In line with plans announced at the end of last year (CI No 2,823), L M Ericsson Telefon AB continues to show a strong commitment to telecommunications equipment production in Spain, where it now owns 100% of Zamudio, Basque Country-based Indelec SA. The Zamudio plant will become the third of Ericsson’s world production centers for cellular telephones, only produced to date at the firm’s plants in Sweden and the UK. Ericsson president Lars Ramqvist announced on a recent visit to Spain that Indelec will manufacture 700,000 fixed and cellular telephones a year, absorbing part of the production of the other two world centers, where demand is exceeding output capacity. Five work shifts have been set up at the Zamudio plant, operating seven days a week and due to take on another 120 staff in the course of this year. Ericsson is one of the primary suppliers of telecommunications equipment to the two cellular operators in Spain, Telefonica Moviles SA and Airtel SA, although Ericsson Espana managing director Raimo Lindgren confirmed that 90% of Indelec’s production will be exported to other European countries and Latin America. Since 1993 Ericsson has invested $44m in Indelec, in which it has gradually raised its holding over the years, taking Telefonica de Espana SA’s 20.7% stake in April 1995 and the Basque government’s 40% stake in October 1995. In June 1996 the Swedish firm took full ownership of Indelec, merging it with Ericsson Radio. Ericsson has earmarked investment of a further $26.4m in Indelec up to the year 1998. Lindgren foresees that the plant’s sales volume will double to $80m in fiscal 1996. The factory will be the only production center worldwide to produce NMT cellular telephones and analog mobile telephones conforming to the TACS standard, while it will also manufacture surface-mount modules for digital telephones. There had originally been plans for Indelec to produce Groupe Special Mobile telephones and the base stations required by Telefonica a nd Airtel; however for the moment this will not occur, although the necessary adjustments can easily be made if the market so dictates, Lindgren declared. At all events the Zamudio plant is already producing some components for the stations being manufactured at Gavle, Sweden; Melbourne, Australia; and Carlton, UK. Lindgren said that plans could well be changed in the future in the light of the rapid development of cellular telephony in Spain, where there is now a subscriber base of 2.5 million, and talk of the possibility of a third operator joining the fray. In the 1995 financial year Ericsson Espana announced sales up 40% at $735m, with exports also up 40%, although profits were down 34% at $33.6m. Ericsson confidently predicts that this pattern of growth will continue, albeit a little more slowly, this year.
