Ericsson to cut 3,000 jobs in Sweden
04 October 2016
Swedish telecom equipment giant Ericsson AB today said that it plans to cut 3,000 jobs in Sweden in order to cut costs amid stiff competition from Chinese rivals and low-key demand for its cellphone towers and switches.
The Stockholm-based company employs over 116,000 people in 180 countries, including 16,000 in Sweden.
The latest round of restructuring is part of its global plan to cut costs by 9 billion kronor ($1 billion) in 2017.
The proposed job cuts will affect around 1,000 positions in production, approximately 800 in R&D and approximately 1,200 in other operations like sales and administration.
Ericsson intends to make significant reductions in operations in its production facilities Borås and Kumla in Sweden, in line with the company production strategy, consolidating to fewer production sites.
The proposed reductions will also impact its operations in Göteborg, Karlskrona, Linköping and Stockholm in Sweden.
Erricson intends to meet its job reduction target through a combination of voluntary and forced reductions as well as other alternatives such as outsourcing.
In addition to its overall $1 billion cost cuts, Ericsson said that it would double previously announced savings of operating expenses "to reach a reduced run rate of operating expenses of 53 billion kronor ($6.2 billion) during the second half of 2017."
Ericsson will also make general cost reductions and take out external costs, primarily by reducing the number of consultants in Sweden by 900, but also through general reductions in operating expenses.
But the company intends to create 1,000 R&D jobs in Sweden over the coming three years, mainly from universities, to bring in new competence in new technologies like development of faster 5G wireless networks.
Jan Frykhammar, president and CEO of Ericsson said, "Ericsson is going through a large transformation. We continue to have a strong focus on R&D, and since many years, most Ericsson employees work in software development and services, rather than hardware production. The measures are necessary to secure Ericsson's long term competitiveness as well as technology and services leadership."
Ericsson, whose share price has fallen around 25 percent this year, is struggling to fend off competition from rivals Huawei Technologies, Nokia Corp, Siemens and Alcatel-Lucent not only on Asia but in saturated markets like Europe and North America.