Nokia cuts 4,000 jobs, shifts manufacturing to Asia

Nokia cuts 4,000 jobs, shifts manufacturing to Asia

Summary: Nokia expects to lay-off around 4,000 employees as the ailing company plans to move its manufacturing operations to Asia.

TOPICS: CXO, Nokia, IT Employment

Nokia announced today its plans to move its manufacturing operations to Asia in a bid to cut costs and bring the smartphone building process closer to the component suppliers.

Nokia lost its edge by failing to keep up with the iPhone and Android demand. The company plans to cut 4,000 jobs. But it said the Hungary, Mexico and Finland factories where the jobs cuts will be shall remain in operation to focus on European and U.S. smartphone consumerisation.

The layoffs will be completed by the year's end, are part of more than 7,000 global layoffs the mobile phone giant announced last month.

It's not clear where Nokia plans to call its mobile phone manufacturing home, however. Considering the recent controversies of harsh working conditions in China --- a public relations nightmare for Apple, which uses contract-manufacturer Foxconn --- it would be a foolish move to announce a similar partnership.

But Asian markets are increasingly the source of not only cheap labour, but a source of technological expertise also. It also cuts down on part shipping which could save the company millions per year. Helsinki-based analyst Mikko Ervasti told Bloomberg that Nokia is "following the suppliers", and the company's actions could "reach the cost savings of €1 billion by the end of 2013."

"Shifting device assembly to Asia is targeted at improving our time to market. 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," said Niklas Savander, Nokia executive vice president, Markets.

"We recognise the planned changes are difficult for our employees and we are committed to supporting our personnel and their local communities during the transition."

Nokia reported last month that its smartphone sales sunk by nearly a quarter globally in the fourth-quarter, as net revenue fell by 20 percent to €10 billion ($13.1 billion).

Image source: CNET.


Topics: CXO, Nokia, IT Employment

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  • Ouch

    I take it they're not planning on a giant uptick from Windows Phone. I guess neither is Microsoft: they just layed off 5,000. Sounds like Death By Bonga-Bonga for both of them.
    Robert Hahn
    • RE: Nokia cuts 4,000 jobs, shifts manufacturing to Asia

      @Robert Hahn
      When they build phones like the Lumia series that sell themselves (and sell out) you don't need that many people in the sales department.
      Loverock Davidson-
      • RE: Nokia cuts 4,000 jobs, shifts manufacturing to Asia

        @Loverock Davidson-
        ROFLLLLLLLL.... You are really good at sarcasm!
    • RE: Nokia cuts 4,000 jobs, shifts manufacturing to Asia

      @Robert Hahn
      Yeah, because so much of Microsoft's revenue depends on smartphones. They're doomed. Doomed I say!
      x I'm tc
    • What? it sounds like they DO plan on a giant uptick from WP7

      @Robert Hahn
      otherwise they wouldn't be moving their work to Asia, where Apple has their operations, which according to everything we have read, is the reason they can turn phones around so quickly.

      You really have to stop reading too much into everything looking for an "MS is in trouble" slant.
      William Farrel
      • RE: Nokia cuts 4,000 jobs, shifts manufacturing to Asia

        @William Farrel Except that Nokia will also continue making phones in Brazil - no where near Asia. It's not about "turning phones around quickly" (whatever that means), it's about controlling labor costs.
    • RE: Nokia cuts 4,000 jobs, shifts manufacturing to Asia

      @Robert Hahn Nokia has leased enough offices in Sunnyvale California to run the management for their global operations. Once they've outsourced all their manufacturing to China and India, their engineering to cheaper countries, they can shut down their European operations entirely. The real-estate under the Finnish operations and other capital assets should net a good bit even after the huge hit to Finland's economy, and ducking out of retirement obligations should save them even more.

      Transitioning to a design company with outsourced production is just an intermediate step of course on the path to an IP Pure-Play company that can be folded up and stuffed into a few filing cabinets manned by a few lawyers and their staff.
  • What does job loyalty get you in today's world?

    A swift kick in the teeth and a hop in the bon pantalons out the Corporate door, that's what.

    Here we see yet another example of more short-sighted decisions made by an elite few in the name of profits to the total disadvantage of a National majority.

    Fundamentally wrong.
    Dietrich T. Schmitz *Your
    • RE: Nokia cuts 4,000 jobs, shifts manufacturing to Asia

      @Dietrich T. Schmitz * Your Linux Advocate <br>Agreed 100%.
    • Translation:

      Mexicans, Hungarians and Finlandians (?) deserve jobs more than Asians. (Yeah, I know, it doesn't make any sense).
      • Actually were mainly talking Chinese

        Oh, their communist, and the western nations spent how many trillions of dollars during the cold war to support Capitalism. We as tax payer got screwed.

    • You burn your money instead

      @Dietrich T. Schmitz * Your Linux Advocate
      The people running the company can't just pretend to be generous with other people's money. They have to worry about [b]all[/b] of the company's stakeholders, and try to reach some sort of balance in the face of what is, for Nokia, some pretty rough times.

      In addition to the employees, the managers have to consider the customers, the shareholders, and the communities where Nokia does business. If, as you advocate, Nokia burns through its cash to keep employees paid while the company loses money, then when the cash runs out the customers have no one to honor the warranties, the shareholders have lost their retirements, and [b]all[/b] the places where Nokia is a significant employer (including its administrative headquarters) suffer a huge blow. That is neither prudent nor "nice." It's just stupid, which is why they won't do it.
      Robert Hahn
    • RE: Nokia cuts 4,000 jobs, shifts manufacturing to Asia

      @Dietrich T. Schmitz * Your Linux Advocate

      We here in Finland have known it for a long time (since 2008) that Nokia is indeed loosing player in this smartphone poker.
  • RE: Nokia cuts 4,000 jobs, shifts manufacturing to Asia

    It's easy to make a blanket condemnation when you're not the one with ultimate responsibility by shareholders for the success/failure of your company. Yes, ever since the Industrial Revolution, these sort of changes have occurred and there have been exploitive, selfish, owners/executives but those I have known HATE to layoff employees because of the impact to their lives. We cannot know all the factors, but reality dictates: either a company tries to compete in today's global market or it doesn't and eventually, shrinks or goes bankrupt and most/all lose their jobs anyway.

    Witness what happened to British Industry post-WWII when the businesses and jobs were protected by the government....they ended up non-competitive and had to be on Government support until the painful restructuring occurred in the 80s and 90s.

    As in the Industrial Revolution, much is changing and new jobs will develop in time.
    • Economic Reality of Offshoring Jobs

      Take the U.S. for instance.
      This type of scenario has been going on 'for years'.
      It isn't anything new.

      But what has the effect been?: The U.S. 'economy' is eroded to the point where we have a Job deficit and no core manufacturing base.

      It would be ok if the balance of trade with, say, China was such that we could have parity and producing product sold in their country.

      But that is not the case. In fact, the global so-called Free Trade is not 'Free'.
      There is a cost.

      Corporations continue to be 'rewarded' for this kind of behavior but Americans are getting short shrift. How is that good? Intrinsically, morally, ethically, it is bad and should NOT be rewarded.

      If Corporations were incentivized (legislation happening years ago perhaps) to hire employees on U.S. Domestic soil with tax breaks or tax abatements and subsidies (such as what we do for Farmers), then we wouldn't be seeing a $400B trade deficit with China.

      The worst part is that every dollar spent for a foreign-made good pays an invoice in that country's manufacturer, that is then spent to pay the country's employee, who then has the disposable income to spend in his/her 'Economy'.

      $400B/year leave our country every year 'for good'.

      All the while Journalists report lay-offs with jobs moving to Asia as though it's a 'fact of life'.

      Well, this whole process need not be rewarded. With moral courage to tackle this issue, America can succeed again by putting the onus on Corporations to meet new mandated U.S. Domestic Employment legislation that draws a 'line in the sand': no more off-shoring.

      Government: You have 10 years to phase-out off-shore labor--we will tariff non-compliant Free Trade countries (ones with trade deficits) and put that money directly into Manufacturing subsidies, also give new start-ups tax abatements and reduce taxes on new employees hired from the U.S.

      These things are on my mind and should be considered vitally important to the survival of America.

      God Bless America.
      Dietrich T. Schmitz *Your
  • This is the first time I've ever read that labor in Mexico

    was expensive.
    • RE: Nokia cuts 4,000 jobs, shifts manufacturing to Asia


      LOL, probably not so much the labor, but the supply chain and the associated costs with shipping to Mexico. Take a look at the NYT piece on Apple/FoxConn. The cost of labor is actually pretty low on the list of reasons why these tech companies do so much of their manufacturing in Asia.
  • RE: Nokia cuts 4,000 jobs, shifts manufacturing to Asia

    Nokia should never have listened to the French military and picked a fight with Qualcomm over the use of GPS in their data protocol...
    Tony Burzio
  • RE: Nokia cuts 4,000 jobs, shifts manufacturing to Asia

    So let's hear all of the outrage that a company is using Asian companies for their product manufacturing. There is plenty of it being flung at Apple. Come on people let's be equal opportunity haters.