Nokia slims down for efficiency

Citing “long-term competitiveness,” Nokia Corp. said today it would close a handset factory in Bochum, Germany, and sell automotive and research-and-development sites in the same locale. Nokia will move its handset production from Bochum to more “cost-competitive” sites in Europe, according to the company.
The move will lead to the loss of about 2,300 jobs, according to Nokia. That represents about 2% of the company’s global workforce, according to media reports.
The move may prove politically unpopular. The high cost of labor in Germany was cited by BenQ Mobile (owned by Taiwan-based BenQ Corp.) when the latter closed its handset manufacturing facilities in Munich prior to declaring bankruptcy last year. Close attention to such closures by the press and by German politicians makes such moves politically unpopular, if financially necessary, as Nokia said today.
“Due to market changes and increasing requirements for cost-effectiveness, production of mobile devices in Germany is no longer feasible for Nokia,” said Veli Sundback, executive VP of Nokia Corp. “It cannot be operated in a way that meets the requirements for global cost efficiency and for its flexible capacity growth. Therefore we have to make this tough decision.”
The company said it would begin “consultations” with employee representatives “to reach a satisfactory solution for all parties concerned.”
Nokia said it would report the cost of the manufacturing plant closure, including the consultation process, in next week’s quarterly earnings report, due Jan. 24.
The company said it is in talks with Sasken Technologies over the sale of the R&D unit and that it seeks a buyer of its Bochum-based automotive supply business.