Nokia Cuts Jobs And Moves Manufacturing To Asia

Nokia has revealed it will axe 4,000 jobs and move its smartphone manufacturing operations to Asia as boss Stephen Elop continues to make the tough decisions as he seeks to turn around the fortunes of the troubled Finnish handset giant.

The brunt of the jobs losses are to be borne in Nokia factories in Hungary, Finland and Mexico.

Painful Restructuring

The news follows a review of Nokia’s smartphone manufacturing operations last September. At that time Nokia revealed it was cutting 3,500 jobs, mostly from closing a factory in Romania, while promising that its high-volume Asian factories provided “greater scale and proximity benefits.”

However Nokia has been shedding jobs for a while now, including 1,800 positions in October 2010 and in April it revealed it was also axing 4,000 staff and transferring another 3,000 employees to Accenture, as Nokia cut its ties with Symbian to focus on Windows Phone.

Indeed, Nokia released what could be the final hurrah of Symbian (Nokia Belle) earlier this week, and will reportedly only ship one more Symbian-based handset in 2012.

Job Cuts

Now Nokia is saying that the decision to move manufacturing away from Mexico, Hungary and Finland is part of the company’s aim to increase its “competitiveness in the diverse global mobile device market.”

With its Asian factories, Nokia says that it will be closer to where the majority of component suppliers are based, which will allow it to deliver new handsets more quickly to market.

“With the planned changes, our factories at Komarom (Hungary), Reynosa (Mexico) and Salo (Finland) will continue to play an important role serving our smartphone customers,” said Niklas Savander, Nokia executive vice president, Markets. “They give us a unique ability to both provide customisation and be more responsive to customer needs.”

Despite the fine sounding rhetoric, it is clear that the amount of manufacturing at these factories will be drastically scaled down, hence the 4,000 job cuts.

“Shifting device assembly to Asia is targeted at improving our time to market,” said Savander. “By working more closely with our suppliers, we believe that we will be able to introduce innovations into the market more quickly and ultimately be more competitive.”

“We recognise the planned changes are difficult for our employees and we are committed to supporting our personnel and their local communities during the transition,” he added.

Human Cost

Nokia’s manufacturing move to the Far East will bring it in line with its mobile rivals as it will enable Nokia to take advantage of lower labour costs in Asia. However some are increasingly concerned at the human cost of manufacturing electronics in places like China, after reports of alleged worker abuse as well as safety concerns.

Last month, Nokia reported a fourth quarter loss of €1.07 billion (£897m), compared with profits of €745 million (£625m) during the same period last year. Sales also tumbled from €12.6 billion (£10.56bn) to €10 billion (£8.38bn), with sales of smartphones dropping by 23 percent.

Despite this however there seems to be a glimmer of optimism surrounding Nokia at the moment. It has sold more than one million Lumia handsets running Windows Phone, and according to one analyst at least (IDC), Nokia is clinging onto the lead position for general mobile phones.