Ericsson announces 700 redundancies

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In September 2002, Ericsson, the Swedish-owned technology multinational, announced 700 job losses at its plants in Bilbao and Madrid, reducing its Spanish workforce by nearly 30%. The latest redundancies are part of a wave of workforce reductions affecting the telecommunications sector worldwide.

Ericsson, the Swedish-based telecommunications technology multinational, announced in September 2002 further cuts (ES0201205F) in its Spanish workforce, to be implemented through a new redundancy procedure. The multinational will make redundant 700 employees at its plants in Bilbao and Madrid, representing 28% of its current Spanish workforce. The group, which two years ago employed 3,300 workers in Spain, will be left with only 1,700. The workforce reduction will be carried out through compulsory redundancies because the company has already exhausted the possibilities of outsourcing areas of its business or using early retirement.

The workforce cuts will affect sales, technical, factory and support staff at all Spanish sites. However, they will not affect the mobile telephony division, which is a joint venture with the Japanese Sony. The workers' committee at the Bilbao plant fears that Ericsson plans to close the factory.

The economic crisis affecting telephone operators has paralysed investments in equipment and networks. Ericsson argues that it must adapt to the technological changes that are taking place in fixed telephony and maintain its competitive position in the sector, which is also going through a serious price war.

Ericsson states that the Spanish redundancies form part of a workforce adjustment programme that is planned for the whole group, involving the loss of 25,000 jobs between 2002 and 2003. With this planned reduction, the total workforce of the group worldwide will be less than 60,000 at the end of 2003. The redundancies will, it hopes, allow the firm to return to profitability in 2003.

The telecommunications sector is going through a difficult situation globally. Overall, the world's eight largest telecommunications manufacturers plan to eliminate over 106,000 jobs during 2002-3 in order to address the crisis affecting the sector. The French-based Alcatel (FR0210101N) and Ericsson are the latest firms to announce redundancies. The German-owned Siemens will eliminate 35,000 jobs, 8% of its global workforce. The UK-based Marconi now has a workforce of 24,000, compared with the 34,000 employees that it had in early 2001. In late July 2002, the US-owned Motorola announced the elimination of 7,000 jobs (7% of its workforce) before the end of the year. Lucent (USA) will cut 7,000 jobs in 2002, 13% of its workforce, and its subsidiary Agree Systems will shed another 4,000, 33% of its workforce. In early April 2002, the Canadian Nortel launched a restructuring plan that will involve the loss of 3,500 jobs.