Royal Philips Recall Results In Layoffs

Royal Philips has announced that the company will be cutting 4,000 jobs in an attempt to better manage supply chain shortages and handle the recent backlash from a recalled sleep apnea device.

The recall consists of 5.5 million devices designed to assist with breathing during sleep. The devices contain an internal foam that is used to reduce the noise of the device. Later it was discovered that the foam could degrade potentially releasing harmful gasses into the user’s lungs. So far Philips has stated that there is no evidence that the foam releases harmful gases, however, testing is not yet complete.

The company announced that the 4,000 jobs that they intend on cutting are luckily only 5% of their total workforce but will allow for the company to simplify operations and save nearly $300 million a year.

The company has been in hot water since the recall, the failed devices added up to result in nearly a $1.3 billion net loss throughout the third quarter. As a result, the company has now stated that rather than a 1-3% sales growth throughout the year they are now projecting single digest losses.

The company then stated that as of recent years they have been failing their stakeholders, and the company must reevaluate core issues like supply chain hurdles before pushing forward to growth.

Source: Wall Street Journal