Ericsson has announced the closure of its Katrineholm operation in Sweden, with the loss of almost 500 jobs. The telecoms giant was one of the biggest employers in the municipality, which has a population of just 33,000.
Staff in Stockholm, Katrineholm, Borås, Kumla, Göteborg, Linköping and Karlskrona will also be affected as Ericsson cuts 2,200 jobs across the country. Most of the posts will go from the company's R&D and supply business areas, and a cut in external consultants is also expected.
“The announcement came as a shock,” said Andreas Lindhe, news director and deputy managing editor at local newspaper Katrineholms Kuriren. “The closure of Ericsson's factory in Katrineholm is a big blow, not only for the city, but also the wider western Sörmlandsleden region. Losing 460 jobs from a small place like Katrineholm will have the same impact as 30,000 job losses would have on Stockholm.”
The job cuts may be a shock to the Katrineholm community, but they are less of a surprise to anyone following Ericsson’s transformation.
In 2004, 73% of the company’s revenue came from hardware. Just seven years later, Ericsson CEO Hans Vestberg pulled out of consumer hardware completely, announcing the sale of the firm's 50% share in the Sony Ericsson handset business to Sony for £964m. Today, Ericsson’s main focus is on network infrastructure, software and services.
In November 2014, Vestberg announced a global cost and efficiency programme intended to save SKr9bn (£700m) in costs by 2017. Ericsson’s sizeable R&D operation, which employs about 25,000 people worldwide, was expected to bear the brunt of the cuts.
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- Vodafone CTO Steve Pusey is to step down at the end of July 2015, and will be replaced by Ericsson head of networks, Johan Wibergh.
- Ericsson has picked open-source cloud computing platform OpenStack for its $30m (£17.9m) datacentre, cloud and telecommunications infrastructure update.
Ericsson's news worsens an already bad week for the Swedish IT industry after Sony Mobile's announcement on Monday of 1,000 job losses at its Lund facility.
Anders Ferbe, president of the IF Metall union, which represents 320,000 industrial workers across Sweden, told Computer Weekly that the cuts are “ruthless” and threaten the future of Sweden's mobile IT industry.
“I am deeply worried for the Swedish function within Ericsson and the future looks pretty bleak for the entire ICT industry in Sweden,” he said. “Although we heard about the broader restructuring plans last autumn, we had no inkling of the impending death blow to Swedish operations. It was both surprising and upsetting.
“Some staff will probably be able to get jobs in other companies, but it’s likely that the majority will have to look for a new career. For many of our members in Borås, Kumla and Katrineholm, there are weak prospects for alternative employment. It will be an extremely tough situation for many and I feel deeply for all those affected.”
Ericsson said negotiations with unions are under way and workers will be given their notice in June.
At the end of 2014, Ericsson's workforce totalled 118,000, including 17,580 in Sweden.