Philips shuttering Murrysville, Upper Burrell plants, shifting 500 Bakery Square jobs

Philips Respironics is moving its manufacturing operations out of Western Pennsylvania, company officials announced.

Philips will move manufacturing in Murrysville and Upper Burrell to an unnamed third-party operator, according to a company statement. Employees at its Bakery Square site in Pittsburgh’s East Liberty neighborhood will shift to other Philips locations in Western Pennsylvania at the end of 2024.

It will mean the loss of 300 jobs, reduced in phases, through the end of 2025 at the Upper Burrell and Murrysville locations. Five hundred jobs from the Bakery Square site will shift to the other two locations starting in the fourth quarter of 2024, according to the statement.

“This has been in the works,” said Gregg Perelman, managing partner of Walnut Capital, which owns Bakery Square’s 34-acre campus,said of the move. “A lot of it has to do with covid.”

Philips’ 15-year lease at Bakery Square runs until 2036.

Phillips is in the process of subleassing 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, the Philips was supposed to have 1,200 employees.

But the covid pandemic meant Philips was averaging about 200 or 300 employees in the office space per day, according to Perelman.

Philips’ exit from Bakery Square shouldn’t hurt the development, Perelman said.

“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.

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 their 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 at Westmoreland County locations in Murrysville, East Huntingdon and Upper Burrell, along with one in California.

The company is among the top 10 employers in Westmoreland County in terms of workforce numbers, according to Pennsylvania Department of Labor statistics from late 2023.

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.