Ericsson said on Wednesday it plans to ditch its operations in Gävle in eastern Sweden, in a move set to hit 856 workers.

In Gävle, Ericsson designs and manufactures base stations for third generation mobile telephony. The location also serves as a major logistics hub, according to the company’s website.

“This is news that no one expected. It really comes as a total surprise,” said Johanni Samalistu, chair of the local chapter of the engineers’ union, to the TT news agency.

“We’re devastated. Now we have to inform our members of this shocking news.”

In addition, the company will make 90 white collar workers redundant in Borås in the south west, currently home to more than 1,037 Ericsson employees, of which 612 are white collar employees and 425 are workers covered by collective wage agreements.

“It’s a tough day for us today,” said Ericsson CEO Carl-Henric Svanberg in a statement.

“We have to reduce the number of employees in our production operations because the amount of labour required to make our products has shrunk at the same time as we’ve become more effective. It’s a tough blow for Gävle and Borås.”

Ericsson said in a statement that a new way of working has led to a reduced need for manpower.

“We’ve considered several alternatives and performed a number of deep analyses,” said Ericsson’s head of production and logistics, Jan Wassenius.

“Because we soon won’t be able to employ everyone in Gävle and Borås, today we’ve started negotiations with unions about the closing of Gävle and downsizing in Borås.”