How Nokia's Finnish homeland took the news of Microsoft cuts

How Nokia's Finnish homeland took the news of Microsoft cuts

Summary: With one in five Nokia staffers in the country now facing redundancy, politicians are calling on Microsoft to support outgoing workers.

TOPICS: Mobility, Microsoft, Nokia, EU

After the news broke on Thursday that Microsoft was laying off over 12,000 ex-Nokians, including around 1,100 people in Finland, the mood in Nokia's home country has varied between angry, sad, and disappointed, if not entirely surprised.

"It can be said that we have been betrayed," Finland's newly-appointed finance minister Antti Rinne told the Finnish business daily Kauppalehti. "At the time of the Nokia deal Microsoft announced it is committed to Finnish expertise. Now it seems this commitment isn't fully met."

The feeling of disappointment is echoed in the northern city of Oulu, where Microsoft is shutting down a research and development unit which had been mainly responsible for developing software for feature phones. As part of the closure, Microsoft will lay-off the staff of around 500 there. It's a bitter pill for the city of over 200,000 inhabitants which prides itself on being an ICT success story.

"Of course it is a disappointment that this kind of unit will be shut down. It is a major blow," said the city's mayor Matti Pennanen."But we have to look forward and believe that we can get through this as well. We have great expertise in Oulu and now we have to find out together with Microsoft and others how this talented group of people can be re-employed."

The news didn't come as a complete surprise to Pennanen, as the future of the Oulu unit was left undecided when the Microsoft deal was announced last year. However, Nokia — the rest of company that Microsoft didn't buy — is remains in the city.

"What was good for Oulu then was that the deal strengthened the position of the NSN unit [Nokia Siemens Networksnow Nokia Networks] in Oulu which employs around 2,500 people," Pennanen said.

Microsoft's announcement comes only a few months after its acquisition of Nokia's devices and services business was finalised in April. Globally, Microsoft said it will cut 18,000 jobs, 12,500 of which be among the former Nokia division — roughly half of the entire business unit.  From 4,700 people employed in Finland, up to 1,100 will lose their jobs, which means roughly one in five employees in the country are facing redundancy. The final number of layoffs will be confirmed after employee negotiations are finalised.  

While Oulu is hit the hardest, the cuts will also affect Microsoft's Finnish headquarters in Espoo. The development of key mobile technologies will be concentrated in other former Nokia units in Tampere, which will work on high-end products, and Salo, which will look after the cheaper part of Microsoft's range. It's seen as one positive piece of news as there had been fears that more of the development work on Lumia phones could be moved outside Finland.

The focus is now on how to help the employees being hit by the layoffs, and Finnish politicians have been vocal about the need for Microsoft to step up and meet its social responsibilities.

"The least we can expect from Microsoft is that it'll participate in creating a similar programme and support package for the people made redundant now as was done for people laid off from Nokia," said Finnish labour minister Lauri Ihalainen in a statement.

"Oulu is currently still recovering from Nokia's previous redundancies, but it is believed that the city will be able to recover from this blow," said Heikki Kauppi, secretary general of TEK, the association of Finnish engineers. "Oulu hopes to attract new businesses, which can benefit of Microsoft's [formerly Nokia's] experienced specialist workforce."

In light of the redundancies, pressure will now intensify on Microsoft to follow through on its commitment to build a €250m datacentre in Finland. Rinne summed up the mood of the nation. Speaking to Finland's largest newspaper Helsingin Sanomat he said: "This promise has to be met."

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Topics: Mobility, Microsoft, Nokia, EU

Eeva Haaramo

About Eeva Haaramo

Eeva Haaramo has covered the Finnish startup and tech scene for the past seven years. As a freelance journalist, she enjoys writing about entrepreneurs, innovation and industry trends in the Nordic region.

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  • Don't count on anything from MS.

    They have always been long on promises, and short on delivery.
    • Like?

      Like what?
      Buster Friendly
      • Following Google's lead I guess

        where they bought Motorola, layed off thousands, then sold it to a Chinese company in the end.

        Yup, Google's always been long on promises, and short on delivery, and Motorola's the proof.

        Guess he feels MS should do the same?
        • That would be everyone

          There's always layoffs after acquisitions due to redundancy. I guess the entire planet is long on promises and short on delivery...whatever that is supposed to mean.
          Buster Friendly
          • And

            feature phones are a category that is heading towards extinction. We are moving over to smartphones at the low end as well as the high end.

            Even if Nokia hadn't been sold the feature phone division would sooner or later have been closed.
        • Not should... As MS DID do that.

          And has essentially killed Nokia in the first place, thanks to Elop.

          I don't believe Google layed off 50% of the staff. 10-15% yes. This is just the result of a stupid purchase that lost a lot of money, and no gain.

          Of course, if they hadn't bought Nokia, they wouldn't have anyone manufacturing a Windows phone.

          As it was, Elop gutted a company that had around 50% of the market in smart phones, then ran it into the ground and then sold the remnants to MS... and kept his job.
    • Why not beat up on Nokia

      For selling themselves to Microsoft?
      • That was an Elop operation...

        They were already owned by then, just not on paper.
      • Don't forget...

        Just like HTC and other phone manufacturers, Nokia was already in trouble. And before they were bought they also reduced staff by the thousands.

        If it makes business sense and the government is supportive, why not build a data center in Finland. Go as place as any in Europe.
        Rann Xeroxx
    • Like Apple, like Google, like IBM...

      Compared to which company? Microsoft is no different in its business decisions than any of these.
      Rann Xeroxx
  • This was always Nokia's mess

    They knew it was coming and dumped the problem on Microsoft. The writing was on the wall for a long time. I get why Nokia passed it to Microsoft though... so they could save face at home.
    • MS didn't have to buy Nokia Mobile

      It might have even been more economical to buy a Vietnamese electronics manufacturer, given that it appears that is where the manufacturing is going to go.
      John L. Ries
      • No designers or IP

        A manufacturer just puts stuff together. The value of Nokia is designers and the IP.
        Buster Friendly
        • and brand...

  • Can't think of a single merger/takeover

    that did not result in job loss. It's happened to me and it's not fun, but the writing was on the wall.
    • Agreed

      Which is why only foolish or desperate employees embrace the prospect of a merger.
      John L. Ries
      • Microsoft could have alternatively viewed Nokia as an acquisition

        And created a subsidiary, with Nokia employees at the core, dedicated to mobile device design and manufacturing. This would have been preferable because it would have left Nokia relatively intact, augmented by additional Microsoft staff.

        If Microsoft decides at some future time to sell off Nokia, as Google did with Motorola Mobility, there won't be much to sell. Instead, it will be a write-off as aQuantive was.
        Rabid Howler Monkey
        • Bad economics

          That's bad economics. You make the same amount of money yet have a much larger organization to do it. It's also wouldn't make sense to be building new organizational walls at the same time making cuts to remove them in other areas.
          Buster Friendly
          • aQuantive was bad economics

            $8.2 billion U.S. worth of bad economics. What will it be for Nokia?
            Rabid Howler Monkey
          • Correction: aQuantive was a $6.2 billion U.S. write-off

            Still bad economics.
            Rabid Howler Monkey