Being born in the region of Eindhoven has certain characteristics. You will probably talk with a very gently accent, a certain part of your youth will be spent at Stratumseind, and you’ll also be most likely to support PSV. And almost certain: either one of your (grand) parents or neighbours works or worked at Philips. In my case, my dad used to work at Philips (quality engineer/consultant), one of my friend’s dad worked at Philips (something with TV’s and medical stuff) as did a lot of people surrounding me.
When talking with foreign friends about the region I’m from and I give the example of Philips: “Philips? Is that really from Eindhoven? I thought it was German”. That’s like a below the belt punch. Being raised in Eindhoven means you’re proud of Philips, the company with over 400,000 employees in its heydays, making everything, from toilet seats to the most complex electronic devices you’ve ever seen, which meant literally anything around the house which you could buy from Philips, would be from Philips.
At the end of September ‘14 Philips announced to split the organization into two separate firms. Philips Healthcare and Consumer lifestyle together would become Philips HealthTech and the Philips Lighting division would be separated as a different business. Like a next step in the continuous reorganizations which have been going on for decades within Philips resulting in a 300,000 employees reduction of size.
Philips, as some will know, started as a small light bulb factory in Eindhoven (still there, a museum now) and expanded the business and city around it. From the employees’ point of view the separation of lighting is described as: “the umbilical (navelstreng) is cut off”, “betrayal” and “Philips’ heart is bleeding”. From a company which gained its largest successes by vertical integration, production from raw material to finished product and everything in between, and horizontal integration, producing anything they can produce (hey we have plastics for our home appliances, let’s make toilet seats), this just feels like a shame.
Workers claim that since the headquarters moved to Amsterdam, the management lost feeling with the company and only did stuff to keep the stockholders happy. It is a fact that the stock-exchange market likes smaller, more focused companies better instead of big lumpy conglomerates. Smaller, more focused companies can ramp up easier and make more profit percentage-wise as was the case with Philips over the past years, where the healthcare business unit kept the profits up compared with the other less profitable divisions.
From the business and entrepreneurial perspective, companies with a smaller size can adapt more easily to market changes and as history has pointed out, Philips split-offs became quite successful. Look at once-a-daughter school example ASML, keeping ties with Philips would only have slowed off its enormous rapid growth. Look at NXP, successful semiconductor manufacturer, from making antennas for military appliances to the chip in your (less successful) OV-card. Former Philips factories, being picked up by VDL, to manufacture high tech first-tier parts.
In the end, things don’t really change for the end customer. The boxes containing LED-bulbs will still carry the name Philips, just like the TV’s they don’t manufacture anymore, the home appliances as well as the MRI-scanners manufactured by Philips HealthTech will also contain the exact same logo.
The symbolic brand feeling may have just devalued a bit, but we Eindhoven people will get used to it.