Cell Division.

U.S CELL PHONES--OR, AT LEAST, THEIR production--could be heading south.

Motorola's plant in Chihuahua, Mexico, may pick up more business in the wake of a production shutdown in Harvard, Illinois. According to Motorola, a global surplus of production capacity forced it to lay off 2,500 U.S. employees in January.

At press time, Motorola insisted it had not yet decided which facility would take over the role of supplying the North American market. Existing plants in Brazil, China, Germany and Scotland were in contention. But given Mexico's proximity to the United States, its low labor costs and the economic momentum of Nafta, Chihuahua was viewed as the frontrunner.

Ironically, the Chihuahua plant, which employs 3,000 and was set up in 1996 to manufacture pagers, switched at the start of 2000 to making mobile phones for the export market, contributing to the glut that undermined Harvard's viability.

"In 2000, the Harvard manufacturing team lowered production costs and improved quality but we cannot competitively manufacture products when there is surplus capacity at lower-cost sites," says Motorola President Mike Zafirovski.