ERICSSON SAID THEY HAD TO SWALLOW THE POISON PILL and will lay off 750 employees from their self-performing services business by September 29, 2023. Matrix pricing and high interest rates surfaced as the usual culprits.
On Thursday afternoon, Ericsson’s U.S. field services employees were informed via a live webcast that the company will be shuttering its self-performing installations group by September 29, 2023, since the current market demand will no longer allow the company to justify the cost of maintaining crews.
A Friday memo from the company’s People Operations Team made it official. Approximately 750 employees will be affected.
Ericsson began the field service business in 2015 to provide installation services to “accelerate local service delivery capabilities during the peak of the 5G cycle.”
At the time, the company said an additional 20,000 would be needed to build out 5G, and they spent millions of dollars opening four Center of Excellence training centers occupying almost 100,000 square feet.
In a video in February 2022, Ericsson featured Ivan Radziak, a graduate of the 100th training class in Lewisville, TX. Radziak entered the business in 2019 and said, “He is looking toward the future to continually roll out and maintain the 5G and future 6G networks in the U.S.”
On Saturday, he posted a position wanted ad on Wireless Estimator seeking an opportunity to assist another employer and supervise those future builds.
Hired as top-hand by Ericsson, he was elevated to a Telecom Foreman 1 position and is still employed by the services group.
He said that Ericsson has been “very supportive” in doing everything possible to transition their workers to multiple contractors with open positions. Radziak said Ericsson provided its techs with great resources, training, and advancement opportunities.
Ericsson said that if there weren’t positions available internally, they would have the opportunity for a severance payment.
Swedish déjà vu?
In 2018, Ericsson divested its field services business in Sweden, Ericsson Local Services, to Transtema Group. Coincidentally, the employee count was also near 750 workers, but in contrast, Sweden’s stand-alone field service projects were profitable.
Although Ericsson said its U.S. group closure was due to a capex slowdown, multiple industry observers believe it was caused by untenable matrix pricing offered by carriers, specifically AT&T.
“Field builds are labor-intensive, and if your backlog slows, you can remain profitable by reducing your workforce and increasing operational efficiency. You don’t have to close your doors,” said one industry analyst.
It’s possible that Ericsson had been viewing its flawed catalog pricing contracts before recent downturn announcements, and the field services group fell far below acceptable margins, with high interest rates taking their toll.
Ericsson’s announcement that they’ll be exiting the field services business in Q3 due to a drop in carrier builds conflicts with Ericsson CEO Börje Ekholm’s mid-July predictions that the market would undergo a gradual recovery” in late 2023 and improve in 2024.
Ericsson reported a 62% fall in second-quarter adjusted operating profit, slightly above market expectations. They said the decline was driven by a slowdown in spending among operator clients, particularly in North America.
Ericsson will continue to operate as a turf vendor and will likely provide increased project builds to its key subcontractors.
In past years, many larger firms have been unable to maintain self-performing success based on carrier pricing, benefits they provided to support employee growth, or financial stability. As did Westower, Andrew Corp., Nexius, and others, American Tower failed.
Smaller businesses benefit from an increase in the available talent pool as larger contractors close their doors. However, such as the recent acquisition by MasTec of Nexius’s Velex, where approximately 70% were onboarded, salaries were often lower.
According to knowledgeable individuals, Nokia had entertained establishing a self-performing field services subsidiary. Still, it scuttled the idea when, at best, they found that they might only obtain a 3% net profit margin.
If you’re an Ericsson field services employee seeking employment opportunities, post your resume on Wireless Estimator’s Positions Wanted Board. Or if you have an open position for the soon-to-be-seeking many hundreds of candidates, post your company’s open positions on the nation’s largest and most influential industry Help Wanted Job Board. Both are available at no charge.