Ericsson Fires Thousands, Wipes Out 140-Year-Old Swedish Industry

Facing increasing competition from Chinese rivals and suffering from weak demand, Swedish telecom giant Ericsson has announced plans to lay off nearly 20 percent of its home country workforce. According to internal sources, one of Sweden's oldest companies is also planning to end all of its manufacturing in Sweden.

The dramatic cuts of over 3,000 jobs are only a first step in a wider restructuring program, in which Ericsson plans to significantly reduce its global staff of 115,000, the company said in a press-release.

In its home country alone, Ericsson said it intends to cut 1,000 positions in production, 800 in research and development and 1,200 in other operations, such as sales and administration — out of the total workforce of 16,000. Additionally, Ericsson also said it would reduce the number of outside consultants in Sweden by 900. According to the press-release, the company is now in talks with unions over the planned job cuts.

In 1878, two years after Lars Magnus Ericsson founded #Ericsson, we sold our first telephone ever #140Ericsson pic.twitter.com/XWOA4Zbl92

— Ericsson MENA (@EricssonMENA) April 10, 2016

​The staff reduction will primarily affect the company's last remaining Swedish production facilities in the towns of Borås and Kumla, potentially putting an end to a 140-year-old manufacturing period. Over the past decades, the majority of Ericsson's manufacturing operations have already been moved to low-wage countries, such as China and Estonia.

Ericsson's president and CEO Jan Frykhammar said earlier that the company was going through a "large transformation" from hardware to software, having previously announced plans to be at the forefront of 5G wireless technology. According to Frykhammar, this was "a cure" to secure Ericsson's endurance and in the long term even the company's competitiveness.

"We have the ambition to become a leader in 5G," Jan Frykhammar told Swedish economic newspaper Affärsvärlden.

Following the news of Ericsson's job cuts, Swedish Enterprise and Innovation Minister Mikael Damberg announced a visit to the town of Kumla, which is expected to be hit the worst.

Some classic examples of Telephone Instruments at the Ericsson HQ in Sweden #Ericsson pic.twitter.com/aLumTfTR0F

— TheGhostRider31 (@TheGhostRider31) September 30, 2016

​"The main purpose is to show support for the employees," Damberg said of his visit, during which he plans to meet with Ericsson employees, union representatives, local business heads and local politicians. "It is important to ‘show face' but also to voice support for the employees. We expect Ericsson to take responsibility in this situation, but the state is prepared to act," he said.

Ericsson's recent strategy of "braking and accelerating at the same time" triggered criticism among Swedish captains of industry.

"This is outrageous. Ericsson seems to have taken a course that is unfortunate for the company itself, the Swedish industry and Sweden in general. In moving production, there is a long-term risk that Ericsson pulls out completely from Sweden," Anders Ferbe, IF Metall's chairman, told Swedish newspaper Östgöta Correspondenten.

"This plan would kill Ericsson and become the first step towards phasing out all of its operations in Sweden," an internal Ericsson employee told Swedish newspaper Svenska Dagbladet.

In recent years, Ericsson has been based languid demand for its cellphone equipment. Additionally, the telecom giant is facing a tough competition from the Chinese Huawei Technologies and its traditional Nordic rival Nokia.

In 1863, Lars Magnus Ericsson created his first telephone “network” at the age of 17. #FBF pic.twitter.com/5IyrjafRau

— Ericsson Careers (@EricssonCareers) January 29, 2016

​Founded in 1876 and headquartered in Stockholm, Ericsson currently employs around 110,000 people and operates in 180 countries. In 2012, Ericsson possessed 35 percent of the mobile infrastructure market.

Follow Lars Magnus #Ericsson as he shows us the past, present, and future of Ericsson. #140Ericsson pic.twitter.com/nPN9caV6WP

— Ericsson Careers (@EricssonCareers) July 19, 2016