Nokia layoff: Europe's pain is Asia's gain

Struggling Finnish phone maker Nokia plans to cut 4,000 more jobs at its plants in Finland, Hungary and Mexico as it seeks to cut costs by moving smartphone assembly work to Asia.

The cuts of 8 percent of the phone business workforce bring total planned job cuts at the group since Stephen Elop took over as Chief Executive in September 2010 to more than 30,000.

Nokia said in a statement the job cuts would take place in phases through this year. It has been reviewing the operations since unveiling the closure of its Romania plant last September.

“This was inevitable. It was a surprise it took so long for the decision to be made,” said Steve Brazier, chief executive of technology research firm Canalys. “Stephen Elop may be a polarizing figure, but he is proving effective at driving the change and he should be credited for that.”

Nokia’s recent business results have underscored the need for drastic cuts. Late last month it reported a 73 percent fall in quarterly earnings as sales of new Windows Phones failed to dent the dominance of Apple Inc’s iPhone or compensate for diving sales of its own old smartphones.

Its fourth-quarter smartphone sales shrank 31 percent from a year ago and the business made a steep loss for the quarter.

NO MORE PHONES BUILT IN EUROPE

Nokia said it would cut 2,300 jobs in Hungary, where it is a major exporter, some 1,000 in Finland and 700 in Mexico. It will continue to tailor models for specific operators at all sites.

Its Finnish factory in Salo, which was the cornerstone for its success in 1990s, has been the last remaining major phone assembly plant in the Western Europe for some time. Most rivals have moved their production to Asia.

The Hungarian government said it regretted Nokia’s decision.

Analyst Gergely Suppan at Takarekbank in Budapest noted the highest value-added activities would stay in Hungary.

The move comes only months after Nokia closed its plant in neighboring Romania, laying off some 2,200 people there.

Finnish unions demanded hefty cash payments to laid-off staff and Antti Rinne, chief of union Pro, said the announcement was damaging for Finland’s employment outlook.

“Raising the employment level and prolonging working careers is impossible if there are no jobs in Finland,” Rinne said in a statement.

Finland has pushed for years to prolong working careers as the Nordic country struggles with a shrinking work force and sluggish economic growth.

Nokia announced in April last year it would cut 7,000 jobs and unveiled a further 3,500 job losses in September. Its network arm Nokia Siemens announced cuts of 17,000 in November.

The group had 130,000 staff at the end of 2011, including Nokia Siemens.

Reuters