Ericsson aims to cut costs by 20 bln skr/yr from 2002

STOCKHOLM (AFX) - LM Ericsson AB said it is launching a new programme aimed at cutting costs by 20 bln skr a year from next year.	    "We have started a comprehensive review of our operations with the target to reduce costs by at least 20 bln skr by the end of this year, to be realized in 2002 on a going forward basis," said Kurt Hellstrom, president and CEO of Ericsson.	    The cost savings will be achieved predominantly outside of the manufacturing area through a fundamental review of all areas including administration, marketing and sales, supply management, and research and development, Ericsson said in a statement.	    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 reflect a slower than expected growth in the economy, the telecommunications industry and particularly the mobile phones business, it said.	    Ericsson announced a recruitment freeze across the whole company and said it will reduce the number of consultants substantially - in some areas by more than 50 pct - and shift work to internal resources.	    Additional measures will be announced when the full program is outlined by Ericsson on April 20, it said.	    "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," Hellstrom said.	    Ericsson will adjust manufacturing capacity to reflect the slower economic growth by reducing its workforce in Kumla, Sweden from 3,200 to 1,700 employees.	    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 in the third quarter of this year, the company said.	    A search for a new owner of the plants is ongoing. If needed, activities will be initiated to support the changes. The costs of this measure have already been accounted for in the fourth quarter 2000 provision for restructuring the Division Consumer Products, Ericsson added. 

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