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.
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