The restructuring events database contains factsheets with data on large-scale restructuring events reported in the principal national media and company websites in each EU Member State. This database was created in 2002.
Kumla, Borås, Gothenburg, Linköping, Karlskrona and Stockholm
Sector
Manufacturing Manufacture Of Computer, Electrical Electronic And Optical Products Manufacture Of Computer, Electronic And Optical Products 26.30 - Manufacture of communication equipment
2,770 jobs Number of planned job losses
Announcement Date
4 October 2016
Employment effect (start)
Foreseen end date
Description
Swedish telecom company Ericsson announced on the 4 October that 3,000 employees in Sweden will be made redundant. In addition to the 3000 redundancies, contracts with 900 consultants will not be extended. According to Ericsson, the internal restructuring is needed in order to meet technology shifts, to attract new customers and to increase the proportion of operations within software development. According to earlier decisions from the board of management, the variable costs of Ericsson will be reduced from SEK 63 billion (€6.4 billion) to SEK 53 billion (€5.4 billion) during 2014-2017.
In June 2016, reports on 3,000-4,000 redundancies were released from news agencies based on anonymous sources. The redundancies were not confirmed by the company at that time.
Ericsson are downsizing within both production and research and development (R&D). In total 1,000 employees are made redundant within manufacturing, 800 within R&D and 1,200 within sales and administration. Most of Ericsson's manufacturing in Sweden will therefore be discontinued, with a maximum of 100 jobs remaining. Parallel to Ericsson's announcement of redundancies, the company has announced plans to hire up to 1,000 employees within R&D in Sweden during the upcoming three years. Ericsson manufacturing and R&D in Borås and Kumla will be most severely affected by the internal restructuring.
Ericsson has a total of 116,507 employees worldwide. Prior to the announced restructuring, more than 16,000 employees (around 14% of the company's overall staff) were employed in Sweden. Ericsson has downsized its operations in Sweden during the last 10 years from having around 21,000 employees in Sweden in 2005.
Update 31/10/2016;On 27 October 2016, Ericsson announced that 1,910 jobs will be cut as a first step of the savings scheme, that foresees a total reduction of 3,000 positions. Jobs will be cut in Stockholm (1,450 employees), Gothenburg (270 employees), Linköping (150 employees) and Karlskrona (40 employees). Ericssons plans to cut the 1,910 positions by encouraging employees to voluntarily leave the company. All 15,000 employees within R&D, sales and administration in the four cities have therefore been offered a severance package if they voluntarily leave the company. In total 1,910 employees will be granted this severance package. Negotiations regarding the 1,200 positions in the factories in Kumla and Borås are ongoing (it is currently not clear how many will be made redundant).
Update 31/11/2016; On 29 November 2016, employer-employee negotiations at Ericsson in Borås and Kumla were concluded. Negotiations regarded all 1,200 positions at the two manufacturing units. In total 820 employees will be let go at the two factories. In Kumla, 360 of 420 employees will be let go. In Borås, 460 of around 700 employees will be let go. Terminated employees will be granted support packages, including full salary during their initial time of unemployment. In Borås, the production of micro-wave links will be terminated and a small unit will remain working on prototype development, logistics and software development. In Kumla, production will be discontinued as well and the remaining 60 employees will function as a test centre for development of 5G-technology.
Update 12/12/2016;On 8 December 2016 Ericsson announced that no more job reduction schemes will be have to be implemented after 1,600 employees in Stockholm, Gothenburg, Linkoping and Karlskrona have accepted voluntary severance packages. The distribution of jobs cut through this measure is not know, but can be expected to be close to the number of redundancies communicated in October 2016 (update 31/10/2016 above). Furthermore, more than 300 jobs have been cut by the company not replacing employees who have retired or resigned for other reasons. In addition to the previously noted 820 terminated employees in Kumla and Borås, 50 jobs will be outsourced from the Borås factory. After concluded employer-employee negotiations a total of 2,770 jobs will be cut at Ericsson, Sweden. Most redundancies will be carried out before the end of 2016.
Due to the number of employees choosing to voluntarily leave Ericsson and accept the severange package, the costs for the internal restructuring for 2016 will be SEK 5.5-6.5 billion (EUR 579-685 million) rather than previously anticipated SEK 4-5 billion. Union officials have called the large restructuring a sad story, but note that the engineers who leave Ericsson will have good possibilities to find new positions in other companies.
Sources
4 October 2016: Dagens Industri
4 October 2016: Dagens Nyheter
4 October 2016: Ericsson (company press release)
3 October 2016: Svt News
Citation
Eurofound (2016), Ericsson, Internal restructuring in Sweden, factsheet number 88773, European Restructuring Monitor. Dublin, https://restructuringeventsprod.azurewebsites.net/restructuring-events/detail/88773.
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