Telecommunications giant Telefon AB LM Ericsson, which is transferring its mobile phone production to Flextronics International Ltd. this month, has announced major cutbacks at four European plants with the loss of as many as 3,300 jobs.
Ericsson is slashing its 3,200-member work force in Kumla, Sweden, to 1,700, while another 600 jobs will go at Linkoping, Sweden, where mobile phone production is being switched to Singapore-based Flextronics.
In the United Kingdom, Ericsson plans to halt production of mobile-phone handsets beginning in the third quarter. Flextronics will take over facilities in Carlton and Scunthorpe, England, but is expected to move the assembly work to Eastern Europe or the Far East. Those plants in England are for sale, but 1,200 workers could lose their jobs if the companies cannot find buyers.
Flextronics also is taking over Ericsson plants in Pilangen, Sweden; Malaysia; Brazil; and parts of a Lynchburg, Va., facility.
Some suppliers of plastic components to Stockholm, Sweden-based Ericsson already work with Flextronics.
"Last year, less than 2 percent of our business was with Ericsson," said Elmar Paananen, vice president of investor relations at Eimo Oyj of Lahti, Finland. "The amount of direct work we expect to do for the group is very small. We have worked with Flextronics for a number of years and have high hopes of future development with the company."
Most Ericsson component suppliers are feeling the slowdown in the mobile-phone market already. Eimo announced a production slowdown at plants in Lahti and Hollola, Finland, said Paananen.
Another Ericsson supplier, Perlos Oyj of Nurmijarvi, Finland, is trimming the 200-strong work force at its main plant there. Perlos has 15 plants worldwide, including operations in the United States, Hungary and China.