January 27 2020
Nokia to Cut 4,000 Jobs at 3 Factories
08 February 2012

Nokia, the biggest maker of mobile phones by volume, said Wednesday that it would eliminate 4,000 manufacturing jobs, or 7 percent of its global work force, as it moved to streamline operations and save money from its production of smartphones.

The company said the cuts would be made at three Nokia factories — in Komarom, Hungary; Reynosa, Mexico; and Salo, Finland — as it transferred the assembly of smartphones to factories in Asia, which are closer to component makers.

“Shifting device assembly to Asia is targeted at improving our time to market,” said Niklas Savander, the Nokia executive vice president responsible for smartphones. “By working more closely with our suppliers, we believe that we will be able to introduce innovations into the market more quickly and ultimately be more competitive.”

Nokia, based in Espoo, Finland, said it planned to cut 2,300 of 4,400 jobs at its Hungarian factory, 700 of 1,000 in Mexico and 1,000 of 1,700 in Salo, its largest production facility in Finland.

The job reductions come as Nokia is struggling financially during the transition from its Symbian-based smartphone lineup to Lumia Windows phones with Microsoft. Nokia last month said it had a loss of €1.1, or almost $1.5 billion at the current exchange rate, in the fourth quarter of 2011, with its sales declining 21 percent from a year earlier, as operators abandoned Symbian models or demanded price cuts for them.

The factories affected by the job cuts will refocus on customizing Nokia smartphones for Europe and North America. Nokia’s smartphone lineup includes Lumia Windows phones; MeeGo, from an alliance with the chip maker Intel; and Symbian.

Last September, the Nokia chief executive, Stephen Elop, said the company would start a comprehensive review of its smartphone production facilities with an eye to reducing costs and making long-term improvements in efficiency.

Nokia’s smartphone factories in Masan, South Korea, and Beijing will take over the assembly of smartphones, said James Etheridge, a Nokia spokesman in Espoo. The factories in Hungary, Mexico and Finland will add software and local-language applications.

The reductions are the second wave of job cuts at Nokia under Mr. Elop, a former Microsoft executive. In April 2011, Nokia said it would eliminate 4,000 jobs in Britain, Denmark and Finland, and transfer 3,000 employees in Symbian software development to Accenture, a technology consultant.

Nokia employed 57,000 employees at the end of 2011, excluding workers in the Nokia Siemens Network venture, where Nokia owns a 50 percent stake. Nokia said it planned to eliminate the latest round of factory jobs by the end of this year.

Shares of Nokia barely rose Wednesday in Helsinki.

Michael Schroder, an analyst at FIM Securities in Helsinki, said the latest job cuts were largely in line with what the company had suggested in September when announcing the review of its manufacturing operations.

Whether Nokia will have to cut more jobs depends in large part, Mr. Schroder said, on how precipitously Nokia’s old Symbian lineup declines. When Nokia began its collaboration with Microsoft in February 2011, the company said it expected to sell 150 million Symbian models during the transition to Windows. But last month, Mr. Elop abandoned that sales goal, saying the declines of Symbian sales were more rapid than anticipated.

“Nokia has quite ambitious cost-savings targets, but I think this is probably the bulk of the cuts,” Mr. Schroder said. “That all really depends on Symbian, where we expect volumes to decrease again for at least the next two quarters.”



Related Stories