Ericsson has announced that it plans to lay off nearly 20 per cent of its workforce in Sweden as part of an ongoing restructuring programme.
In Sweden, Ericsson intends to trim approximately 1,000 positions in production, 800 positions in R&D and 1,200 in other operations, for a total reduction of 3,000 in its local workforce of 16,000. The company also plans to reduce the number of consultants in Sweden by 900.
Sites at Borås, Göteborg, Karlskrona, Kumla, Linköping and Stockholm will be affected. The production facilities in Borås and Kumla will be subject to the largest staff reductions, in line with the company strategy of consolidating to fewer production sites and continued work with outsourcing partners.
Offsetting these changes in the area of research and development, Ericsson also said that it intends to recruit about 1,000 R&D positions in Sweden over the coming three years, mainly from universities, as the company builds up competence in new technology and customer domains, particularly 5G.
Jan Frykhammar, president and CEO, Ericsson says: "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."
Production in telecom has changed significantly over the past decade with smaller products and a more efficient production – manufacturing time per radio unit has been reduced by more than half. Higher volatility in production volumes has increased the need for flexibility and using partners has become more important, the company claims. As a consequence, Ericsson is consolidating its own production to fewer sites globally.
The cost in sales and administration will be reduced as a result of the new company structure introduced July 1, 2016, with the aim to create a more efficient and purpose-built organisation to meet the needs of different customer segments and more quickly seize business opportunities.
At the same time, Ericsson has consolidated its global R&D organisation to increase efficiency and optimise operations. Two of the centres are in Sweden, in Rosersberg and in Linköping, with Sweden remaining the base for research and development in radio technology and 5G.
Ulf Ewaldsson, chief strategy and chief technology officer, said: “We have a clear goal that our R&D in Sweden should be world leading, not least in next generation systems. In the short term we have to reduce the number of positions in R&D, primarily within administrative roles. At the same time our intention is to bring in new competence in new technologies. Therefore, we intend to recruit approximately 1,000 engineers in Sweden, primarily from universities, over the coming three years."
Union consultations on the proposed changes in Sweden are ongoing and, for the majority of the operations, is expected to be concluded during the first quarter of 2017. The process related to the operations in Borås and Kumla is expected to be concluded during the second half of 2017.
The staff reductions are part of a cost and efficiency programme targeting savings of SEK 9 billion during 2017. In addition, Ericsson announced on 19 July, additional measures designed to reduce its annual run rate of operating expenses to SEK 53 billion in the second half of 2017, effectively doubling the savings that the company hopes to make. (These figures exclude restructuring charges, which are estimated to be about SEK 4–5 billion for 2016.)