The company is parting with some of its factories

corporate governance
On Saturday, the management of Europe's largest electronics and household appliances concern, Philips, announced its intention to close or sell a third of its factories around the world as part of a reorganization. The company is going to cut costs, but it does not intend to leave markets that are profitable for it.
On Saturday, the Dutch newspaper NRC Handelsblad published an interview with Philips CEO Gerard Kleisterlee, who announced the company's immediate plans to close or sell 50 of its 150 enterprises. Production will cease at the least profitable factories. “We are going to produce only those products that will allow us to remain competitive,” the head of the concern emphasized. According to him, the production of simple types of goods, such as light bulbs, will be concentrated on enterprises located in countries with cheap labor. In addition, Philips intends to restructure its home appliance division.
These measures, according to Mr. Kleisterlee, do not mean that Philips will leave the most important world markets, primarily the United States. In addition, the company's management intends to intensify its activities in the fast-growing Chinese market and hopes to double sales volumes in this country in the next five years (China currently accounts for a tenth of all Philips sales).
According to company spokesman Jules Praast, Philips has not developed a specific plan for closing and selling plants and there is no strict time frame for these activities. According to him, it is not yet possible to predict how many jobs will be cut due to the closure of plants, but many of those laid off will be able to find work at the former Philips enterprises after the change of ownership.
Philips suffered a record loss of 2.6 billion euros in 2001 and failed to return to profit in 2002 amid a global economic downturn, declining demand for semiconductors and increased competition from Asian manufacturers. Over the past five years, Philips has already liquidated 120 of its factories. Since May 2001, the company has been forced to cut 50 thousand jobs, and Philips currently employs 170 thousand people. True, this year the concern received its first quarterly profit: in the second quarter it amounted to $47.4 million.
ALENA Kommersant-MIKLASHEVSKAYA

Newspaper "Kommersant" No. 151/P dated August 25, 2003, p. 7

Authors:

Alena Miklashevskaya

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