The appointment of Börje Ekholm as CEO for Ericsson last Wednesday was one of the more sensational pieces of news on the Stockholm stock market for several years. An initial gain in share price was later cancelled out due to Börje Ekholm’s decision to remain in the USA and the fact that he did not distance himself from Ericsson’s recent strategy.
DI reports that not all board members realised Ekholm would not move to Sweden, which creates problems for the board that fired Bina Chauraisa, HR director in October, because she lived in the USA and Ericsson needed someone stationed in Stockholm. Furthermore shareholders have expressed their concern about how it will work and how much time will be wasted on travel.
Furthermore in an interview with SvD chair of Ericsson’s board Leif Johansson admits that he and the board ought to have noticed Ericsson’s decline earlier. “If we had foreseen the decline that came heavily at the start of 2016 then we would have acted differently,” he says.
Writing in business daily Dagens Industri, Maria Rannka and Mikael Wolf, the chief executive and the chairman of the Stockholm Chamber of Commerce, note that Stefan Löfven’s recent visit to Saudi Arabia has stirred massive debate as to whether the PM should travel to a country that is far removed from Sweden in terms of values and culture, whether companies should do business in undemocratic countries and whether the PM should travel with business representatives.
Rannka and Wolf stress that it is almost always better to engage in dialogue and trade than to remain silent or call for a boycott.
One could easily believe that Sweden’s trade with Saudi Arabia focuses on defence-related products and services, but a closer look at the statistics shows that this sector accounts for less than 10% of exports in the past five years.
Areas identified as being of specific interest include energy efficiency and sustainability, education and care. Saudi Arabia is an important country in a region with significant challenges and in need of innovation. Rannka and Wolf are convinced Sweden can contribute to a change
The Riksdag has criticised Sweden’s national AP pension funds over the soaring costs connected to the management of assets. Management fees have increased by 10% annually over the past four years, and totalled SKr 1.85 billion in 2015.
Sweden’s Alfa Laval has launched a SKr 1.5 billion cost-cutting programme and will axe 700 jobs worldwide.
The company is feeling the effects of the sharp downturn in the oil and gas industry, and in the shipbuilding industry. CEO Tom Erixon noted that shipbuilding has hit its lowest level in 30 years, but firmly believes that the business will recover: “There is a need to replace vessels,” he said.
In recent weeks Confederation of Swedish Enterprise head Carola Lemne has come under fire over her role as the chair of Uppsala University. Lemne has been accused of being power hungry and of wishing to have full control over the appointment of the university’s vice chancellor. Eight professors have sent a letter to Helene Hellmark Knutsson, the higher education minister, calling for Lemne to be replaced. Lemne claims she is misunderstood.
The value of Swedish exports of goods to the UK fell by 19 per cent, or by some SKr 10 billion kronor, between January and July.
Fresh data from the Stockholm Chamber of Commerce shows that exports of medicinal and pharmaceutical products to the UK fell by 38 per cent, chemical products by 23 per cent and paper products by 15 per cent, compared to the corresponding period last year. This is equivalent to a collapse in export value of SKr 2.5 billion.
Andreas Hatzigeorgiou, the Stockholm Chamber’s chief economist, sees cause for concern. “If the effect were to persist, this could lead to fewer jobs and lower growth in Sweden,” he warns.
Olle Grunewald, an analyst at the National Board of Trade, believes it is too early to establish a link between the fall in the value of exports and Brexit. However, the uncertainty that prevailed ahead of the referendum may have affected exports.
On Saturday prime minister Stefan Löfven travels to Saudi Arabia. In addition to meeting representatives of the Saudi royal family and the country’s foreign minister the prime minister will meet business representatives, including a reception at the Swedish embassy.
Although the visit has been criticised by politicians the business world is praising the visit. Marcus Wallenberg, chair of the Swedish Saudi Business Council, considers the visit an opportunity to anchor the council’s work at the highest political level. Dag Andersson, CEO of the dialysis company Diaverum is also pleased the visit has materialised.
Ali Shakir, trade secretary and country director for Business Sweden, says that the country has previously had unlimited funding but is now working on becoming less oil dependent and is searching for smarter solutions and turning to countries such as Sweden.
Under planned new international tax rules, or the so-called base erosion and profit shifting (BEPS) project, corporate taxes should be paid in the country where the value is created. The OECD and G20 countries agreed on BEPS last year and now member countries and the EU are working to implement the rules into national legislation. On Tuesday the Swedish government presented its bill on the exchange of tax information.
Stafan Bohman, chair of the Confederation of Swedish Enterprise’s tax delegation, now warns that there is a real risk that Swedish corporations will move parts of their business from Sweden to countries with low corporate taxes.
Meanwhile, Magdalena Andersson, the finance minister, says BEPS will generate more tax revenue for Sweden, but refuses to say how she has arrived at this conclusion.
Maria Malmer Stenergard, the Moderate spokeswoman on tax policy, says no other party shares Andersson’s belief, and accuses the government of sloppiness.
During their years at Ericsson Hans Vestberg and Carl-Henric Svanberg spent more than SKr 65 billion on company acquisitions, many of which were a disappointment. For example, the acquisition of US internet router maker Redback, which Ericsson bought in 2007 for SKr 13 billion was a disaster. Analysts now forecast that the telecoms giant may be forced to book a SKr 20 billion asset write down in its Q3 report, which will be published on Friday.
Sweden has a greater imbalance on its labour market than any other country, according to the 2016 Hays Global Skills Index. The USA is in second place.
Sweden’s education system is poorly adapted to companies’ needs, particularly in terms of front-edge competence. There are not enough well educated people for the hi-tech companies to recruit, according to Johan Alsén, MD of Hays’ Swedish arm.
The imbalance has fuelled wage inflation in a number of industries and there are now concerns that many companies are approaching a pain threshold in terms of costs. The consequence of this may well be that highly qualified jobs, in R&D for example, will be transferred to other parts of the world, where it is possible to find the right skills at a lower cost.