Nokia to Axe 4,000 Workers, Looks to Asia for Manufacturing
February 8, 2012 10:45 AM
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Job cuts are expected to be complete by the end of 2012
The mobile phone world hasn't been kind to Nokia over the last year or so. While the company is still the biggest seller of mobile phones in the world, the vast majority the phones that it sells or lower profitability basic phones and feature phones. Nokia has so far been unable to compete in the high-end and
profitable smartphone market
Nokia, however, today announced some significant changes to its manufacturing operations.
Nokia intends to institute significant changes at factories in Komarom, Hungary, Reynosa, Mexico and Salo, Finland. The three factories will focus on smartphone product customization and the products at the locations will be sold in Europe and the Americas. Device assembly will be transferred to Nokia factories that are in Asia since that is where the vast majority of component suppliers are located.
"With the planned changes, our factories at Komarom, Reynosa and Salo will continue to play an important role serving our smartphone customers. They give us a unique ability to both provide customization and be more responsive to customer needs," said Niklas Savander, Nokia executive vice president, Markets.
The changes mean a significant decrease in manufacturing and the amount of work to be carried out at these three locations. Because of reduced output, Nokia will be getting rid of 4,000 employees between all three facilities. The layoffs are intended to be phased throughout the year and will be completed by the end of 2012.
Nokia also notes that it will offer a support program tailored to each location that will include monetary assistance and help finding another job locally.
"Shifting device assembly to Asia is targeted at improving our time to market. By working more closely with our suppliers, we believe that we will be able to introduce innovations into the market more quickly and ultimately be more competitive," said Savander. "We recognize the planned changes are difficult for our employees and we are committed to supporting our personnel and their local communities during the transition."
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RE: LOL what a load of BS
2/8/2012 3:19:17 PM
Joking aside, labor costs are a surprisingly secondary factor. Labor outside of China adds relatively little to the final cost.
The main factor is the fact that their component manufacturers are very close to assembly plants. This is an infrastructure that is completely unique to China. Changing or adjusting something like a screw is super fast; the factory that machines custom screws is right down the street. They can also ramp up production on a new product much more quickly given that they have access to so many people. This isn't just for assembly line workers, this also applies to higher level positions like engineers. Foxconn turns away prospective employees constantly despite the fact that they employ millions and millions of people.
Apple is easy to single out because they are the biggest tech company in the world, but don't forget that Intel, Asus, Microsoft, Nintendo, Sony, Amazon, Barnes & Noble, Dell, Hewlett-Packard, EVGA, MSI, Cisco, Motorola, IBM, Phillips, Sharp, Samsung, and on and on also contract Foxconn for production. It is probably due to their being in the spotlight, but Apple is also the only one of these companies that conducts independent audits of their suppliers and publishes the reports. It isn't great, but it's a start.
Either way, singling them out for their use of Chinese labor is ridiculous unless you completely stay away from tech products. Microsoft just had this to deal with re: XBox 360 production:
Labor conditions are a problem that I hope the Chinese fix, but sadly it doesn't' seem like it'll happen without even more pressure from their clients.
RE: LOL what a load of BS
2/9/2012 12:59:32 AM
I don't hate apple because they us cheap "slave" labor like the other tech companies. I hate them because they act like their products are made in some hippy commune in Oregon, and they have a large enough profit margin to pay more and still make money. Simply they choose a profit margin 10 to 15% above industry average over protecting the workers.
Yes I know apple doesn't have direct control over the workers at foxconn, but I'm sure they could do something.
"So, I think the same thing of the music industry. They can't say that they're losing money, you know what I'm saying. They just probably don't have the same surplus that they had." -- Wu-Tang Clan founder RZA
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