Nokia Temporarily Lays Off 2,500, Scales Down Production

Nokia announced that it planned to continue its move to increase cost-efficiency and adapt to the market situation, and that it would close its mobile devices R&D site in Jyvaskyla, Finland, and concentrate on its sites in Tampere, Oulu, Salo and the Helsinki metropolitan area. At the same time, the company further announced that it would scale down the production at Salo and that it would operate layoffs at the site. The company also stated that it would begin consulting with employee representatives on the plans.

The Finnish mobile phone maker mentioned that it planned to gradually ramp down the Jyvaskyla site and also close it by the end of 2009. The move would affect all of the 320 employees working on mobile device product development and marketing at the site. The change will adjust the capacity of Nokia's Devices unit, reflecting this way the company's portfolio cuts, while also increasing efficiencies in its R&D operations.

“Our employees in Jyvaskyla are highly competent and have contributed to the creation of numerous hit products. The planned closure of the Jyvaskyla site is an unfortunate, yet unavoidable measure. We must adjust our resources to reflect reduced market demand in order to maintain our competitiveness also in the future,” says Peter Røpke, senior vice president, Devices R&D, Nokia.

While closing the Jyvaskyla site, the company also plans on scaling down the production in Salo. The phone maker announced that it planned to implement temporary layoffs on a rotational basis, so that the operations at the site would not be interrupted. The arrangement fits the Finnish labor practices and legislation, and is usually used to adjust production in conformity with market demand.

Nokia plans to implement the temporary layoffs in phases, with around 2500 employees, or around 20 – 30 percent of the workforce, being laid off at a time. The company stated that the planned layoffs would impact all personnel groups at the site.

“With these plans, we aim to scale down Salo production to reflect reduced market demand, while operations in the factory continue uninterrupted,” says Juha Putkiranta, senior vice president, Demand Supply Network Management, Nokia. “This is one of the measures we are taking to adjust our global demand supply network to the current situation.”

At the same time, the company will also start consulting with employee representatives for the reduction of around 60 employees in global support functions and 30 employees in the planned ramping down. Nokia already announced plans to adjust business operations and cost base to reflect market demand, and today’s announcements are part of those plans.