Oh, Nokia. Another 3,500 People Laid Off, Manufacturing Operations Trimmed Down

Oh, Nokia. Another 3,500 People Laid Off, Manufacturing Operations Trimmed Down(techcrunch.com)

57 points by ga0bi 14 years ago | 33 comments

blumentopf 14 years ago |

One piece of information that's missing in this article:

Nokia closed down its plant in Bochum, Germany in 2008 and transferred the jobs to Romania in Eastern Europe where labour is cheaper. This damaged their reputation in Germany significantly. The Bochum theatre put up dumpsters where people could get rid of their Nokia phones and replace them with a competitor product.

It's not a small irony that just 3 years later, the employees in Romania lose their jobs as well.

In retrospect, the people in Bochum got really lucky because Nokia agreed to pay millions to be able to shut down their plant.

Edit: The Bochum theatre also produced a play at the end of 2008 with the prophetic title "Connecting People - Erinnerungen an einen Handy-Hersteller" (memories of a cellphone manufacturer), its cast consisting of former Nokia employees: http://www.derwesten.de/wr/westfalen/kultur/Erinnerungen-an-...

guard-of-terra 14 years ago | |

I wonder how much it costs to build a new plant in another country and shut down and old one while transferring operations, and I would probably bet some money that they actually lost money on that.

3 years of operations probably did not offset costs.

blumentopf 14 years ago | | |

They received subsidies from Romania and the EU for building the plant in Cluj that they'll likely have to return if they close down the fab early.

That's why they agreed to pay millions for closing down the plant in Bochum, because they had received subsidies for building that plant in the 1990s and the German state of Nordrhein-Westfalen claimed they didn't fulfil the conditions under which the subsidies were granted.

Here's a PDF with some details (page 12): http://www.eurofound.europa.eu/emcc/erm/templates/displaydoc...

Quote: "Nokia received German state subsidies for its production in Bochum and will be exempted from the real estate tax in Romania, while the infrastructure for its new plant in Cluj was subsidised by Romanian and EU funds."

Nokia would really hold the world record in shortsighted management if HP hadn't ousted them in that discipline this summer.

tripzilch 14 years ago |

I don't want people to forget how they helped out Egypt and Iran finding more people to torture:

http://www.bloomberg.com/news/2011-08-22/torture-in-bahrain-...

I can't imagine why I would ever spend a penny on anything made by Nokia or Siemens, again.

signa11 14 years ago | |

well, i would guess that the monitoring s/w etc. that was mentioned in the article, was part of the various gateway nodes that make up the entire 2g/3g/4g network. 3gpp has standardized on well defined interfaces for "lawful interception". most likely, if you are using any of the above wireless technologies, you may be subjected to them as well, and of course you would never know.

another point-of-view, would you also blame cisco aiding and suppressing dissident movement in china just because their equipment was/is the one being used to do so ? on the same lines, i think, the hand wielding the knife should be taken to task, rather than it's manufacturer...

tripzilch 14 years ago | | |

> well, i would guess that the monitoring s/w etc. that was mentioned in the article, was part of the various gateway nodes that make up the entire 2g/3g/4g network. 3gpp has standardized on well defined interfaces for "lawful interception".

Did you even read the article? This Nokia-Siemens joint venture built was not specifically targeted at wireless.

You make it sound as if Iran and Egypt just bought a certain model of wireless routers or switches that Nokia-Siemens happened to offer on the international market.

No, the Nokia-Siemens joint venture was specifically created as a bid for the custom monitoring technology Iran needed. They probably re-used some of that knowledge when Egypt needed a similar system, later.

This is not just a question of Iran ordering some pieces of hardware equipment that the way they installed it just happened to help them find more "dissidents" to torture.

Nokia-Siemens designed, developed and built the infrastructure, it entails a littlebit more. They knew from the start exactly what this system they were building in Iran was going to be used for, they designed it and sent over their expertise to lay the f#ing cables and configure the routers and switches so that it did what Iran ordered it to do.

No, I wouldn't blame some corporation for selling hardware/equipment that happens to be used for tracking down people to torture.

Yes, I do blame a corporation when they bid to a specific order that really doesn't leave any doubt as to what the system is going to be directly used for, proceed to design it (again with the "requirements" crystal clear), develop, build and deploy it on the spot.

ahi 14 years ago | | |

yes, I do blame cisco. They sold it to them with full knowledge of what it was going to be used for. It's not like they just ordered some routers off of Newegg. It's very likely Cisco personnel have been actively making sales and providing support for the Firewall operations. That is why you pay the cisco premium after all.

cocojumbo123 14 years ago | |

Pretty much every country on the planet mandates the possibility of Legal Intercaption capability for telecom equipment - the required intercepting capacity might vary though from country to country so no sale can happen unless it's provided.

suivix 14 years ago | | |

Yup.

http://en.wikipedia.org/wiki/Lawful_interception

pacala 14 years ago |

> Nokia’s high- volume Asian factories provide greater scale and proximity benefits.

Bye bye Western technology. It was nice knowing you. "Greater scale and proximity benefits" are crowning China as the new 800lb gorilla. Special thanks go to the "let's outsource to China for $10M bonus this year" top management.

nhoj 14 years ago |

"Joy to the world!

What a trainwreck."

I find news about Nokia interesting, so thank you for posting this, but what is up with the tone of the article? It feels more like a youtube-comment than news.

ericHosick 14 years ago |

Nokia has/had awsome hardware but it seems their software platform has always been lacking.

Is hardware > software or is software > hardware or is software ≈ hardware?

toyg 14 years ago | |

Their software has not "always" been lacking. T9 for example was a wonderful innovation, and looked magical at the time. They were destroying the competition back in the 90s thanks to great UI work on very limited devices.

They've lost the plot when they started to ignore the limitations of Symbian, probably because they had invested so much on it very early in the game and so it had gained almost 100% mindshare among their engineers. Then the iPhone came out and the leadership lacked courage to tell engineers that Linux was the future and they should all retrain RIGHT FUCKING NOW; instead there was a lot of internal politicking, keeping Maemo at bay and trying to put lipstick on the Symbian-UI pig.

Some of those layoffs are deserved, in a way, since resistance to change was coming from below as much as from above. Shame that it took an idiotic leader making the worst possible choices to make people see the error of their ways.

Gravityloss 14 years ago | | |

T9 was copied from Benefon, a smaller Finnish mobile company. Some of my friends had their phones. EDIT: Or at least they brought phones with that earlier to the market. Wikipedia claims it was invented by "Tegic".

T-zex 14 years ago | |

Not sure if engineering is to blame. I guess lack of vision did the biggest damage.

nextparadigms 14 years ago | | |

It was the lack of vision. They kept doubling down on Symbian for 4 years thinking they can make it competitive with iOS and Android. It was the wrong decision.

They should've kept supporting Symbian, but focus on Maemo (or a new OS) from day one (after the iPhone launched). Supporting WP7 over Android will probably be the final biggest mistake that Nokia did.

iand 14 years ago | | |

Classic innovator's dilemma: The management made all the right decisions to avoid cannibalizing their own Symbian revenue. They just didn't have the courage to take the steps necessary to bet on the future.

z92 14 years ago | | |

I call it lack of leadership. There was no leader who had a vision, and the ability to lead the team toward that new path.

apaprocki 14 years ago |

If you look at their financials, they are still a very profitable company. Revenue is ~40 billion, net income a little under 2 billion. It seems if they continue on the path of "we can make a better smartphone!", their financial statement will be murdered in the next 2-3 years. If someone fiscally conservative took over and focused them on the niche where they do well, they can still survive in a post-smartphone world. That would require trimming jobs, cutting costs...

jfruh 14 years ago | |

But is that a niche that's even going to exist in five years? I'm sure someone will be making feature phones in 2017 (I mean, someone's still making landline phones today) but that'll be a low-margin business for companies worth much, much less than Nokia is worth today. I can't imagine Nokia's shareholders would like this idea... in their view, it's probably better to swing for the fences than resign yourself to failure.

toyg 14 years ago | |

There's only so much that you can do to persuade people NOT to upgrade, especially in developing markets like India or South Africa where Nokia is traditionally strong. The rise of the middle-class in those areas will inevitably reduce demand for Nokia "smartphones" (by which they mean Symbian phones, hardly smart but whatever), squeezing their already-low margins on that sector. They would have to be constantly chasing new "poor" markets, which is hard; and they'd further tarnish the brand in traditional markets.

I'm sure they can survive even by just following the current strategy to the bitter end (i.e. becoming Microsoft's bitc-- er, preferred partner). What they cannot do is to grow or even just to stay relevant.

shareme 14 years ago | |

with the price of smartphones approaching $50 there is no niche left to them..

faizanaziz 14 years ago |

Laying off jobs is kind off expected since there whole software division has become redundant due to Micrsoft's OS... Agreed they still have to make some software but that's still way lesser than what it did previously.

Whats troubling is that it is reducing manufacturing... Does it actually expect to sell less phones and if it does than how does it plan to make money... They are mass market devices, numbers are really important

juhanaj 14 years ago | |

These layoffs don't affect their software division. This is mostly about moving production to Asia.

They will also stop manufacturing phones in Finland. The plant in Finland won't be shutdown (yet) but they won't be manufacturing phones anymore.

lambtron 14 years ago |

nokia has been continuously losing market share in both their high end and low end products. if microsoft is in a better position, it could be accretive for microsoft to buy nokia to support microsoft's flailing mobile division.

stephen elop's only hope is for nokia's vertu sales to remain high.

antimarketing 14 years ago | |

I swear, elop is the most unpopular man in Finland. If not for U.S military might Finland would declare a war because of what he has done to their national crown jewel.

izend 14 years ago | | |

That sentiment is a little short-sighted... Its equivalent to blaming Obama for the poor economy a year into his term. Nokia was on the path of failure long before Elop arrived.

iloveponies 14 years ago | | |

Except for the fact that Elop is a Canadian citizen born in Ontario.