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.