Philips Respironics moves could net more workers in Westmoreland County

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 company has been a good neighbor in Upper Burrell and will be missed, 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 provided to the township’s budget, but said they should be able to cover it without increasing taxes.

“We’re pretty good at nipping and tucking the budget,” he said. “I think we’ll be OK.”

But 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 actually mean more Philips employees may be working at three locations in Westmoreland County even as the company’s regional employment 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 the development, 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 has already taken over one floor of Philips’ 210,000 square feet of space 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.”

Around six months ago, she said Walnut Capital was talking about Philips’ future in the space due to what was going on with the company, Doven said, 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 spinoff companies moved into Bakery Office Three, he said.

In the one-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 massive global recall.

Philips 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.

In addition, the company entered into a federal consent decree in April that requires an overhaul of how it manufactures sleep apnea devices. The agreement also requires the company to replace or reimburse patients for recalled machines.

Royal Philips, headquartered in Amsterdam, Netherlands, is a global health technology company with nearly 70,000 employees worldwide and sales of more than $19.5 billion in 2023.