Written by Jonny Williamson
Nokia, formerly the world’s largest mobile phone manufacturer, has fallen on hard times in recent years. Partnering with Siemens in 2007 to try and combat a diminishing market share; the Finnish company has struggled to make a profit since. Even collaborating with Microsoft last year to enable the Nokia Lumia range to have a Windows operating system, didn’t stop the company’s overall mobile phone sales in 2011 to drop by almost a quarter compared to the previous year. The pairing has been seen as a reaction to relentless competition from a new generation of smartphones, primarily Apple’s iPhone 4 and 4S, as well as Samsung’s Galaxy S models.
In a statement released in September 2011, Nokia warned of having to cut costs in the New Year, with planned job losses in a number of its European plants. Announcing an almost £900 million loss for the fourth quarter of 2011, Nokia’s press release this week has indicated nearly 4,000 job losses at its manufacturing facilities around the world, including those in Hungary, Finland and Mexico.
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Though the sites are intended to stay open, the change from smartphone manufacturing to refocus on phone customisation and increased customer services would mean the actual assembly would move to Asia, more than likely South Korea and China. According to Nokia, the move is aimed at placing production a lot closer to its component suppliers, also in Asia, therefore reducing assembly time and, importantly, overall costs.
In the face of rapidly expanding competition from Asian rivals, such as ZTE and Huawei, the marked increase in cost of using a European engineer in comparison to a Chinese one has been forcefully highlighted. Coupled with tentative economic growth, every telecoms manufacturer has been required to re-evaluate their current position and spending, having to make dramatic changes accordingly.
The 4,000 job losses are to take place in phases throughout 2012, and now take the total number of Nokia employment cuts to almost 14,000 since 2010. With the overall smartphone market potentially heading towards a decline, and the public reaction to current Lumia models somewhat mooted, it seems the road ahead for Nokia is still far from smooth.
