How electronics destroyed Facit in 1971-72.

2. I hope that this slideshow can shed some
new light on the recession we’re going
through in these days.

3. After decades of growth, Facit, a Swedish
manufacturer of typewriters, mechanical
calculators and office furniture got into deep
trouble in 1971-72.

4. A technological shift was about to happen…

5. Electronic calculators were becoming better and
better and started to replace Facit’s calculators.

7. Just before the storm a new CEO was recruited.

8. ”Large structural changes are needed”

9. Gunnar Ericsson handed over to
Lennart von Kantzow.

10. Kantzow happened to be
married to Gunnar’s sister Ulla.

11. The Ericsson family had built and owned Facit
since the 1920s and therefore, this seemed to
be a good way of retaining the family’s
control over the company.

12. The technological shift started to bother Facit
bigtime at about the same time as Kantzow
started as CEO.

13. After decades of profits, the bottom line was
now painted in dark red.

14. ”Facit: no dividends
54 MSEK in losses.”

15. Needless to say, some
layoffs had to take place.

16. ”1000 jobs are
lost at Facit.”

17. Here comes the next bomb.

18. Kantzow is fired after about 1 year as CEO:

19. ”Even the CEO is fired!”

20. ”I don’t know why I was fired.”

21. Since Gunnar Ericsson was still the
chairman of the board this created
huge headlines in the Swedish media.

24. ”Facit refuses to tell why Kantzow had to leave.”

25. Gunnar Agrell, who was in charge of the
subsidiary called Addo now entered
has CEO.

26. ”Can you handle Facit’s problems, Gunnar Agrell?”

27. However, Agrell was only supposed to remain
as CEO until a new one had been recruited.

28. ”Facit intensifies its search for a new CEO”

29. But who wants to become the
captain of Titanic?

30. No one. Therefore it was now up to Gunnar
Ericsson to step up once again.

31. ”Is Gunnar Ericsson able to handle the Facit crisis?”

32. Gunnar and his father had built and lived with
the company for many, many decades.

33. It was now up to Gunnar
to watch this go down.

34. ”I have to rescue Facit.”

38. It must have been tough to take on this
job. Facit was critized for everything.

39. ”Did Facit miss a unique invention?”

40. ”Facit director tried to stop TV program”

41. ”The bubble that
burst.”

42. The results for 1972 didn’t seem too
promising either.

43. ”Another 55 MSEK loss at Facit. Poor sales.”

44. The situation started to become
desperate and Facit now asked
McKinsey for advice.

45. Speculations about Facit continued
in the meantime.

46. Will even more workers have to be fired?

47. Given that Facit had manufacturing sites
throughout all of Sweden, the entire
country was worried…

48. ”Malmö may lose 1100 jobs”

49. ”They can kill two cities!”

50. In mid 1972, the investigation was
ready to be published.

51. ”USA Experts:
Shut down Addo!”

52. (Back in those days the Swedish
office of an American consulting
firm was referred to as ’American’)

53. ”3000 have to
be fired”

54. Though the report contained some
recommendations it was after all up to the
board to decide where the layoffs should
take place.

55. ”Facit sacks 2400 employees!”

56. Not many people envied Gunnar
Ericsson during those years.

57. Ericsson had grown up in Åtvidaberg and he
had always cared about the town..

58. Therefore many layoffs took place in other
towns throughout Sweden.

60. Malmö suffered.

61. ”75 people are
’notified’ today”

62. Göteborg suffered.

63. ”The Göteborg plant for sale”

64. Strömstad suffered.

65. ”Soon there will
only be retired
people left”

66. ”Strömstad is
heading for a
disaster”

67. ”30-40 percent of the factory jobs in
Strömstad are lost.”

68. More than 30 percent of Facit’s employees had
to leave the company within two years.

69. The Facit stock had lost most of its value.

70. ”Shareholders
lost 0,25 billion
SEK in five
years”

71. Speculations now took place regarding the
future of Facit…

72. ”Strange transaction of Facit shares”

73. ”Sell your Facits shares now”

74. ”In five years 1880 SEK left out of 10 000 in Facit”

75. The once so admired Gunnar Ericsson
was now subject to a lot of critique,
while he had to witness his hometown
and his company go through such
difficulties.

77. The crisis was also used by those who
wanted to argue against capitalism.

78. ”Private
capitalism
ruled by single
families is
becoming
something
unreasonable.”

79. The communists up north in Sweden
weren’t too happy either:
”The crime against Facit’s workers”

80. The German comrades showed their support.

81. The Social democratic youth party thought that
the government had to take some
responsibility.

82. ”The safety of thousands is more
important than the owners”

83. Not much new under the sun in 2009.

85. Prime minister
Olof Palme
entered the
discussion.

86. Olof Palme said that one cannot exclude
that ’society’ should take care of this.

87. Was Facit going to get nationalized?

88. Towards the end of 1972 it became clear
that Electrolux wanted to buy Facit.

89. ”A few
gentlemen,
some
whisky and
someone
said: ’why
don’t we
buy Facit?’”

90. ”The deal was struck over breakfast”

91. ”Electrolux buys Facit for 60 MSEK.”

92. Gunnar Ericsson was now a relieved man.

93. ”Feels great to wake up without power.”

95. What was going to happen with Facit?

96. ”The acquisition cannot hide the fact that the
crisis will become even worse.”

97. This was just the beginning.

98. The problems remained.

99. Mechanical calculators were dead.

100. The demand for Facit’s mechanical calculators went
down to zero within a few years.

101. The layoffs continued after
Electrolux had bought the company.

102. Things did not get better in those small towns
where Facit had been the main employer.

104. Who was to blame?

105. The owners?

106. Top management?

107. Capitalism?

108. Well, kind of.

109. He and his family controls the fate of
thousands of people.

110. Gunnar Ericsson, ’American’ consultants, Mr.
Von Kantzow – none of them had any
power to control the fate of Facit.

111. The mechanic business was dead and with it died
thousands of jobs throughout Sweden.

112. So who was to blame?

113. The Americans invented the integrated circuit,
which enabled calculators to become smaller
and better at a furious pace.

114. The Japanese built their wealth by making
those products affordable for millions of
people throughout the world.

115. Blame the Americans, the Japanese and
everyone else who was involved in
destroying the value of Facit’s
mechanical calculators.

116. Capitalism creates growth and prosperity by
destroying old technologies and products.

117. The Austrian economist Joseph
Schumpeter referred to this as
creative destruction.

118. This essentially means that the road to
wealth goes via massive layoffs and
industrial collapses.

119. Capitalism is brutal and those people who
claim the opposite have most likely never
been exposed to the problems it creates.

120. The theory of Creative Destruction is also a
profound criticism of everyone who claims
that ’society’ (government) should bail out
collapsing industries and ’act responsibly’.

121. What would have happened if electronic
calculators had been abolished?

122. Who would have benefited from letting
taxpayers finance an industry and a
company which had become history?

123. No one. Such measures would have prevented
the scarce resources in society from doing
something more productive.

124. In 1971 it was Facit and Åtvidaberg that
suffered from capitalism.

125. ”The history
about
Åtvidaberg
is the
history
about the
Ericsson
family.”

126. Capitalism seems to be pretty good at messing
around with capitalists.

128. The electronic revolution destroyed a large
amount of the wealth that the Ericsson family
had accumulated during 50 years.

130. Thanks to ’Brukskultur Åtvidaberg’ och the
municipal government of Åtvidaberg. The Facit
archive is a fantastic source.

131. Christian Sandström is a
PhD student at Chalmers
University of Technology in
Gothenburg, Sweden. He
writes and speaks about
disruptive innovation and
technological change.
www.christiansandstrom.org
christian.sandstrom at chalmers.se