Union asks Mandelson to stop Ericsson closure

Unite calls on the government to intervene in Ericsson's closure of a Coventry R&D plant and probe foreign tax credits

The UK's largest union, Unite, has called on business secretary Lord Mandelson to intervene to stop the closure of Ericsson's Coventry research and development facility.

According to a statement from the union on Thursday, the UK government should also investigate whether other countries — to which 700 jobs from the Ansty Park plant are likely to be transferred — had given Ericsson more attractive tax credits for R&D work than those offered by the UK.

The closure of the Ansty Park facility, a recently opened site that houses network infrastructure R&D as well as a global services centre, was announced on 10 November as part of a major cost-cutting drive. Jobs from the plant are set to move to China, India, Croatia, Hungary, Italy, Ireland and Canada because Ericsson has "significant scale and synergies" in these countries, the company said at the time.

On Thursday, Unite said the site's closure would damage the UK's capacity to compete for future R&D work.

"If this site is allowed to close, there will be a loss of highly skilled work that is central to future strategic technological development," Unite spokesman Peter Skyte said in the statement. "The country's capacity to compete for future R&D work will be diminished."

Unite said it wanted to meet with Mandelson to "see how the government can intervene in areas such as procurement contracts for government communications work, in particular contracts in secure communications and defence and security projects".

The government should also look into why the company's UK facilities lost out to plants in Canada and other countries in internal Ericsson bidding contracts, Unite said.

"We want the government to challenge Ericsson's position," Skyte said. "We also want to know if other countries where Ericsson has sites give sweeteners that cause the UK to be less competitive and, therefore, unsuccessful in winning internal contracts."

According to Unite's statement, the union has written to Ericsson chief executive Carl-Henric Svanberg, who will soon become head of energy giant BP, asking him to meet a Unite delegation and reconsider the closure.

"We believe the announcement by Ericsson risks damaging the reputation and standing of the company in the UK, which cannot, in the long term, be to the benefit of the company," Skyte said. "In addition, this proposal appears to be based on short-term cost savings at the expense of the company’s long-term effectiveness in R&D within Europe."

A spokesperson from Mandelson's Department for Business, Innovation and Skills (BIS) told ZDNet UK on Thursday that the business secretary had spoken to Svanberg and Ericsson's UK managing director, Mats Granryd, "about the reasons behind their recent decision and to ask what, if anything, the UK government could do to encourage Ericsson to reconsider".

"We will continue to discuss the situation with the company," the BIS spokesperson said.

ZDNet UK approached Ericsson for comment on these latest developments, but had received no response at the time of writing.