Nokia Takes Axe To Workforce Again

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Nokia is cutting 3,500 jobs as well as a factory in Romania

Nokia is to axe another 3,500 jobs as part of its ongoing cost-cutting plan.

The main bulk of these jobs cuts (i.e. 2,200 positions), will be from a factory in Romania that Nokia is also closing.

The announcement, which Nokia calls ‘aligning its workforce and operations’, comes in addition to the 1bn euros (£871m) cost-cutting plan announced by the troubled Finnish phone maker in April.

More Redundancies

And it should be noted that these new jobs cuts are on top of the previous job cuts that the Finnish handset giant has already announced. In April for example Nokia’s beleaguered workforce were told that the company was axing 4,000 staff and was transferring another 3,000 employees to Accenture, as Nokia cut its ties with Symbian.

And prior to that in October 2010 Nokia announced 1,800 jobs were to be lost as part of a restructuring of its smartphone business. A number of the job cuts were also related to streamlining “particularly around the Symbian platform.”

Meanwhile it seems that the new job cuts announced on 29 September are to “support both the execution of the company’s strategy and the savings target the company announced earlier this year,” it said in a statement.

Painful Steps

Nokia said that it plans to close its manufacturing facility in Cluj, Romania by the end of 2011, as Nokia’s high-volume Asian factories provide “greater scale and proximity benefits.”

The company also pledged to review the long-term role of its manufacturing operations in Salo, Finland, as well as Komarom, Hungary, and Reynosa, Mexico.

Nokia said it is also starting consultations with employees in Sales, Marketing and Corporate Functions, in line with Nokia’s earlier announcement on 27 April.

“We are seeing solid progress against our strategy, and with these planned changes we will emerge as a more dynamic, nimble and efficient challenger,” said Stephen Elop, Nokia President and CEO. “We must take painful, yet necessary, steps to align our workforce and operations with our path forward.”

Europe Core

“Europe is core to Nokia’s future. In addition to our headquarters, we have a strong R&D presence in Europe. We have four major R&D sites in Finland and two major R&D sites in Germany, as well as Nokia Research Centres and other supporting R&D sites in Europe,” Elop added.

“Nokia also retains a strong local presence in our many sales offices throughout this region, as well as our operations in Salo and Komarom,” he said.

Nokia said it would offer employees affected by the planned reductions a comprehensive support programme. “Nokia remains committed to supporting its employees and the local communities through this difficult change,” it said.

Tough Times

But there is no disguising the fact that Nokia remains in desperate trouble.

This was self evident in July when Nokia posted a truly dire set of financial results that revealed a collapse in its handset sales in the second quarter.

For the three months to the end of June, Nokia made a net loss of 368m euros (£324m), compared to a net profit of 227m euros (£200m) in the same quarter a year ago. There was equally bad news on the revenue side, after net sales fell 7 percent to 9.27bn euros (£8.2bn), down from 10bn euros (£8.8bn) last year.

Those shocking figures were because the number of Nokia phones actually sold in the second quarter fell to just 88.5 million. This on the surface sounds impressive, however Nokia sold 111 million in the same quarter a year ago. And in the first quarter of this year, it sold 108.5 million.

Even worse, Nokia slumped in the smartphone sector, an area it once dominated completely. In the second quarter Nokia sold 16.7 million smartphones, compared to Apple, which boasted that it had sold 20.3 million iPhones in the same period.

The issue for Nokia is that it is now paying the price for its decision in February to ditch Symbian from its smartphone portfolio and opt instead for Windows Phone 7.

The problem is that Nokia took too long to make the switch. Many analysts and Nokia customers had warned that their patience with Nokia was fast running out in the face of better alternatives from the likes of Apple and Android.

Meanwhile Nokia is set to announce details of its first Windows Phone device on 26 and 27 October in London.

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Author: Tom Jowitt
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