Cutbacks lead to loss of nearly one fifth of Nokia Siemens Networks jobs in Germany
Talks on elimination of 700 jobs begin in Finland next week
The planned job cuts by the mobile phone network manufacturer Nokia Siemens Networks (NSN) are to have their greatest impact on Germany.
The company, which began operations in April as a result of the merger of the network operations of Nokia and Siemens, announced on Friday that between 2,800 and 2,900 employees would be made redundant over the next three years - amounting to more than one fifth of personnel.
NSN has about 13,000 employees in Germany. The severity of the German cutbacks was unexpected, because the employees in Germany were reported to have been protected by an agreement beween the employers and the trade union that represents the employees.
"The fact that we reported these kinds of figures shows that the agreement does not limit reorganisation in Germany", says NSN CEO Simo Beresford-Wylie.
In Finland, the company said that it would immediately launch discussions with employees on the possible elimination of 700 jobs. The aim is to slash between 1,500 and 1,700 jobs by 2010, which is a minimum of 15 per cent of the work force.
In addition to those cutbacks, Nokia Siemens is looking into the possibility of shifting people to work for its subcontractors. This means that the ultimate reduction in personnel employed directly by the company could be greater than the figures that were announced.
Already last summer, the two companies said that the aim of the murger was to cut spending by EUR 1.5 billion. At that time it was estimated that a total of 6,000 and 9,000 people would need to be eliminated. On Friday the company declared that the figure would be closer to 9,000.
"Cost pressures in business activities have grown constantly, with 90 per cent of growth in the field coming from developing markets, where people spend no more than four or five euros a month for telephone calls. Decisive measures are necessary if we are to maintain competitiveness", Beresford-Wylie explains.
Another factor affecting the competitive situation is the arrival of Chinese network manufacturers onto the market. For instance, the semi-state woned Huawei has taken a strong foothold in the market for networks in the Third World.
"The positive side of these actions is perhaps that I can now say that we will employ 18,000 people in Germany and Finland in the future. Without these actions we would be in danger of fadnig away", Beresford-Wylie says.
NSN did not say which units would be most affected by the cutbacks. Employees are to be given more precise information on Monday. Previously the company has said that 40 per cent of planned cost cuts would come from product development, and one third out of various tasks of administration and sales.
NSN has not yet decided on the fate of its factories in Oulu and Espoo.
"We have not yet looked at the production side. These cutbacks apply mainly to duplicated work in other areas", Beresford-Wylie says.
At least some of the personnel cutbacks are expected to be implemented by selling activities to subcontractors. Beresford-Wylie would not reveal the extent of such sales.
"Working with partners is a good alternative. In places where we have problems with costs, they could make more efficient use of personnel by serving several clients", he observes.
Nokia Siemens Networks has already begun outsourcing in Britain, where a product development unit of about 100 people has been sold to a company by the name of Aricent.
Previously in HS International Edition:
Nokia Siemens eliminating over 1,500 jobs in Finland (3.5.2007)
Nokia Siemens Networks get going amid reduced market expectations (3.4.2007)
Nokia Siemens Networks debuts at Barcelona 3GSM Congress (13.2.2007)
Announcing record result, Nokia reiterates faith in Siemens deal (26.1.2007)
Nokia and Siemens postpone merger over corruption investigation (15.12.2006)