Nokia ends phone assembly in Europe, cuts jobs

Feb 08, 2012 By MATTI HUUHTANEN , Associated Press

(AP) -- Nokia Corp. plans to stop assembling cell phones in Europe by year-end as it shifts production to Asia and will cut another 4,000 jobs, its latest attempts to cushion itself from stiff competition in the smartphone sector.

The Finnish company said Wednesday it will make the new job cuts at three plants in Finland, Mexico and Hungary this year as it reorganizes global manufacturing operations to compete better with the likes of Apple Inc.'s iPhone and handsets using Google Inc.'s Android operating software.

The cuts come on top of nearly 10,000 layoffs announced last year.

Nokia said it had increasingly shifted cell phone assembly from Europe to Asia, where the majority of component suppliers are based, to help it reach markets faster. The company said it would not close the three factories, however.

"There will be no assembling of mobile phones at our plants in Europe after this," Nokia spokesman James Etheridge said. "We plan to focus product assembly at our plants in Asia where the majority of our suppliers are based, while our facilities in Salo, Komarom and Reynosa will focus on the software-heavy aspects of the production process."

Neil Mawston from Strategy Analytics said Nokia's move "made sense" and was in line with what other cell phone makers had been doing for years, such as Samsung Electronics Co., Motorola Inc., and Sony Ericsson, which had large assembly plants in Europe.

"It's an unstoppable trend really. Essentially, labor costs, land costs and other associated costs are so much lower in Asia," Mawston said. "Also, Asia is so much closer to the biggest pool of users now so from a supply and demand side Asia looks a lot more attractive than Europe."

Nokia said the shift to Asia would enable it to introduce innovations into the market more quickly and "ultimately be more competitive."

Once the bellwether of the industry, Nokia has lost its dominant position in the global mobile phone market, with Android phones and iPhones overtaking it in the growing smartphone segment. It's also been squeezed in the low-end by Asian manufacturers making cheaper phones, such as ZTE.

Nokia has been the leading handset maker since 1998 but after reaching its global goal of 40 percent market share in 2008, the company has gradually lost overall market share. It plummeted to below 30 percent last year.

In an attempt to remedy the slide, Nokia launched its new Windows Phone 7 in October, eight months after CEO Stephen Elop announced a partnership with Microsoft Corp. That heralded a major strategy shift for the Espoo-based company as it adopted the Windows operating system in its new phones.

But analysts have said it could take a few quarters before Nokia's success can be measured.

Last month, Nokia reported that smartphone sales plummeted 23 percent globally in the fourth quarter as net revenue fell 20 percent to euro10 billion ($13.11 billion) compared to a year earlier.

Nokia share price closed up slightly at euro3.88 ($5.09) on the Helsinki Stock Exchange.

Nokia, based in Espoo near the Finnish capital, employs 130,000 people - down from more than 132,000 a year ago.

Explore further: Out-of-patience investors sell off Amazon

not rated yet
add to favorites email to friend print save as pdf

Related Stories

Nokia's market share falls below 30 percent

Apr 21, 2011

Nokia Corp. reported better than expected first-quarter profits Thursday but its global market share dropped to below 30 percent for the first time in over a decade as the world's top cellphone maker continued to lose ground ...

Nokia loss tempered by Windows phone launch

Jan 26, 2012

Mobile phone maker Nokia Corp. on Thursday posted a fourth-quarter net loss of euro1.07 billion ($1.38 billion) as sales slumped 21 percent even as the company's first Windows smartphones hit markets in Europe and Asia.

Nokia says to cut 4,000 jobs, outsource 3,000

Apr 27, 2011

The world's leading mobile phone maker Nokia said on Wednesday it will cut 4,000 jobs worldwide by the end of 2012 and transfer a further 3,000 employees to consulting firm Accenture.

Nokia launches its cheapest phones at $30-$35

Aug 26, 2011

(AP) -- Nokia on Thursday unveiled its two cheapest cellphones to date aimed at attracting users in the low end market as it fights increasing competition from Asian manufacturers.

Nokia to delist from Frankfurt exchange

Nov 24, 2011

Nokia Corp. has applied to delist from the Frankfurt Stock Exchange because of falling trading volumes of its shares, the world's largest mobile phone maker said Thursday.

Recommended for you

Out-of-patience investors sell off Amazon

Oct 24, 2014

Amazon has long acted like an ideal customer on its own website: a freewheeling big spender with no worries about balancing a checkbook. Investors confident in founder and CEO Jeff Bezos' invest-and-expand ...

States ascend into the cloud

Oct 24, 2014

Seven years ago, the state of Delaware started moving computer servers out of closets and from under workers' desks to create a consolidated data center and a virtual computing climate.

Microsoft drops Nokia name from smartphones

Oct 24, 2014

Microsoft said Friday it was dropping the Nokia name from its Lumia smartphones, rebranding following the acquisition earlier this year of the Finnish group's handset division.

Amazon's loss makes holidays a question mark

Oct 24, 2014

Amazon's trademark smile icon is becoming more of a grimace. The world's largest online retailer reported a wider third-quarter loss than analysts expected and gave a disappointing holiday forecast.

User comments : 0