updated 11:55 am EST, Wed February 11, 2009
Nokia Scales Back Manufact
Nokia on Wednesday warned that it would significantly scale back its cellphone manufacturing to reflect reduced demand for its phones. The company says it will implement a rotating layoff system that will temporarily drop between 20 and 30 percent of workers at its Salo, Finland plant and thus mirror "reduced market demand" without interrupting production. In a more drastic step, Nokia also plans to gradually scale back and close its research and development office in Jyväskylä by the end of the year. The move will drop about 320 jobs and will shift R&D to existing Finnish locations.
The company explains the reductions as being part of the cutbacks announced in November, which include a total of 615 job cuts.
Both the Jyväskylä and Salo efforts are particularly deep blows to the company's smartphone efforts, as both facilities have been involved in the development and production of the company's higher-end devices. Nokia has rapidly lost market share in smartphones to Apple and RIM in the past year, with slight declines in its actual phone shipments being countered by a major expansion in the market.
Most of Nokia's sales are centered on budget and mid-range phones and accordingly focus on the developing world and Europe. The cellphone producer has typically fared poorly in key markets like North America, where native companies like Apple, Motorola and RIM regularly outstrip Nokia in demand and have deeper ties to carriers. Most Nokia smartphones sold in the US are only available as carrier-independent but unsubsidized versions that cost substantially more up front.