Ericsson announces 2,100 redundancies in Sweden

In late March 2001, the Swedish-owned telecommunications company Ericsson announced that 2,100 workers employed in mobile telephone production in Sweden were to be given notice of redundancy. Furthermore, contracts with 7,500 consultants operating worldwide would be terminated and production at two Ericsson mobile telephone factories in the UK would cease.

On 27 March 2001, Kurt Hellström, the managing director of the Swedish-owned telecommunications company Ericsson, announced a "comprehensive efficiency programme", involving "streamlining" its operations and cutting costs. As a result, 2,100 employees at the company's two Swedish factories manufacturing mobile telephones, in Linköping and Kumla, will shortly be given notice of redundancy. Mobile telephone production at Ericsson's UK factories in Carlton and Scunthorpe, which employ 1,200 workers, will cease and Ericsson will try to find a buyer for the plants. About 7,500 consultants working for Ericsson worldwide will have their contracts terminated

The company's announcement did not really surprise either its employees or the stock market. The huge financial problems at Ericsson - which has 45,000 employees in Sweden - have been known for about a year, with mobile telephone production being the main culprit. In 2000, mobile telephone production lost SEK 24 billion, according to the company's annual report published in January 2001. On 12 March 2001, managements announced that the results for the first quarter of 2001 would show a loss of another SEK 5 billion. In the autumn of 2000, some 500 metalworkers at the Linköping mobile telephone factory were given notice of redundancy, which was the first sign of the further job losses confirmed on 27 March. All of the 500 redundant workers have now left Ericsson, with an agreement that they will receive one year's full pay and at least one year of employment through the temporary work agency, Manpower, while seeking new jobs. Management has announced that it intends to help the further 2,100 workers now to be made redundant in a similar way.

There will be only 475 workers remaining at Linköping after the redundant workers have left. The remaining workers may be transferred to the US-based Flextronics, which is going to take over the reduced mobile phone production at the plant.

The Ericsson group consists of about 40 companies and has a total of around 100,000 employees. The company's new worldwide efficiency programme aims at reducing costs by at least SEK 20 billion per year from 2002. Many subcontractors will also be affected negatively by the economy measures, though it remains to be seen how great the consequences will be.

In 1997, a total of 587 workers were made redundant at the Ericsson Telecom factory in Norrköping, near Linköping (SE9704114N). A joint group - consisting of Ericsson, the trade unions, the temporary work agency Proffice, the local labour market authorities, the local job-centre and the county council - worked together to find best possible solutions. As of 31 December 2000 (according to a recently published survey by Roland Ahlstrand of Lund University), 59% of the redundant workers had received new jobs, 9% had started studies, and 10% had retired on an old-age pension. The remaining 22% were registered at the local job-centre or the local social insurance authority, awaiting various labour market measures or a new job.