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RNS Number:1053B
Ericsson(L.M.)(Telefonaktiebolaget)
27 March 2001



Ericsson to increase operating efficiency in times of economic slowdown
 
- Comprehensive Efficiency Program expected to reduce ongoing costs by
at least SEK 20 bn annually, beginning in 2002
 
As a response to a slow-down of the economy, Ericsson today announced
that it is stepping up its efforts to streamline operations and reduce
costs across its international organisation with an efficiency program.
 
"We have started a comprehensive review of our operations with the
target to reduce costs by at least SEK 20 bn by the end of this year, to
be realized in 2002 on a going forward basis," said Kurt Hellstrom,
President and CEO of Ericsson. "In today's uncertain state of the
economy with negative signals, Ericsson must react, and we are now
taking necessary measures. We have to drive efficiency much harder, with
the dedication to become more competitive than ever before."
 
These cost savings will be achieved predominantely outside of the
manufacturing area through a fundamental review of all areas including
administration, marketing and sales, supply management, and research and
development. The program will affect a significant number of employees
and consultants in all areas of the company worldwide as Ericsson will
reduce the cost base to a slower than expected growth in the economy,
the telecommunications industry and particularly the mobile phones
business.
 
Ericsson has announced a recruitment freeze across the whole company.
Ericsson will reduce the number of consultants substantially - in some
areas by more than 50% - and shift work to internal resources.
Additional measures will be announced when the full program is outlined
by Ericsson on April 20.
 
"As the world leader in providing wireless infrastructure equipment and
a leading supplier of wireless handsets, we remain optimistic about the
medium to long-term growth and profit potential of Ericsson as well as
the whole telecommunications industry," said Kurt Hellstrom. "But this
efficiency program is key for us to achieve a solid financial
performance in difficult economic times."
 
Ericsson also decided it will adjust manufacturing capacity to reflect
the slower economic growth by reducing its workforce in Kumla (Sweden)
from 3,200 to 1,700 employees. The Company will offer, with support of
Proffice, outplacement and training programs for employees leaving the
company. The costs of this measure are expected to be offset by the
savings during 2001.
 
As part of the back-to-profit program in the Division Consumer Products,
the workforce in Linkoping/Sweden - soon to be outsourced to Flextronics
- will be reduced to approximately 475 people, resulting in additional
600 redundancies. Ericsson, in cooperation with Manpower, will offer
outplacement and training support. In the UK plants Carlton and
Scunthorpe where 1,200 people are employed, mobile phone production will
be terminated effective third quarter of this year. A search for a new
owner of the plants is ongoing. If needed, activities will be initiated
to support the changes. The costs of these measures have already been
accounted for in the fourth quarter 2000 provision for restructuring the
Division Consumer Products.
 
Ericsson is the leading communications supplier, combining innovation in
mobility and Internet in creating the new era of Mobile Internet.
Ericsson provides total solutions covering everything from systems and
applications to mobile phones and other communications tools. With
presence in 140 countries, Ericsson simplifies communications for
customers all over the world.
 
Read more at http://www.ericsson.com/press
 
FOR FURTHER INFORMATION, PLEASE CONTACT
 
Roland Klein, Senior Vice President, Corporate Communications
Tel. +44 207 4515660, E-mail: roland.klein@clo.ericsson.se
 
Pia Gideon, Vice President, External Relations
Tel +46 8 719 2864, E-mail: pia.gideon@lme.ericsson.se
 
Nina Eldh, Press Relations Manager
Tel: +46 8 58532560, E-mail: nina.eldh@ecs.ericsson.se

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