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CEO says that factory in Romania also to be closed
Nokia, has announced that it intends to cut 3,500 jobs and close a factory in Romania by the end of the year as it restructures its business for the second time this year, reports ABC News. Nokia is the world's top cellphone maker, reports ABC News, and they're trying to cut their operating expenses by $1.5 billion by 2013.
The Finland based company has continued to lose market shares as the smartphone sector grows increasingly competitive as companies such as Apple Inc, and Google Inc, introduce new smart phones into the market.
By closing the factory in Cluj, Romania, Nokia will cut 2,200 jobs. According to Proactive Investors, the reason for the close of their Cluj, Romania manufacturing plant is because Nokia's high volume Asian factories can "provide greater scale and proximity benefits."
According to the Financial Times:
The Cluj factory was only opened in 2008 at a cost of $88m, but market demands mean that this brand spanking facility is in the wrong place. It makes low-end “feature phones” (as opposed to high-end smartphones) which dominate markets in Asia – which is where Nokia will now make them.
They also plan to make changes in their location and commerce sector- 1,300 jobs will be cut worldwide in navigational services, digital mapping and location platforms. Bonn, Germany and Malvern, Pennsylvania operations will also be closed.
These layoffs will add to the 7,000 worldwide job cuts that Nokia reported in April.
The plan is for Nokia to shrink its devices and services work force down from 59,150 in June by 18 percent through the next year. But, as the FT reports, change is nothing new to Nokia. They began as a rubber boot company, and have constantly made decisions that will help them financially survive.
According to Stephen Elop, Nokia's CEO, "we are seeing solid progress against our strategy and with these planned changes we will emerge as a more dynamic, nimble and efficient challenger. We must take painful yet necessary steps to alighn our workforce and operation with our path forward," Elop said in a statement.
Nokia is also reviewing the long term manufactuarion operations they currently hold in Finland, Hungary and Mexico.
Nokia has joined up with Microsoft Corp in February and hopes to regain momentum with the launch of Windows Phone 7- which is expected later this year. They hope that Windows Phone will replace the Symbian software that has been losing ground to the Google based Android platform.