Phillips has reported lower than expected sales during the third quarter. Therefore, the technology company has decided to cut 4,000 jobs to improve productivity and increase agility.
Restructuring plan under the new CEO
Phillips CEO Ray Jakobs has been in charge for one week and he has taken a stern decision to lay off 4,000 jobs at the company. Previously, the company has announced their sales numbers for the third quarter which is around 5 percent less than target. Hence, the CEO has taken this step to eliminate thousands of jobs globally as part of a restructuring effort. “We are taking immediate steps to the reduce the costs involved in running the company. This includes the difficult but necessary decision to immediately reduce our workforce by around 4,000 roles globally, subject to consultations with the relevant workers’ councils and social partners. t is a decision we do not take lightly and which we will implement with respect toward impacted colleagues, but one that is needed to cope with our current challenges.” Jakobs said during a call with investors on last Monday.
Highest layoffs at big employee bases
Operational and supply challenges, inflationary pressures, the COVID situation in China and the Russia-Ukraine war had an impact on company’s performance. Moreover, the CEO stated that the job cuts will apply across the board. However, highest number of job cuts will occur at company’s biggest employee bases. Phillips has its largest employee bases in the U.S., Netherlands, India and China. Phillips had a global headcount of 78,000 in 2021.
More layoffs are in sight
Furthermore, the company’s CEO hinted that this is the first phase of the layoffs. Phillips intends to slim down its workforce even further as part of its restructuring plans. “We will continue to review areas to further improve our supply operations, invest in quality and simplify the way of working and remove organizational complexity. This is expected to result in additional restructuring and associated costs in 2023.” Jakobs added to his statement.
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