Ericsson’s cost reduction plan aimed at saving the company more than $1.05 billion in expenses by year-end 2017 is progressing ahead of schedule. While this means that no further layoffs are planned for the company’s workers in Sweden, it will result in higher restructuring costs in 2016.
Ericsson said that total restructuring costs for 2016 are estimated to be between $606 million and $710 million compared to the previous estimates of $440 million to $550 million. However, in 2017 the restructuring costs will decrease. Exactly how much the costs will decrease will not be revealed until the company’s fourth quarter results are released in January.
Ericsson announced in October that it was slashing 3,000 jobs from its workforce in Sweden. At the time, the company said it would accomplish that by cutting jobs at manufacturing sites in the cities of Bora and Kumla. It also said it planned to eliminate hundreds of consultants.
Today the company said that process is complete, and that most of the jobs were eliminated by outsourcing, reducing production, and through natural attrition. In addition, 1,600 employees will voluntarily leave the company by Dec. 31.
Ericsson has been struggling for several quarters as it faces increasing competition from Chinese manufacturers like Huawei. In addition, many large service providers, particularly those in North America, have been spending less because they have completed their 4G buildouts and have not yet started 5G deployments.
At the end of the third quarter, the company reported that its net sales declined 14 percent year-over-year, with declines in all segments of its business. The company also reported its first net loss in four years. It ended the third quarter with a 233 million Swedish kroner ($26.2 million) loss, compared with a net profit of 3.08 billion Swedish kroner ($345 million) in the same period last year.