Magazine article Management Today

Hanging on the Fate of Philips

Magazine article Management Today

Hanging on the Fate of Philips

Article excerpt

It might almost be a company town in recession-hit Britain. Not in appearance admittedly. Physically, Eindhoven is just about as messy as most English industrial cities, but there's an austere north European quality about the disorder. In the town centre the streets pick their way through what looks like a jumble of outsize cardboard boxes, with never a blackened Gothic spire in sight. It's all fairly new. The place was knocked about a bit in the war, and much of it was rebuilt (or built) in the 1950s and '60s, when architectural standards were not at their highest. It's also, like the rest of the Netherlands, relatively clean.

Comparison with the UK is prompted by the economic strains caused, in turn, by the sufferings of Eindhoven's principal employer. The town is of course Philipsburg, North Brabant. It was here that Gerard Philips began producing carbon filament lamps almost 100 years ago, and the fortunes of the town have been inextricably bound up with those of the company ever since. The gradual evolution of Philips into a multinational is what turned Eindhoven from an agricultural community into a major industrial centre with a population of more than 190,000.

Although Philips came to employ many more people outside than inside the Netherlands, Eindhoven was always the hub of the universe. It was home not only to corporate management but to the senior administrative, planning, marketing and R&D staffs of several of the product groups that emerged as the main axis of the group's famous matrix structure. A massive raft of concrete-and-glass factories -- all bearing the name Philips -- formed in the heart of the town. At one time, it's said, more than half the region's working population of 200,000-plus were in 'Philips-related' jobs.

With true old fashioned paternalism, the company penetrated into virtually every aspect of the town's life. Philips ran schools, the library, the leading hotel, the fire brigade, the local football team, even the airport. Most of these links are now quite tenuous, where they have not been severed completely. The Cocagne Hotel was sold to a German group a couple of years ago, and although the home ground of PSV Eindhoven is still called Philips Stadium, the company is just one in a long list of sponsors.

Disengagement from such extra-mural activities is by no means finished yet. There has lately been talk of a management buyout of the corporate conference centre, and there are plans to privatise the group's in-house engineering company. …

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