Nokia cutting back on telephone models and on employees in Finland

Market share dwindles in Western Europe

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The mobile telephone manufacturer Nokia plans to cut up to 230 jobs in research and development in Oulu, while at the same time cutting back on its selection of models.
      “The market changed, which means that it is possible to meet the needs of the customers with fewer products. Naturally, the products that we bring to the market need to be better than before”, says Antti Vasara, Senior Vice President and General Manager of Nokia’s Mobile Device business unit in the Enterprise Solution business group.
     
In recent years Nokia has introduced new handset models at an annual rate of about 50. In 2008 Nokia spent EUR 6 billion on research and development, including the R&D costs linked with Nokia Siemens Networks.
      In Oulu Nokia is cutting back especially on product-based design of mechanics, electronics, and circuit boards.
      Vasara noted that nowadays, the distinctive features of products focus on software and services. “It is no longer a question of how many different kinds of mechanical variations are made.”
     
In addition to Oulu, Nokia is cutting back about 100 jobs in its R & D unit in the Danish capital Copenhagen.
      The Oulu and Copenhagen units focus on the development of mid-range and higher-priced telephones, with Europe as one of its important market areas.
      The market research company Strategy Analytics says that Nokia’s market share in Western Europe declined in the first half of this year by five percentage points compared with early 2008. Nokia’s market share in Western Europe was 38 per cent in January-June.
      Vasara says that cost-cutting is not the reason for the cutbacks, although the move will also save money. He will not say how much the company will save.
      “We will have other savings than just the personnel costs. In the future we will not have to produce prototypes of so many telephones, or to produce production materials”, Vasara says.
     
Nokia Siemens Networks, which is half-owned by Nokia, has a plant in Oulu, which employs nearly 900 people. The plant mainly manufactures base stations for mobile telephones.
      The employees at the plant do not expect that the mother company’s cutbacks in Oulu will affect them.
      “I am not at all afraid for the factory, because it is working at full capacity”, says Markku Mattila, shop steward of office workers at the Nokia-Siemens Networks plant in Oulu.
     
Vasara expects that some of the employees whose jobs are to be cut will find new work in Nokia.
      “Oulu is our largest product R & D unit, where there are statistically the best chances to find a job within the company.”
      Nokia is also offering economic support for those who resign voluntarily. In previous rounds of personnel cuts, the packages have been worth 5 - 15 months’ pay, depending on how long the employee has worked for Nokia.
     
Last December Nokia announced plans to cut EUR 700 million in operating costs by the end of next year. In the present year Nokia has had several rounds of co-determination talks with employees in Finland.
      The recession has severely affected Nokia. The company’s profitability has weakened considerably, and mobile phone sales have declined more than the overall reduction in the market. In the important smartphones, Nokia has lost some of its competitive edge.
      At the end of the year Nokia is closing down its mobile phone research and development centre in Jyväskylä, which has employed 320 people.


Previously in HS International Edition:
  Sacked Bob Iannucci attempted to move Nokia R&D out of Finland (31.10.2009)
  Nokia Siemens Networks cutting thousands of jobs worldwide (4.11.2009
  Nokia still choked by recession; stock falls 11% in Helsinki and New York (16.10.2009)

Links:
  Nokia press release: Nokia continues to streamline its R&D operations November 20, 2009

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