Nokia's closure of one small factory is one big lesson about its past - and its future

Nokia's closure of one small factory is one big lesson about its past - and its future

Summary: Nokia has made its last phone in its Finnish homeland, and the closure of the Salo facility is an object lesson in how the last few years have treated the company - and where its future focus lies

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TOPICS: Nokia
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A little over a year after Nokia CEO Stephen Elop sent his famous 'burning platform' email, the Finnish company has produced its final phone on home turf.

After announcing earlier this year announced that its Salo production facility, its last in Finland, was to close, Nokia finally shuttered the site last week.

Its closure has provoked a greater outpouring of both opinion and soul-searching than the shutting down of a phone-making factory typically might. But Salo is different to any other factory - indeed, any other Nokia facility. As the last man standing in Finland, Salo was seen as Nokia's avatar, a representation of the changes that continue to dog the country's best known export.

According to Nokia, workers at the now-shuttered Salo facility made Nokia's N8, N9 and E7 phones, as well as first Nokia device running Windows Phone 7 – making the facility an object lesson in Nokia's shifting smartphone loyalties, showing the transition in which OS the company was pinning its hopes on at the time, from Symbian to Meego to Windows Phone.

But, of course, it's Salo's location that's more significant: the production facility's closure is symbolic of Nokia's ongoing withdrawal from Finland - a process that began well before Elop's arrival in 2010, but appears to have accelerated under his leadership.

nokia-salo-crop
Nokia's Salo production facility, pictured in 2010
Image credit: Nokia

In February 2009, in the wake of Android and iOS' rise, Nokia began "ramping down" several facilities to "adapt operations to market conditions".

Back then, when its quarterly declines in device unit shipments were far lower than today, perhaps the urgency to transform was not as great. Instead of closing Salo outright, the focus of the 30 to 40 percent 'rotational redundancy' scheme for the 2,500 assembly and R&D staff at the facility was to keep the 14,000 square metre facility in production "without interruption". 

But, by the time the decision was taken to close Salo's gates for good, just 1,000 staff remained, 780 of which were still on the assembly line

From a peak of 24,600 employees in Finland in 2007, Nokia's Finnish overall workforce has fallen by over 2,000 a year and stood at 18,700 by the end of 2011. If the current rate of attrition continues, Nokia won't have a Finnish workforce within the next decade. 

Removing Salo is consistent with Elop's strategy to speed up the pace of change at Nokia and reduce operational costs, but if Windows 8 is the catalyst Elop thinks it will be, perhaps Salo should - as it has for the past few years - keep chugging, if not as a reminder that Nokia is both European and Finnish, then as a centre of excellence and an example to  for new staff in India, Vietnam, China and Brazil?

After all, over the same period, Nokia has doubled its headcount in China and the Asia Pacific from 11,000 and 14,000 respectively to 22,000 and 29,000 - although some of these are likely related to its Nokia Siemens Networks joint venture, which accounts for more than half of Nokia's overall associated headcount. 

Moving away from Finland and Europe while piling up in Asia would help explain why in 2012, despite the massive staff reductions underway, Nokia's headcount is in fact 14,000 higher than in the better days of early 2008. Nokia may still be cutting headcount, but it is not cutting it equally across the world.

Salo's continued existence in 2012 was a product of Nokia's older, more polite Finnish way of doing things – a way that had led it into the post-iPhone confusion of the late 2000s, and a way that it has been moving away from ever since.

After all, with Elop, Nokia chose a Canadian citizen over well-regarded Nokia stalwart and Finn Anssi Vanjoki when it need a new CEO to lead it out of the doldrums, while its software efforts most closely aligned to Finland, MeeGo and Meltemi, have been kicked into the long grass.

Salo was another lingering reminder of Nokia's Scandinanvian origins, and another one the company decided it had to say goodbye to, symbolism and all, in its long struggle to regain momentum.

Topic: Nokia

Liam Tung

About Liam Tung

Liam Tung is an Australian business technology journalist living a few too many Swedish miles north of Stockholm for his liking. He gained a bachelors degree in economics and arts (cultural studies) at Sydney's Macquarie University, but hacked (without Norse or malicious code for that matter) his way into a career as an enterprise tech, security and telecommunications journalist with ZDNet Australia. These days Liam is a full time freelance technology journalist who writes for several publications.

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17 comments
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  • Long overdue. If you cant compete on price and access you have to move

    it's pretty obvious. You can either close down in the non competitive parts of the world or you can close down everywhere, take your pick. This is why bringing in Elop was such a good idea. Promotion from within would have made making these important decisions much slower if not impossible. I'm sure these people are smart and adaptable and will find or create other opportunities for themselves. Good luck to them!
    Johnny Vegas
    • gees... man...

      I just hope to seee you in the same situation... losing your job, I mean... and getting all this crap about competition and "good luck"... when you have to pay mortgage and health insurance yourself because your wife is pregnant,,,
      pupkin_z
      • If you don't want to lose your job, learn a job

        that is too valuable to be eliminated. It really isn't that hard to comprehend. The problem is, it requires effort and too many people just want to sit on their backside and draw a paycheck.
        baggins_z
        • You mean ppl who managed to produce

          smartphone (N9) with better reviews than iPHONE did nothing but draw their paychecks?

          Nice joke.
          przemoli
          • But the problem was...

            The N9 got tons of good reviews but was "...such a breath of fresh air it will leave you gasping — that is, until you remember that you're dealing with a dead man walking.". Those are Engadget words not mine.

            Ironically I was a Moblin enthusiast until Intel decided to kill it merge it Maemo and QT. It was a marriage made in hell and the people at Nokia MeeGo (the worst dorkish name yet) were sent to the coding purgatory.

            Salo was just a casualty of top managements decisions.

            Even worse. The new Moto RAZAR i with Intel Mobile Atom will run on Android. MeeGo has been ruled out and Microsoft's has said nothing of WP8 on Intel, their long time friend.
            cosuna
      • He did lose his job...

        As "Grill Tech" at Wendy's. now he works as a "Fry Tech" at Burger King. His greatest asset? being single, and living with Mommy.
        Jumpin Jack Flash
        • His greatest asset being single, and living with Mommy?

          So does he share the bed with you, or do you both have you own rooms?
          William Farrel
          • Wile Farrell is concerned about sharing beds

            He does want to get out of that dog house, ya know...
            CaviarBlack
    • Nokia not competetive in Finland?

      Are you kidding me?

      Nokia not competitive with N9 (produced in mentioned factory)?

      Are you kidding me?

      Bringing Elop to help Nokia mobile unit?

      Are you kidding me?
      (Nokia was BIGGER than 2nd and 3rd contestant in mobile space combined!!! When Elop took over.)
      przemoli
  • Nokia rating was downgraded 19 times by 3 rating companies in last 15 month

    Always critical was small sales.

    So Nokia close only factory that could produce N9 (which was best selling non-Symbian smartphone from Nokia), and that could produce N95 (which was never allowed to be sold, even though there where ready devices haded to some 3rd party devs).

    Also Nokia did closed only one factory capable of producing Android smartphones. (Yes Andi 4.1 can run on N9!!!).

    Why, yes, Nokia will save some moneys. But Nokia do not need savings now. Nokia need more sales. And more and more and more sales.

    Sadly Nokia CEO will not even consider best moves for Nokia (selling more N9, or pushing Android N9).

    Btw. Last Nokia CEO was fired for 55% share lose over 3y. Current managed 88% lose in 18 months, and he is still CEO. WTF?
    przemoli
    • Only problem there, przemoli

      Is that it's been shown that if Nokia sold an Android phone, they would be out of business by now.

      Cheap Android phones is what's keeping the other guys in business, and Nokia doesn't do cheap.

      Why build a 200 Android phone when most Android users walk right past them for the 29.99 / Free Android phones?
      William Farrel
      • Because of large Nokia userbase.

        Nokia did have LARGEST userbase. And most loyal. So they would go to phone shop and ask for NOKIA phone. It have not worked for WinP cause WinP was not good enough (no Bluetooth file transfer?????), and did not offered QWERTY option (which was important for large population of Nokians).

        So where are those ppl now?

        Oh BTW Nokia managed to sell N9 without much push with OS sentenced to death before release by its own CEO, for higher price than Lumias, and it still outperformed WinP phones.

        And nobody can proof anything about Nokia Android phones since there where NON. There is only community port of Android 4.1.
        przemoli
      • Re: it's been shown that if Nokia sold an Android phone, they would be out

        Umm, shown by who, exactly?
        ldo17
  • I thought countries with universal healthcare could support manufacturing

    By removing a large cost from employing manufacturing employees.

    I guess not.

    Just another Obama Lie?
    goingbust
  • Wow...

    The Microsoft apologists are out in full force. I wonder if they're afraid someone might suggest (not for the first time) that Elop was sent to Nokia to lower the stock value so that Microsoft could acquire it cheap?
    DarkPhoenixFF4
    • Nyaa

      That makes a better conspiracy theory than it does a business strategy. What is it you get if you buy Nokia? World class manufacturing? They're closing it down and going to Asian subcontractors. Microsoft doesn't need Nokia to do subcontracting. Smart people? There have been big "LAYOFF COMING" signs at Nokia for over a year. Who do you think is left? The brand name? Why does Microsoft need a brand name?

      Why buy a big old company that is going rapidly out of business? Who would want it?
      Robert Hahn
  • They chose a Canadian for...

    First they copied Motorola and Samsung's formula (Snapdragon, big screen) with the first Lumias (700, 800, 900). By market standards, all three were flops digging Windows Phone 7 grave deeper than it already had with Dell's exit, Samsung's Focus upgrade Fiasco and LG Optimus 7 quick dismissal.

    Now they are coping Apple's philosophy (design in California [by Microsoft], built in China) with their new Lumias (820, 920). At the same time, they had forgotten Android's fragmentation, so they chose to use Windows Phone 8 before WP7 ever lifted high above the ground to see the big picture. In the process they have created an even worse fragmentation not just of Windows Phone but of the Lumia franchise. All previous Lumias will end up being paper weights, ironically not even waiting until the two year contracts expire for those babies.

    So finally, the reason they chose a Canadian is to imitate RIM, once the market leader and today just a foot note. They had no other way.

    In the mean time, I'm gonna get myself a Lumia 900 and wait till they are a rarity and sell them on eBay for one grand or two, just like the Ford Edsel and the Nash Metropolitan. Hopefully WP7 developers will be as stubborn as OS/2 guys and continue to develop apps even after Microsoft has 0.1% marketshare.

    As for WP8 developers, I guess most are waiting to see Windows 8 as a success, so there's also gonna be fragmentation as most Windows Runtime apps will be for Win 8, rather than WP8. WP8 owners will get stuck for a while with WP7 apps, until the two year contracts expire and Nokia Releases the Cookies and Cream Lumia 950 with WP8.5.
    cosuna