Nokia to cut 4,000 smartphone factory jobs

Nokia will cut about 4,000 jobs at its smartphone manufacturing bases in Europe and the Americas after announcing plans to shift production to Asia.

The three factories affected are in Finland, Hungary and Mexico, although part of the operations will remain open to customise smartphones for the regional markets following assembly in Asia.

The Finnish phonemaker said there were no plans for additional workers in Asia, with the assembly work to be transferred to its factories in South Korea and Beijing in China, where there is spare capacity.

Smartphone shipments at Nokia fell by about a third in the fourth quarter to 19.6m compared with a year previously. The initial sales of a Windows phone range introduced in certain markets in the past few months failed to counter a steep drop in its Symbian-based devices that are being phased out by 2016.

Nokia has so far shipped about 1m handsets using the Windows platform since its launch in October.

Nokia said the Asia move would increase competitiveness in the global device market, with the majority of its component suppliers based in the region.

The Asian consumer is also important to Nokia given the company’s goal to provide internet-enabled handsets to the “next billion” emerging market customers.

The plan does not include any culling at its Finnish research and design laboratories, which employ 3,500 staff. Even so, the move will be particularly unwelcome in Finland, where Nokia has its headquarters, given its significance as an employer in the country.

It will also remind investors that the group remains close to, if not still on, the “burning platform” that Stephen Elop, chief executive, compared its predicament to this time last year shortly before announcing the Windows phone partnership with Microsoft.

Mr Elop said at its results last month that 2012 would be another year of transition. Including Wednesday’s announcement, Nokia has made 14,000 job cuts since the end of 2010 when the group had 66,000 employees.

Mr Elop took over in September 2010 with a mandate to carry out cost-cutting and drive efficiencies in a business seen as bureaucratic and slow to respond in a fast-moving market.

It was caught by surprise by the sudden popularity of high-price smartphones, in particular, on the back of Apple’s innovative iPhone.

Niklas Savander, Nokia executive vice-president for markets, said: “Shifting device assembly to Asia is targeted at improving our time to market. By working more closely with our suppliers, we believe 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.”

The measures follow a review of smartphone manufacturing operations announced last September. The job cuts are planned to be phased through 2012.

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