From crisis to war
The results of Ericsson’s diversification efforts in Sweden in the 1930s were quick to appear. Domestic sales nearly trebled between 1933 and 1939. The parent company had normally had 75 percent of its sales outside Sweden, but, during the 1930s, that share gradually fell to only one-third. At the same time, diversification proceeded. The switches and equipment for telephony had formed more than 80 percent of Ericsson’s production at the beginning of the 1930s, a share which declined to 55-60 percent from the middle of the decade.
Thus, to a large degree, Ericsson took market share from its competitors. Increasingly, the name Ericsson was seen instead of ASEA or Siemens on the electricity meters in all homes constructed at the end of the 1930s. However, Ericsson also started the development of entirely new products. Svenska Kassaregister, a subsidiary, began to produce a cash register in 1936, for example, and it was to become a valuable long-term feature of Ericsson’s product range. The company also invested in development and production within some technically advanced and future-oriented areas. For example, the production of electronic tubes was started within a special subsidiary, the products of which were strategically significant during the threat of blockade at the end of the 1930s. At AB Svensk Elektronrör, expertise was gathered that was vital for long-distance telephony, but particularly for the new and increasingly important radio technology.
Diversification and focus on the domestic market was Ericsson’s way of surviving the crises of the 1930s. The same trends were to apply even more during the Second World War from 1939-1945. Exports westwards from Sweden were blocked after April 1940 by both of the warring powers. For six months, the company was virtually unable to export anything.
At the beginning of 1941, Swedish negotiators had obtained a corridor to the west, known as the Gothenburg traffic, and Ericsson was given space on a total of 80 of the vessels so that the South American subsidiaries, in particular, could receive supplies. The company could also supply Finland and continental Europe, but on the whole, Ericsson’s exports were suppressed. The export portion of the parent company’s invoicing was at about a third during the war years, with the lowest figure of 15 percent being noted in 1944.
However, while the war presented export problems, it produced new opportunities in the domestic market. In order to equip the Swedish defenses at the height of the war and the blockade, the Swedish engineering industry was mobilized. Swedish defenses were almost completely equipped with domestic materials. Nearly a quarter of the Swedish engineering facilities’ capacity was used directly for the war effort. The figure for Ericsson was approximately 20 percent during the years 1939-1944.
The company’s defense supplies were to a certain extent products that belonged to standard production – telephone equipment for warships, field telephones and switches for the army, instruments for airplanes, equipment for monitoring aircraft, alarms, etc. However, the production process also involved to the same extent material designed purely for the war, which was completely outside Ericsson’s conventional range.
Initially, this involved the production of ammunition. In the spring of 1940, a quarter of the automatic lathes were being used to turn grenades. The second major product was heavy machine-guns. The state-owned Carl Gustafs Stads Gevärsfaktori plant in Eskilstuna was responsible for these weapons, but the capacity was far from adequate, so items were initially ordered from appropriate suppliers. After providing a test order in autumn 1939, a major order followed in January 1940 and by the summer 80 workers were sitting cutting machine-gun parts at Ericsson.
The order backlog subsequently grew even more. This meant multiplying the number of employees many times and increased requirements for cutting machines and lathes, hardening furnaces, surface-conditioning baths, etc. Facilities for test firing of the finished weapons were also required.
The manufacturing of war material had now reached such proportions that it outgrew the space in the new workshop at Midsommarkransen, to which Ericsson had moved in 1940. For this reason, the company rented its old premises at Tulegatan street, which is now owned by the City of Stockholm, and, at the end of 1940, it built a special workshop, primarily for machine-gun production. The parts were produced on the ground floor, assembly was on the floor above, surface treatment was carried out in the upper basement and, at the bottom of the basement, the finished weapons were test-fired against a sand wall.
In April 1941, the plant at Tulegatan already had a capacity of 15 machine-guns per day. About 150 machines were in operation and half of them were used in double shifts. Between 400 and 500 persons were employed in weapons production from 1941-1943. In addition to machine-guns, parts were produced for the new Ag m/42 semi-automatic rifle and automatic guns. At the same time, Midsommarkransen was producing other war supplies, such as bomb-release boxes and core instruments for anti-aircraft defense and submarines.
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