Ericsson to end manufacturing in Sweden – Internal report
Ericsson is reported to be planning to close its remaining manufacturing sites in Sweden. A new CEO is yet to be announced.
Ericsson could be about to end its 140 years manufacturing tradition in Sweden as it plans to close down its two remaining manufacturing facilities in the company’s home country. Located in Kumla and Borås, the manufacturing facilities together employ 1,200 people. As a whole, a total of 3,000 jobs within Ericsson Networks division in Sweden could be cut in an effort to save around SEK3 billion ($352 million), according to Swedish daily newspaper Svenska Dagbladet, which refers to a confidential internal report.
Ericsson has neither confirmed nor refuted the information published by Svenska Dagbladet, saying instead that Sweden is, as earlier communicated, part of the planned cost and efficiency program “Profitability Plus 2017” announced on 19 July 2016, only days before CEO Hans Vestberg was ousted.
The cost and efficiency program initiated by Ericsson in 2014 aimed at securing annual cost savings of SEK9 billion during 2017, a program that has been progressing according to plan, but is not yet finished, according to Ericsson. On July 19, 2016, Ericsson announced it planned to double the previously announced savings of operating expenses of SEK4.5 billion in order to reach a reduced run rate of operating expenses, excluding restructuring charges, of SEK53 billion during the second half of 2017, compared to SEK63 billion for the full year 2014.
In a written statement to IIoT 5G Insights, Ericsson corporate relations said: “As previously communicated on several occasions, these measures mean a reduction of the number of employees worldwide. We have large operations in Sweden which are not excluded. As we always do for any employee reductions, we will handle this on a country-by-country basis and our employees and, where applicable, union representatives will always be informed first.”
Ericsson has today 116,000 employees worldwide. In Sweden, Ericsson employs 15,000, or 5,000 fewer than in 2010 when Hans Vestberg became CEO of Ericsson. Ericsson is said to have started negotiating with the Swedish unions. In December and October, employees willing to leave voluntarily will be offered severance packages. Failing to convince a sufficient number of people, employees could be made redundant starting in December, the paper reports.
A new CEO
As far as the search for a new CEO is concerned, Ericsson told IIOT 5G Insights there was nothing to add to what the board communicated when announcing Hans Vestberg’s departure, that is that it would take some time to find a new CEO. While the board said the search would include both internal and external candidates, it did not specify whether it would also include candidates from outside Sweden. Historically, Ericsson’s CEOs have all been Swedish, with a background within Ericsson or within large Swedish industrial companies. The names that have been circulating for the position of CEO include Anders Runevad, CEO of Danish energy company Vestas, Mats Granryd, president of the GSMA and former CEO of Tele2, and Karl-Henrik Sundström, CEO of Stora Enso. They all have in common a long career at Ericsson and experience of running large companies, traits which are said to be prerequisites. As “software is eating the world”, a candidate bringing expertise in that domain would also be a plus to look beyond Ericsson’s industrial heritage and towards future software-intensive growth areas.
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