- Title: Ericsson to cut 3,900 jobs in Sweden
- Date: 4th October 2016
- Summary: LONDON, ENGLAND, UK (OCTOBER 4, 2016) (REUTERS) (SOUNDBITE) (English): DARREN SINDEN, INDEPENDENT MARKET ANALYST, SAYING: "There's two things here really. First of all it's a Swedish company and it's very much a paternalistic society so I think historically they probably haven't cut jobs as quickly as they should have. Secondly they're in an incredibly competitive market. They compete with Nokia and Huwai and other networking firms around the world. There's a lack of new 4G orders. Most of that infrastructure has been installed now by the carriers. 5G which is the next generation of mobile phone technology is not really up and running yet so there's a cyclical low in the demand for their products. They face fierce price competition from Huwai based in China with a much lower cost base and rival Nokia and it's very difficult to compete against that when you're having to pay Swedish wages."
- Embargoed: 19th October 2016 11:10
- Keywords: Ericsson cut 3 900 jobs Sweden
- Location: LONDON, ENGLAND, UK/BORAS + LINKOPING, SWEDEN
- City: LONDON, ENGLAND, UK/BORAS + LINKOPING, SWEDEN
- Country: Sweden
- Topics: Company News Markets,Economic Events
- Reuters ID: LVA00252LAB9P
- Aspect Ratio: 16:9
- Story Text: Ericsson plans to cut around 3,900 jobs in Sweden, doing away with most of its manufacturing in the country as it grapples with a shrinking market for telecoms network equipment.
The Swedish company, whose share price has fallen around 25 percent this year and which is looking for a new CEO after Hans Vestberg was ousted in July, said on Tuesday (October 4) around 3,000 jobs would go in production, research and development (R&D) and other operations, as well as 900 consultants.
The job cuts deal a blow to Sweden, where Ericsson is one of the country's biggest employers and where politicians and unions have scrambled in recent weeks to save jobs.
Ericsson currently employs about 16,000 people in Sweden.
"There's two things here really. First of all it's a Swedish company and it's very much a paternalistic society so I think historically they probably haven't cut jobs as quickly as they should have. Secondly they're in an incredibly competitive market. They compete with Nokia and Huwai and other networking firms around the world. There's a lack of new 4G orders. Most of that infrastructure has been installed now by the carriers. 5G which is the next generation of mobile phone technology is not really up and running yet so there's a cyclical low in the demand for their products. They face fierce price competition from Huwai based in China with a much lower cost base and rival Nokia and it's very difficult to compete against that when you're having to pay Swedish wages," said Darren Sinden, Independant Analyst.
The company said in July it would step up efficiency measures due to a tough market, having already announced a 9 billion Swedish crown ($1.1 billion) cost-cutting programme in 2014.
The 1,000 jobs that will go in manufacturing remove the majority of Ericsson's production in the country, which currently represents about 5 percent of its global production.
Ericsson, which has backing from two of Sweden's most prominent investors - Wallenberg-backed Investor and Industrivarden - has come under growing pressure for its poor performance in recent years and for being slow to address stagnating demand for its core base stations.
The company also said, however, it would recruit about 1,000 R&D positions in Sweden over the coming three years to support technology shifts, new customers and more software development. It added its cost and efficiency programme was on track. - Copyright Holder: REUTERS
- Copyright Notice: (c) Copyright Thomson Reuters 2016. Open For Restrictions - http://about.reuters.com/fulllegal.asp
- Usage Terms/Restrictions: None
