Ericsson to shed 100 staff in Australia and NZ

Stuart Corner
Tuesday, 02 December 2008 08:35

IT Industry - Strategy

Ericsson is to shed about 100 staff and 200 contractors in Australia and New Zealand over the next six months, but says this represents the local implementation of a global cost cutting programme announced in February -  and impending project completions -rather than a consequence of the current global economic troubles.

"We feel pretty good about the local telco market," Ericsson ANZ spokesman, John Papanidis told iTWire. He said that staff cuts would be made all levels "including members of the executive management team."

Papanidis told iTWire that about 10 jobs were expected to go in New Zealand. "The NZ market is still in the process of consultation...The number has not yet been finalised."

Ericsson said the changes were "designed to improve the efficiency and competitiveness of the organisation." It employs around 1660 permanent employees and around 400 people provided through contracting firms.

The company said that all retrenched employees would receive their full entitlements, with Ericsson's policies "providing for 'above market' terms as well as the provision of outplacement, financial planning and counselling services support."

Plans for the global cutback were revealed in Ericsson's fourth quarter results announcement in February. CEO said Carl-Henric Svanberg, said that market growth had slowed during the prior year. "...for 2008 we find it prudent to plan for a flattish mobile infrastructure market. We will intensify our operational excellence programs and reduce our cost base to safeguard our competitive position."

The company said that cost reductions of four billion Swedish krona would bw made to annual expenditure, with full effect in 2009 (about $US0.5b at today's exchange rate). "All parts of the business will be affected, but main focus areas are SG&A, sourcing, supply and service delivery." One-time charges were estimated to SEK 4 billion to be recognised as each activity is decided

The company said a reduction of approximately 1,000 employees was expected Sweden and would be made through voluntary programs as far as possible.

In October 2008 Ericsson announced its third quarter financial results, posting an operating profit of 5.7 billion Swedish krona ($US772.5m) and sales growth of 13 percent. Svanberg said that the organisation was seeing initial positive effects from the cost reduction programme.