Struggling Finnish phone manufacturer Nokia has announced a series of cuts, including the closure of facilities in Finland, Canada and Germany.
The planned reductions to Nokia’s devices and services division will see cuts to R&D projects and the consolidation of manufacturing operations. The company also announced a new strategy focusing on sales and marketing, prioritising key markets, and streamlining IT, corporate and support functions.
In total, these changes will result in the loss of up to 10,000 positions by the end of 2013.
“These planned reductions are a difficult consequence of the intended actions we believe we must take to ensure Nokia’s long-term competitive strength,” said Nokia’s president and CEO Stephen Elop. “We do not make plans that may impact our employees lightly, and as a company we will work tirelessly to ensure that those at risk are offered the support, options and advice necessary to find new opportunities.”
More than 40,000 job cuts since 2010
Since Elop took over as chief executive in 2010, the group has seen more than 40,000 job cuts. Once the highest-ranking phone manufacturer in the world, Nokia’s struggles appear to be the drastic consequences of its inability to make a real impact in the smartphone market.
Nokia’s losses from quarter two of this year will be greater than expected and shares in the company have fallen more than 70pc since February 2011.
These measures are expected to scale back the operating costs of devices and services to €3bn by the end of 2013, compared to €5.35bn in 2010.
Focus on location-based services and imaging
Among its restructuring plans, Nokia has also set out a new strategy under a refreshed executive team.
“We are increasing our focus on the products and services that our consumers value most while continuing to invest in the innovation that has always defined Nokia,” said Elop. “We intend to pursue an even more focused effort on Lumia, continued innovation around our feature phones, while placing increased emphasis on our location-based services. However, we must re-shape our operating model and ensure that we create a structure that can support our competitive ambitions.”
Nokia’s plans include the sale of luxury mobile phone manufacturer Vertu and the acquisition of Scalado, an imaging technology specialist. Scalado currently has imaging technology on more than 1bn devices and this investment, expected to close during quarter three, is hoped to enhance the Nokia Lumia devices.
As far as the job losses go, Nokia is beginning the process of engaging with employee representatives in accordance with country-specific legal requirements.