Subject: [NEXTEL-1] New Ericsson leadership faces threat from unions

From: Marcel <[email-masked]>
Date: Fri, 28 Mar 2003 14:32:08 -0500

New Ericsson leadership faces threat from unions
Svanberg calls job cuts ‘inevitable’
March 26 16:33:00, 2003
  http://www.globalwirelessnews.com/cgi-bin/news.pl?newsId=4670

HELSINKI, Finland—Swedish unions are threatening to “block” mobile equipment vendor
Ericsson's restructuring plans if the
company refuses to “provide genuine guarantees” that future cuts in the group's workforce
are carried out in consultation with
union consent.

Agitated about the prospect of a massive redundancy plan, union bosses are becoming
increasingly concerned about Ericsson's
future, following the appointment of Carl-Henric Svanberg. The new chief executive was
hired from Assa Abloy, the Swedish
security lock maker and world market leader in its niche field.

During his eight-year term with Assa Abloy, Svanberg revitalized group revenues,
profitability and operating margins. This was
largely achieved through large-scale cost-cutting programs and job layoffs.

“The change of management is significant. Previously, management had consulted closely
with unions. Several representatives of
the 12 major unions in Sweden sit on Ericsson's board. This helps in making decisions more
transparent, but when thousands of
job losses loom, it also emerges as a source of embarrassment for unions,” said Lars Els,
a telecom analyst with investment
bank Nordum in Stockholm, Sweden.

Unions anticipate that Svanberg will make labor restructuring within Ericsson his chief
priority. The CEO is expected to
implement a plan that will see Ericsson shed up to 50 percent of its workforce worldwide
within four years, bringing the total
number to below 58,000.

Installation of a new management team, which officially takes office 8 April, is designed
to inject new force and direction into
making Ericsson competitive and profitable again.

“With the profound management change we have seen, it's a reasonable assumption that the
performance of all divisions within
Ericsson are currently being examined. Over time, we will undoubtedly see a leaner and
fitter company emerge from all this,”
said Rohit Goel, an analyst at JP Morgan.

According to Svanberg, unions will be consulted but job losses “will be inevitable.”

“I was appointed to Ericsson to return the company to profitability. This means tough
decisions must be made, and if we need
to cut deep in order to meet targets, then that is what we will do,” he said.

Ericsson's cost-cutting target, in line with the downsizing or sale of non-core units and
allied job losses, will see revenues fall to
around US$14 billion by 2005. Group revenues dropped 31 percent in 2002 to US$18.9
billion. Revenues, pressured by
falling sales, are expected to decline by 10 percent in 2003.

Svanberg is expected to model his restructuring program on archrival Nokia. Ericsson's
main mobile network equipment unit,
which last year generated more than twice the sales of Nokia Networks, still employed more
than three times as many
personnel as the Finnish vendor's equipment sales division.

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