Swedish infrastructure vendor Ericsson has announced it will close down its telecom cable manufacturing business. The news follows the sale of its power cable operation to Danish cable manufacturer NKT Cables for SEK250m ($38.4m) earlier this month.
Ericsson explained that the market for copper cable has declined at the expense of the growth of the fibre cable market, over the last few years. As a result, cable production has shifted towards Asia, where the majority of the business volumes for fibre cable are found. The firm noted that there is more production than demand for both copper and fibre cables in Europe.
“The decision is based on the fact that Ericsson’s production of telecom cables is small from a global perspective, and that we also have a small market share,” said Tomas Qvist, head of special products in business unit networks, and head of human resources for Ericsson in Sweden.
“There is overproduction on the cable market in Europe. Unfortunately, our production has not been operating at full capacity for a long time and has struggled with profitability.”
The announcement primarily impacts the operations in Hudiksvall and Stockholm, where 318 jobs will be cut. The closure will result in restructuring charges of about SEK0.5bn.
Ericsson revealed earlier this month that the sale of its power cable operation to NKT Cables will generate a net loss of approximately SEK100m for the company and negatively impact the operating income of its Networks business unit in 3Q13.
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