Nokia to combat downturn with production cuts, temporary layoffs

As MWC draws closer mobile fans around the world wait in anticipation as mobile companies prepare some of their biggest announcements of the year. Leading up to MWC, news coming from manufacturers is historically positive – a taste of things to come in Barcelona. In this economic climate however, mobile companies find themselves unable to wait until this sacred time has passed and we are still seeing bad news come down from every corner of the industry. Today’s news comes from our friends in Finland as Nokia discusses the coming year with two key phrases: scale down and reduced market demand. Juha Putkiranta of Nokia:

With these plans, we aim to scale down Salo production to reflect reduced market demand, while operations in the factory continue uninterrupted.

Nokia plans to cut handset production and layoff the entire staff at its Salo plant (2,500 workers) on a temporary rotational basis. In other words, the plant will remain operational but only 20 to 30 percent of its staff will be on hand at any given time. Following Nokia’s closure of its German manufacturing plant, Salo is the last major handset plant in Western Europe and had been used to produce some of Nokia’s higher-end handsets, the bulk of which will now likely be moved to foreign plants. All of these moves of course, are part of an effort to shave $905 million from its operating expenses this year as many project Nokia’s shipments and sales to continue to decline. Less market demand, declining numbers and more competition are never a good trio for any market leader but we’re hoping Nokia has some tricks up its sleeve for 2H 2009 and beyond.

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