Ericsson confirms 100 layoffs in bid to cut expenses

Ericsson is laying off about 100 workers in Canada, part of a cost-cutting drive that consolidates operations into global hubs and heightens tensions with employees seeking union representation.

The Swedish telecom equipment maker informed staff on Monday that their final working day would be 31 October. The cuts primarily affect technicians and support staff working in national operations and technical centres, several of whom previously held positions at Rogers Communications. The Globe and Mail first reported the news, citing people familiar with the matter.

The redundancies mark the latest stage in Ericsson’s global effort to reduce expenses as it battles slowing network investment by telecom carriers. Company executives have repeatedly warned of a muted demand outlook, particularly in North America, where major operators are pulling back on 5G spending after heavy roll-outs.

The affected employees were originally part of Rogers’s field operations, responsible for maintaining and supporting cellular towers. In April, Rogers offered about 400 managers and technicians either severance or the chance to transfer to Ericsson, which was contracted to handle the work. Roughly half accepted new contracts with Ericsson.

According to Michael Phillips, president of the United Steelworkers Local 1944, around 200 of those transferred workers have since filed to form a bargaining unit under the Federal Labour Board. That application remains pending. He said that 37 of the 100 employees cut on Monday had only joined the unionisation effort last week.

Ericsson’s explanation

Nathan Gibson, an Ericsson spokesperson, said the Canadian redundancies are part of a broader realignment of its managed services unit. He explained that the company will “bring together our network management services team in Canada with our global operations, leveraging common tools, processes and scale.”

Gibson stressed that Ericsson “remains committed to ongoing investment in Canadian operations and serving our customers.” The company declined to say how many of the Canadian jobs will be shifted abroad or identify which global hubs will absorb the work.

The layoffs come as Ericsson continues to restructure globally. In early 2023, the company announced plans to reduce its worldwide headcount by around 8,500 employees. Management has since highlighted the need to centralise operations, eliminate duplication and adapt to a weaker market for network equipment.

Labour backdrop

The job cuts in Canada add fuel to a growing labour dispute. Union representatives argue that the dismissals are a response to the unionisation drive, though Ericsson has not addressed that claim. The Steelworkers union says half of the transferred Rogers staff are part of its organising effort.

“Many of those impacted had signed union cards in recent days,” Phillips said. “It raises serious questions about the timing and intent of these layoffs.”

Managers who shifted from Rogers to Ericsson earlier this year were not affected by this week’s announcement.

Ericsson, long a key supplier of mobile infrastructure to major carriers worldwide, has faced a slump in demand as telecom companies cut capital expenditure after years of heavy investment in 5G networks. In North America, its largest market, sales dropped by double digits in the second quarter of 2023, Reuters reported at the time.

The company has also confronted pressure to improve profitability as it integrates Vonage, the US cloud communications group acquired for $6.2bn in 2022. Investors have questioned the pace of cost savings from that deal and broader efforts to offset slowing equipment revenues.