Nokia cutting back further in Finland

R & D unit to be shut down in Jyväskylä, temporary layoffs in Salo

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The sharp decline in mobile telephone sales is forcing market leader Nokia to streamline its operations around the world.
      In Salo in Finland, Nokia has plans to temporarily lay off its 2,500 employees for three months during this year. The Salo factory’s output is to be reduced by about 25 per cent.
     
In Jyväskylä, Nokia is closing down its research and development unit, which has employed a staff of 320. According to Antti Vasara, head of research and development of the mobile telephone unit, no stones were left unturned in looking for options before the decision was made to close down the Jyväskylä unit.
      “Last year we saw that the market was slowing down. At first we closed down the R & D unit in Bochum, Germany, and last year in Vancouver, Canada”, Vasara says.
     
Jyväskylä has specialised in the development of smart phones, and especially their cameras in recent years. Nokia’s market share in smart phones has declined by more than 20 percentage points in less than two years. After the closure of the Jyväskylä unit, Nokia has R & D activities in four locations in Finland: in Salo, Tampere, Oulu, and the Helsinki region.
      “If we look one year ahead, it is clear that the Nokia cost-cutting will continue. I firmly believe that we will be present in the four main locations in Finland.”
      The temporary redundancies at the Salo mobile phone factory will be staggered so that production will not have to be stopped at any time. Nokia has already reduced the use of temporary workers and subcontractors.
     
The decline in sales is having a profound effect on the mobile telephone market, which has been on a growth track for more than ten years; production has constantly been planned with continued growth in mind.
      Nokia manufactures 80 per cent of its handsets itself, whereas its competitors have subcontractors producing most of their phones. The large proportion of its own production is one of the most important competitive edges that Nokia has had in scaling back its costs.
      “Salo is a very important part of our international production network. Now the entire international production network is being adapted to a changed market situation”, says Juha Putkiranta, Senior Vice President of Nokia’s Demand Supply Network Management.
      He will not specify what kinds of measures Nokia is enacting in other parts of the world, but they are believed to be similar to those in Salo.
     
Salo manufactures the most expensive and technically sophistiicated of Nokia’s models. Putkiranta says that the main competitive edge of the Salo factory is its ability to react quickly to orders by demanding European customers.
      “The devices that are manufactured in Salo are tailor-made to the requirements of the customers. The factory works on a fast schedule, taking into consideration what the customer has in stock”, Putkiranta.
      In the closing of its accounts in January, Nokia predicted that the mobile phone market would shrink this year by ten per cent, compared with 2008. This means that the number of mobile phones that are sold will be over 100 million fewer than in 2008. The company plans to cut about EUR 700 million in costs.


Previously in HS International Edition:
  Nokia result plummets in fourth quarter (22.1.2009)
  Nokia Siemens Networks to close Espoo factory and cut 560 jobs in Finland (11.2.2008)
  Economic crisis casts a long shadow on Nokia fourth-quarter result (23.1.2008)

Links:
  Nokia press release: Nokia continues to increase cost-efficiency and adapt operations to market situation February 11, 2009

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