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Nokia to shrink production, R&D as sales tank

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.



By Electronista Staff
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Comments

  1. rytc

    Senior User

    Joined: Jan 2001

    0

    Nokia

    Has always focused on the whole market and dominates it worldwide. The generally poor network infrastructure and lack of standards such as GSM has been the main reason for lack of Nokia penetration whose products are perhaps too ahead of what the US market has been. Instead the market is full of crappy featureless CDMA phones, which could not be sold anywhere else in the world.

  1. cyn1c

    Fresh-Faced Recruit

    Joined: Oct 2008

    0

    No surprise...

    Maybe if they could negotiate some deals with US carriers they could increase their production...

    I love their phones, but it can be hard to cough up $500 for an unsubsidized one.

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