Ericsson may leave Sweden if euro rejected

  • 2003-09-04
  • Pia Ohlin
AFP STOCKHOLM - Swedish telecommunications giant Ericsson threatened to move both its
production and headquarters out of Sweden if Swedes reject the euro in a
Sept. 14 referendum.
The veiled Aug. 27 threat from Carl-Henric Svanberg, Ericsson's chief
executive officer, was reported in the daily Dagens Nyheter less than three
weeks before the vote, as opinion polls consistently showed a majority of
Swedes opposed the idea of swapping their krona for the euro.
"I am convinced that we can build a strong Ericsson if we have our
headquarters here. But then again I expect it to be a Œyes' vote," Svanberg
He said Ericsson's activities in Sweden would be reduced if the "no" camp
won the referendum, a scenario he envisaged for Swedish industry in general.
"When you develop a new product and are going to build a new production
line, you always have a choice: should you do it in your Swedish factory or
in your French, German or Japanese factory? In the end more of those
decisions are going to work against Sweden" in the event of a Œno' vote,"
Svanberg said.
He said Ericsson's competitors in the euro zone held an advantage because
they had no currency-exchange risks.
"It is important to note that we no longer have a situation where Siemens
works in German marks, Alcatel in French francs and Nokia in Finnish markka.
It is all the euro zone now," he said.
In the late 1990s, Ericsson, which has 30,000 of its 50,000 employees in
Sweden, threatened to move its headquarters to London in protest against the
Swedish government and the business climate.
Swedish Trade and Industry Minister Leif Pagrotsky, a vehement opponent of
the euro, rejected Svanberg's comments and said he did not believe Ericsson,
nor other Swedish companies, would move abroad because of a "no" vote.
"I absolutely don't believe that. I think other factors will play a larger
role. If we have higher inflation in Sweden that will scare away more
investors than the rather insignificant cost of exchanging currencies," he
Acknowledging that it would be simpler for companies to work in a single
European currency, Pagrotsky said, however, that "for me the risk of
inflation in Sweden is a much more important aspect than the question that
the Ericsson CEO raised."
A survey published on Aug.27 by the business weekly Affaersvaerlden showed
that 92 of 100 industry leaders in Sweden said they would vote "yes" to the
But one outspoken opponent of Swedish membership in the euro zone is the
chairman of Swedish appliances giant Electrolux, Rune Andersson.
"Many in industry believe that that the European Monetary Union is a
watchdog for economic policy in Sweden, but we in the Œno' camp believe that
a free market and an independent Riksbank [Sweden's central bank] are better
watchdogs," he said.
Andersson explained that in the past decade when Sweden had a floating
exchange rate was "actually the best period we've had in 30 years" ‹ as
opposed to the previous 20 years when its currency had a fixed exchange rate
and "the krona fell and we had crises and inflation."
He pointed to Germany's failure to respect the Stability and Growth Pact,
which binds euro-zone members to a public deficit of no more than 3 percent
of their GDP.
"I think the free market is a tougher power [than Brussels bureaucrats], and
that is why I think Sweden is going to pursue a more growth-oriented
economic policy if we stay outside the euro zone," Andersson said.