Ericsson has initiated union negotiations to close down its telecom cables operation within business unit Networks.
As the market for copper cable has declined and the market for fibre cable has grown over the last years, the production has shifted towards Asia, where the majority of the business volumes for fibre cable are found. In Europe there is more production than demand for both copper and fibre cables.
Tomas Qvist, head of Special Products in business unit Networks, and head of Human Resources for Ericsson in Sweden, says: "The decision is based on the fact that Ericsson's production of telecom cables is small from a global perspective, and that we also have a small market share. There is overproduction on the cable market in Europe. Unfortunately, our production has not been operating at full capacity for a long time and has struggled with profitability."
The announcement primarily impacts the operations in Hudiksvall and Stockholm. A notice of reduction of 318 positions in Hudiksvall is given, and a dialog with the unions in Stockholm for how to close down 36 positions in Stockholm is initiated.
Net sales for telecom cables operations in 2012 amounted to approximately SEK 1 billion.
The current best estimate is that today's announcement will generate restructuring charges of about SEK 0.5 billion. With the current time plan, approximately half will impact of business unit Networks' operating income in the second quarter 2013. The rest will impact Networks' operating income in the third quarter 2013.
Today's information does not impact the process for the divestment of the power cables operations to NKT Cables announced on May 3, 2013.
