Ericsson announced its plan to cut 3,000 staff from its Swedish operation is ahead of schedule, but revealed its restructuring costs for this year have come in higher than first anticipated.
The troubled network equipment vendor announced sweeping operational changes in October following months of speculation and a series of poor financial results, which had contributed to long-time CEO Hans Vestberg losing his job in July.
Three months later the company announced Borje Ekholm would take over as CEO in 2017 after interim chief Jan Frykhammar had overseen this year’s restructuring operation.
The company is attempting to reduce its annual operating expenses to SEK53 billion ($5.86 billion) by the second half of 2017. Part of this drive is to slash its manufacturing costs, resulting in the job losses from its Swedish operation.
By the end of the year 1,600 of these employees will have taken the firm’s voluntary redundancy package.
In its latest update, Ericsson confirmed the estimated cost of restructuring had risen to between SEK5.5 billion and SEK6.5 billion from an initial estimate of SEK4 billion to SEK5 billion. The company attributed the increase to job cuts taking effect faster than expected, and noted its related fees from 2017 would likely be reduced.
At the end of the programme Ericsson’s domestic workforce will be around 13,000 with reductions taking place in production (1,000), R&D (800) and 1,200 positions in other operations, including sales and administration. In addition the company announced 900 consultants were also set to depart.
Ericsson’s sites in Boras, Goteborg, Karlskrona, Kumla, Linkoping and Stockholm were among those impacted, with its Boras and Kumla sites likely to be among the hardest hit. As part of the change, the company said it would outsource and automate some operations.
The company today confirmed there would be no further cuts as part of the cost cutting initiative.