Ericsson to shift 7% workforce

NEW YORK: Swedish telecommunications equipment maker Telefon AB L M Ericsson

said on Friday it plans a $670 million (6.7 billion Swedish kroner)

restructuring, affecting 7 per cent of its work force, in a new bid to restore

its troubled mobile telephone handset business to profit.

Ericsson executives said the restructuring was part of a plan to shift

manufacturing operations to low-cost regions. The announcement was made at a

press conference in New York after the release of third-quarter results. The

board of Ericsson, the world's No. 3 mobile phone maker, also was to meet in New

York on Friday.

Executives said the program involved re-training 7,100 workers in its

struggling mobile handset business for jobs in its healthy network systems

business.

The plan is part of a broader effort to shift production of mobile handsets

from factories in the United States and Western Europe to low-cost facilities in

Eastern Europe, Latin America and Asia. The company is seeking to turn over

manufacturing of entry-level phones to contract manufacturers, such as Arima in

Taiwan and Elcoteq of Finland.

The company said the restructuring program would result in 6.5 billion

Swedish kroner of savings in 2001, and annual cost savings of 10 billion Swedish

kroner from 2002 onwards.

(C) Reuters Limited 2000.