Unions fear Philips may cut 2,500 jobs in the Netherlands

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The Independent Online
Unions in the Netherlands are braced for another round of big job cuts at Philips, following an announcement yesterday from the giant electronics group of a bigger-than-expected plunge in third-quarter earnings and news that it was preparing the groundwork for a root and branch reorganisation.

A spokeswoman for the FNV Industry union said up to 2,500 jobs could go, "on top of the 1,000 jobs which will be scrapped under a previously announced reorganisation".

She said the union had begun its calculations about job losses last week when Philips warned that profits would be lower, and said yesterday's results figures supported the belief that more jobs would have to go.

Jan Couperus, an official at the FNV Industry union, predicted that the job cuts were likely to fall at the lighting, semiconductor and components businesses and at the head office in Eindhoven. He could not predict how quickly the cuts would be implemented, but warned: "Boonstra is in a hurry."

The 77 per cent dive in third-quarter net profits to 123m guilders (pounds 45m) compared with analysts' forecasts of between 240m and 360m guilders.

Cor Boonstra, the recently appointed chairman, heightened the unions' fears about job losses by stressing that Philips would tackle its problems head-on through a company-wide reorganisation.

He said that Philips was aiming for double-digit growth in 1997 income from operations and targeted a big rise in return on net operating capital.

"I will also take head-on what I call the bleeders in the company, that means we will turn around, sell or close businesses that are not performing to our standards or are not fitting into our portfolio."

The chairman was coy about Philips' corporate strategy, however. "When the roof is leaking, fix it before you buy a new kitchen. I will come back to you on the subject of corporate strategy, we're looking at it, but first things first."

Dudley Eustace, finance director, said: "There will be a loss of jobs in those areas which are high cost and a gaining of jobs in those geographical areas which offer lower cost labour. It's a fair guess to say more jobs will be lost than gained in western Europe. I would hope that the bulk of these measures will have been completed by the end of next year.

"The story is a sad one for Europe and North America where price pressures are at their strongest and demand at its weakest. The solution can only come from increased pressure on costs which ultimately leads to fewer jobs."

Philips said it would include a 1bn guilder (pounds 367m) one-off charge for restructuring in its current fourth quarter.