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Nokia closes European plant; far reaching changes underway

Stephen Elop continues to take tough decisions in a bid to revive Nokia's fortunes

It’s almost traditional now for Finnish handset firm Nokia to have a double whammy of bad news in the same week. On Thursday the company announced the cutting of 3,500 jobs at its device manufacturing plant in Cluj, Romania.

The move is somewhat controversial as the Romanian plant, opened in 2008, was the cheaper replacement for Nokia’s expensive German manufacturing operation in Bochum. Nokia was dragged over the coals in the Bochum debacle, which saw 2,300 workers axed from its plant.

Now the less costly Eastern European employees are facing the same prospect, with the planned closure of the Cluj factory estimated to impact approximately 2,200 employees. The factory will be closed by year end, as Nokia chief Stephen Elop admitted that Nokia’s high-volume Asian factories provide greater scale and proximity benefits.

Additionally, planned changes in the Location & Commerce business, formed from the merger of Navteq and Nokia’s social location services team, are estimated to impact a further 1,300 employees as Nokia seeks to bring efficiencies and speed to the organisation. The company plans to concentrate its Location & Commerce development efforts in Berlin, Boston and Chicago, and plans to close its operations in Bonn, Germany and Malvern, US.

From what we’ve seen of Elop so far, he’s not the kind of guy to be shy about delivering bad news, so with a hint that there may be more dark clouds on the horizon the Nokia CEO said a review of the long term role of manufacturing operations in Salo, Finland, Komarom, Hungary, and Reynosa, Mexico is also underway.

“These factories are expected to continue to play a key role in serving European and North American smartphone customers, but the plan is to gradually shift their focus to customer and market-specific software and sales package customisation,” Nokia said. “It is estimated this would have an impact on the number of personnel in 2012, with no impact in 2011.” More details will be revealed by the first quarter of 2012.

“We are seeing solid progress against our strategy, and with these planned changes we will emerge as a more dynamic, nimble and efficient challenger,” said Elop. “We must take painful, yet necessary, steps to align our workforce and operations with our path forward.”

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