Philips will begin layoffs of 4,000 employees in connection with the decisions of a complex of lawsuits related to errors in the production of medical devices. The company will have to pay compensation in the amount of 1,300 million euros, which will significantly affect the balance sheet for the third quarter.
The group said the layoffs, which make up 5% of the workforce, will have a direct impact on its global network in an attempt to save around 300 million euros a year, according to the Financial Times.
Philips was forced to withdraw from the market and call for the return of 5.5 million respirators for people with sleep apnea in the US. According to the U.S. Food and Drug Administration FDA, they put users at risk by inhaling toxic foam that contributes to “a wide range of injuries including cancer, pneumonia, asthma and other respiratory illnesses, infections, headaches, coughing, breathing difficulties.” , dizziness, lumps, and chest pain.”
The controversy forced the departure of CEO Frans van Houten, who spearheaded Philips’ recent move into healthcare technology. New CEO Roy Jacobs said the decision to cut jobs was not an easy one.
“My first priority is… to improve execution so we can start to rebuild the trust of patients, consumers and customers, and shareholders.” Jacobs also said that Philips is taking steps to “improve patient safety and quality management.”
