Production companies move west

Ericsson has maintained foreign subsidiaries in the form of production companies for many years. Before the 1930s, Ericsson had restricted the startup of production companies to Europe and by 1931 could boast production plants in eleven European countries. They had been acquired or constructed in conjunction with important breakthroughs in the individual markets, more often than not with links to the concession companies that were subsequently wound up. During the 1930s, the plants in Budapest and Vienna were discontinued and, as a result of the Second World War, the plants in Estonia, Poland and Czechoslovakia were lost to the company. As a result, the slow retreat to the west, which had started when Ericsson lost its major plant in St. Petersburg in 1917, was completed. This effectively meant that all of Ericssons support units behind the now-closed Iron Curtain had disappeared.

On the other hand, the company's production capacity in other parts of Europe was strengthened. For example, Ericsson's presence in Denmark and Norway was increased, as was the case in France, where in the 1950s a variation of the company's crossbar switch system was accepted by the French telecommunications administration, with an accompanying rise in demand. In Italy, where Ericsson had maintained a presence for many years, the company expanded its production during the post-war years. In France and Italy, the company had operated under hidden ownership structures for many years, but towards the end of the 1950s Ericsson presented itself publicly as the majority shareholder. In Spain, ITT's monopoly was finally broken and the Spanish plant began to play its planned role as a supplier to the public telephone network.

The expansion of the Ericsson plants in Western Europe during the post-war years reflected a direct continuation of the policy employed during the interwar period. However, a new element in the establishment of new operations was that Ericsson took a step over the Atlantic and started to produce materials at its own plants in America. When the company also established plants in Australia and Malaysia during the 1960s, it soon had more plants outside Europe than in it. There were several reasons for Ericsson's decision to invest in foreign production operations in this way at the time.

There was a marked concentration of operations in Latin America; no fewer than eight of Ericsson's 21 plants were located in this region in 1970. More than one third of Ericsson's approximately 20,000 foreign-based employees were employed in these newly started plants. More than half of Ericsson's total labor force was at this time employed outside Sweden.

Ericsson's traditional focus on the Mexican and South American markets is reflected here, but the geographical distribution corresponded with the direction of Swedish industry as a whole. At that time, Latin America was the region with the most rapid growth in terms of direct Swedish investments abroad.

Author: Ulf Olsson

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