State aid

At this critical stage, ERA’s American venture received support from the Swedish state. The chairman of Ericsson’s board, Hans Werthén, had good contact with Harry Schein, president of the government’s Investment Bank. By fortunate coincidence, Werthén had arranged a loan in dollars for Swedish shipbuilder Kockums to fund a defense project. The project came to nothing so the money never left the bank; now Ericsson could borrow it.

“When Ericsson needed money to get the expansion off the ground, Skandinaviska Enskilda Banken sensationally refused. Handelsbanken, which also provided services to Ericsson, was also negative. Because Swedish banks traditionally never poach each other’s customers – in other words they refuse to compete – the Ericsson management had only one recourse: the state. The result was a loan of SEK 1.3 billion. The head of the bank at that time, Prime Minister Olof Palme’s friend and tennis partner Harry Schein, has taken every chance to boast about the cleverness – for Ericsson a genuine blessing – he displayed. When I asked the head of Ericsson in those days, Björn Svedberg, about the episode, he declared that the Investment Bank’s contribution was insignificant. But against that, you can say that SEK 1.3 billion was not an inconsiderable amount.”
(Journalist Ulf Nilson in the online book “Sverige: Sluten anstalt [Sweden: Behind bars]”.)

The US continued to be a critical market for Ericsson’s AXE and EIS deals. During 1985–1986, Ericsson was still making major efforts to get the AXE system into the newly established Bell companies, and Werthén acted for a period as executive chairman, focusing on the American market.

At times, however, Werthén took action without always informing even his CEO, Svedberg. One occasion that put their relationship to the test was when ERA was about to receive two new orders from the US, for San Francisco and Houston. Johansson recalls: “Would we be able to accept them? They were outside the credit transfer, and the money from the Investment Bank had also run out, so the risk was described as substantial”.


This was a time when Werthén, without involving Svedberg, had given Arne Mohlin, deputy CEO of Ericsson for many years and one of Werthén’s closest friends since their student days, the job of “minding” Åke Lundqvist. When Mohlin finally gave the new orders the go-ahead, Johansson immediately informed his colleagues in the US and the deal was made public. It was still nighttime in Sweden. In the morning, Johansson was summoned into see Svedberg. “We were told off. We were not going to be able to conclude the deals and we had to sack all our people in the US. I have great respect for Björn but the fact is that we were often fighting an uphill battle with group management,” Johansson says.

Svedberg recalls: “There was nothing wrong with these orders, and getting them was an achievement, but sometimes contracts were being signed with no support from above. As CEO, it was important for me to show that discipline was also needed in business. Werthén and I had a lot of contact on this matter. He could spend hours grinding me down with detail, but when he took the questions to the board, he always found some solution.”

Author: Svenolof Karlsson & Anders Lugn


Hans Werthén, chairman ATI Ericsson and Electrolux


Part of the Ericsson board of directors. Arne Mohlin and Sten Wikander.

© Telefonaktiebolaget LM Ericsson and Centre for Business History

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