Philips Respironics moves could net more workers
By PATRICK VARINE and MEGAN SWIFT Trib Total Media
By PATRICK VARINE and MEGAN SWIFT Trib Total Media
Dutch health technology giant Philips Respironics’ planned phase-out of manufacturing operations in Westmoreland County may result in 300 job cuts at its Murrysville and Upper Burrell locations.
The news was disappointing to local officials, but they are confident local economies can rebound.
The company will be missed, Upper Burrell Supervisor Ross G. Walker III said.
“We’re sorry to hear that they are going. It’s going to have a big impact on the township,” he said. “I’m upset about it. That’s however many employees leaving the township. It will be somewhat of a financial hardship for us.
“We’re going to miss Philips, also. They were good neighbors to Upper Burrell. We worked well together.”
Walker could not immediately say how much revenue Philips employees generate for the township, but he said the loss shouldn’t result in a tax increase.
“We’re pretty good at nipping and tucking the budget,” he said. “I think we’ll be OK.”
It’s not all bad news for Westmoreland County communities.
The company that produces ventilators and sleeping equipment is shifting 500 jobs from Pittsburgh’s Bakery Square to those sites starting in the fourth quarter of 2024, according to a company statement released this week.
The move could mean more Philips employees will be working at three locations in Westmoreland County even as the company’s regional employment footprint shrinks. About 100 employees at Philips’ East Huntingdon facility are not affected by the changes, company officials said.
Philips employs 2,400 people in Pennsylvania, according to the company’s website. The company is the seventh-largest employer in Westmoreland County in terms of workforce numbers, according to Pennsylvania Department of Labor statistics from late 2023.
The moves come as Philips shifts its manufacturing to an unnamed third-party operator, according to a company statement.
The employees who are cut shouldn’t have trouble finding a job, Westmoreland County Planning Director Jason Rigone said.
“Certainly, we are concerned, but the type of skilled employees they have there will be in demand across the county,” he said.
Commissioner Sean Kertes said the county has had no contact with company officials.
“The individuals who work for Philips have high-demand jobs, and hopefully they will stay in the county,” Kertes said.
Philips’ exit from Bakery Square in Pittsburgh’s Larimer neighborhood shouldn’t hurt that development either, said Gregg Perelman, managing partner of Walnut Capital, which owns Bakery Square’s 34-acre campus.
“This now leaves a very, very first-class building … that has great amenities,” Perelman said, such as a fitness center, indoor dining facilities and a rooftop deck.
“This has been in the works,” Perelman said of the move. “A lot of it has to do with covid.”
Philips has a long-term lease at Bakery Square and is in the process of subleasing the space. Management Science Associates already has taken over one floor of Philips’ 210,000 square feet in the building, Perelman said.
Walnut Capital and Bakery Square will need to approve any new tenants, he said.
When the building that houses Philips — Bakery Office Three — opened, Philips was supposed to have 1,200 employees.
Joanna Doven, strategy consultant for Walnut Capital, said Philips’ announcement is an opportunity for Bakery Square, as there’s now an official plan as to when Philips will be leaving.
“We can work to sublease the space to the growing AI companies that want to be in Bakery Square,” she said. “We’re extremely well-positioned to really pivot the space to grow the AI corridor.”
About six months ago, she said, Walnut Capital was talking about Philips’ future in the space because of what was going on with the company, so it wasn’t surprising to hear that Philips is consolidating.
“We don’t believe that Philips has a future here from a standpoint of presence,” she said was the conclusion of the conversation from months prior. “The future is the emerging AI companies.”
Recently, four AI companies that are Carnegie Mellon University spin-offs moved into Bakery Office Three, Perelman said.
In the 1-mile stretch between Bakery Square and Duolingo, Perelman said, 26 companies have been attracted as part of an AI initiative.
“We’re excited about some of the new opportunities,” he said.
$1.1B settlement preceded moves
In late April, the Dutch company agreed to pay out $1.1 billion as part of a settlement involving hundreds of personal injury lawsuits over its defective sleep apnea machines, which were subject to a global recall.
Philips has recalled more than 5 million of its breathing machines since 2021 because the internal foam can break down over time, leading users to inhale tiny particles and fumes while they sleep.
In early April, the U.S. Justice Department filed a complaint for a permanent injunction against the company, specifically operations in Murrysville, East Huntingdon and Upper Burrell, along with a plant in California.