1100 jobs are being shut down at Philips in The Netherlands, the company has announced on Monday. The decision is part of a mass layoff in which 6000 jobs worldwide will be scrapped by the technology multinational over the next two years.
In 2022 alone, Philips suffered a financial loss of 1.6 billion euros. Phillips’ CEO Roy Jakobs says the decision is difficult but necessary, and that Philips is in crisis. Jakobs became CEO in October last year, and shortly after Philips announced they were cutting 4000 jobs, 800 just in The Netherlands. Now with the additional cuts announced, a total of 10.000 jobs will disappear.
The cause for the financial downfall is mainly due to Philips’ worldwide recall of 5.5 million sleep apnea machines, due to a toxic foam in the machine that could potentially cause cancer and other health issues. The malfunctioning of the apnea machines has partially caused the 70% decrease of Philips’ market value, according to Reuters. Additionally the Covid-19 pandemic in China and the war in Ukraine have also in part contributed to Pillips’ crisis.
The company’s headquarters in Eindhoven are expected to be the most affected. “The HTC (High Tech Campus in Eindhoven) is a very nice and inspiring environment with great people and tremendous potential. That’s why it saddens me a lot that this is the place where most of the bombs will fall. Not a smart move in my opinion”, says Eltjo Haselhoff, former employee and researcher at Phillips who resigned last year.
Philips is cutting back on research, innovation and development, and transforming these sectors into smaller divisions in order to invest better in the quality of products. “Theoretically that is good but at the same time they are cutting largely into the innovation department and that can be dangerous in the next 10 to 15 years ”, says Hans Weijers referring to a possible lack of technological developments in the future. Weijers is manager at The Federation of Dutch Trade Unions (FNV) and responsible for communicating with Philips.
An anonymous source working at Philips told The Groningen Observer that the budget for Research and Development will stay the same. However, 30% of the budget was allocated to outside partnerships and will lower to 10%. The information has been confirmed today by Jakobs, according to DutchNews.nl. The R&D budget was reserved for NatLab but that is now being cut to 10% as spending is spread among the different corporate divisions to be ‘closer to the market’.
“What we present today I think is a very strong plan to secure the future of Philips. The challenges we have are serious and we are addressing them head on,” said Jakobs, referring to a plan of investing in “fewer, better resourced, and more impactful projects”.
The Christian National Trade Union Federation (CNV) is not confident with the changes, claiming that sacking employees is often used as the solution: “it is precisely these people who do everything they can to make Philips a great company. It would be much more desirable to stop paying dividends to shareholders for one or two years. They withdraw a lot of useful Philips money purely for their own benefit”, they told the Eindhoven News.