Ericsson AB says cost cutting plans that the company had announced previously will lead to job cuts worldwide, as the Swedish company responds to local media reports that it may shut down what’s left of its domestic production and dismiss thousands of employees.
“We will handle this on a country-by-country basis and our employees and, where applicable, union representatives will always be informed first,” Ericsson said in an emailed statement. The announcement followed a report by Svenska Dagbladet late on Wednesday that the company was considering firing 3,000 employees at its networks products unit in Sweden. The newspaper cited a copy of a confidential savings plan it had obtained.
Ericsson may close its production sites in Boraas and Kumla, which would end 140 years of production in Sweden, the newspaper said, citing the document. The two sites employ some 1,200 people, it said. There may also be job cuts within other areas of networks products, such as research and development, which would bring the total number of jobs affected to about 3,000, Svenska Dagbladet said.
Ericsson unveiled a cost cutting plan in 2014, targeting 9 billion kronor ($1.05 billion) in savings in 2017. “This program is progressing according to plan, but is not yet finished,” the company said.
In July this year, Ericsson revealed further measures entailing a doubling of its previously announced operating savings targets in order to achieve a reduced annual operating cost level (excluding restructuring charges) of 53 billion kronor in the second half of next year, which is 10 billion kronor less than the company paid for all of 2014, it said.
“We have large operations in Sweden which are not excluded” from the cost saving plans, Ericsson said.
The company ousted chief executive officer Hans Vestberg on 25 July, after revenue and profit sagged and an array of investigations at the Swedish maker of wireless-networking equipment led to growing shareholder unease. It named Jan Frykhammar CEO until a replacement is found. Earlier that month, the company said it would accelerate cost cuts after reporting four straight quarters of disappointing revenue and profit. Bloomberg