A serious setback for Philips: the technology group has lost an American order for the supply of 30 000 respirators halfway through the journey. The commission issued by the US Department of Health in April was ‘unexpectedly’ withdrawn.
In April, as the number of Coronas fuses in the United States grew rampant, a total of ten suppliers, including car manufacturer General Motors, were asked to supply a total of 187 thousand patient respirators. Philips received the largest order by far with 43,000 of them. Now that Philips has supplied 12,300 devices, the ministry has crossed a line by delivering the remaining 30.000.
For Philips, the message came as an unpleasant ‘surprise’, according to a spokesman. The Americans have not yet given a formal reason. Philips, which has built an additional production capacity of EUR 100 million and has hired dozens of people in the United States to build the equipment, says to work with the US government to find a solution. The group doesn’t want to say if there’s going to be a claim for damages. The United States government can terminate contracts without a back-up.
The group claims to examine whether the production capacity now released can be used to provide other customers with breathing equipment. “The pandemic is not over yet.”The sudden end has no effect on employment at Philips in the Netherlands. No breathing equipment is being built here. However, this year’s profit margin will be lower than expected, according to the group leadership. Earlier a slight increase was expected, now the margin is expected to be the same this year as in 2019.
It is possible that a conflict over the price of the devices is the reason for the sudden withdrawal of the order. Last month, the Committee on budgets of the House of Representatives stated that Philips was asking too high a price for his equipment and that the US Department of Health had negotiated poorly. Philips denies it increased the price of his breathing equipment.