we called a mini coil, a small blue 4 or 6 way electrical connector for boat trailers, horse trailers. So when I first came to the company I was focused on the RV product like the mini coils. I went from there to shipping and really learned a lot, I got to know part numbers and products. I learned about responsibility. I learned about a lot of things.
One time my older brother Bill and I were working, when accounting would close at midnight at the end of the month, so we were shipping till midnight. We had a record month. We were real proud of ourselves – we were there till 1:30 a.m. But the next day, my dad said, ‘You’re the boss’s son. I don’t care how late you were here last night. You came in at 9:00 this morning and employees assume you’re not working very hard.’
Part of the downside of being in a family business is people assume you’re just looking for an easy paycheck, a big paycheck, or the least input. Credit to my dad, we always were the first car there in the morning and the last car in the afternoon. If your last name’s on the building, you’ve got to work twice as hard to get half the respect.
This is a fourth-generation family business. Only 12% of third generation companies survive and of that 12%, only 3% of them make it to the fourth generation.
HDT: How have you accomplished that?
Rob Phillips: A lot of luck, a lot of hard work, and surrounding ourselves with the right people.
HDT: Tell us about how your family values affect the company culture and its success.
Rob Phillips: Every day our employees fight like champions. My dad has always been the underdog who loves a battle. We’ve taken on that same way of thinking. We do this company wide, we push this theme of doing whatever it takes to get the order.
Bob Phillips: We love to win, but the objective is to play the game, and we love to compete. We always have competition. Invariably most of it comes in under price and not the quality status that we like to have. We like to give people reasons to use us.
Rob Phillips: Another family value is getting things done quickly and getting them done right. We’ve got to be able to react fast and handle customer needs with urgency. TNT – today not tomorrow. If there’s something on our desk at the end of the day, don’t go home till it’s done, because the customer’s waiting for it.
As it relates to our products, again, we’ve really worked hard to keep that legacy my dad created, of offering solutions. We’re not good at ‘me-too’ products. We’re really good at talking to customers and fleets and finding out where they have a problem and solving it. We’re passionate about engineering and finding solutions to industry challenges.
Bob Phillips: We listen really well.
HDT: You seem to really be in touch with the everyday challenges fleets have and come up with ways to address them. How do you do that?
Bob Phillips: All the products we have are from a customer telling us, ‘I wish we had,’ ‘I wish there was a solution to…” Almost everything has come from listening. You’ve got to ask the questions too and be involved with the industry to be able to recognize what to ask. But they all come from the fleets.
I think it’s because I grew up making fleet calls. I’d make 10 or 12 calls a day, and you get to understand them and know them. When we have a chance to solve a problem, like corrosion or a durability issue, we’re all ears.
Rob Phillips: Relationships are so key to everything we do. We really believe that strong relationships drive our future business.
HDT: The industry seems to be changing more rapidly than ever before. What are some of the top trends you’re addressing?
Rob Phillips: The number one trend that we see is all of these great suppliers out there have been making their products smarter. The only problem with that is to get all of these sensors onto a trailer, it’s forcing the fleet to pay a number of different subscriptions for telematics. These smart products need a way to let the driver or fleet know what’s going on. Fleets don’t want a box for ATIS and one for ABS and one for smart tires, and all these things require communications systems. So we developed patented technology that allows us to translate all these signals. Working with other suppliers, we can run everything through one single box, allowing one data connection, one cell plan, one subscription. The result is TrailerNet, a product of Phillips Connect Technologies.
We also are working closely on a great solution for getting camera system signals from the back of the trailer to the driver. Think about how illogical it is that every car off the line has a backup camera on it. However, trailers, when you’ve got maybe 65 feet from the driver to the back of the trailer, the driver is completely blind. There are companies working on making wireless solutions, but the reality is with the wireless solution, you’ve got 1 to 2 seconds of latency, which works out to 11 feet at 5 mph, which doesn’t work. We’ve developed a system that is really exciting that we get pumped about. We’ve been working on that with Velvac Road-iQ, that’s been a real good partnership.
HDT: You recently introduced Phillips Connect Technology, a new business aimed at developing solutions for future intelligent vehicles. Tell us more about that.
Rob Phillips: We’ve got engineering working on a whole suite of products and working with the greatest and best suppliers in the industry. We have an app under development, a web portal, a cloud server. The way it works, [the data from] all of those sensors go up to the cloud, are analyzed in real time, and go back to the driver, fleet operations, however the fleet wants to see it. It’s a completely agnostic program. We’ve not in the business of creating tire inflation systems or making sensors for wheel ends or brake temperatures; we’re working with companies that specialize in that. So fleets can use the suppliers they want to work with. That’s the TrailerNet product.
HDT: Where is that going next?
Rob Phillips: Right now we’re working really hard. We’ve got products that will be on display at TMC that we’re really excited about. We’ve got several years of products coming in behind that. We’re continuing to add additional components and things that will continue to add value.
We really pride ourselves on looking at what’s coming down the road, and we’re seeing all this work that’s begin done to eliminate wire and cable products. A lot of industries have gone wireless. We’re not ready for that, but 5, 10, 20 years from now there won’t be nearly as much wire on trucks and trailers. That’s something we’re really looking hard at. And how do we support both sides as we’re making the transition?
HDT: One of the hot topics today is the development of autonomous trucks. Where do you see Phillips Industries in this?
Bob Phillips: We’re part of it.
Rob Phillips: We’re actively engaged with several companies working on autonomous vehicles right now.
With TrailerNet we have the ability to see how the trailer’s running down the highway. In autonomous or semi autonomous platooning, the trucks and trailers have to be in good working condition and can’t have surprise failures. With TrailerNet we saw that as a big opportunity as well – how do we play a role in the whole autonomous transition?
HDT: Anything else you’d like our readers to know?
Rob Phillips: We’re doing a big celebration for our 90-year anniversary; it’s something we’re really proud of. We’ve done a series of really great videos with my dad talking about the history of our business.