Nokia to Slash 350 Finnish Jobs in Savings Drive

Equipment giant Nokia is cutting 350 jobs in Finland under plans to reduce about €700 million ($800 million) in annual costs in the next two years, the company revealed in a statement today.

The company said the cuts would affect staff across all business groups and support functions, targeting all sites in Finland bar its factory in the city of Oulu.

Nokia Corp. (NYSE: NOK) is understood to employ about 6,000 people in Finland. Including its Finnish workforce, it had about 103,000 employees on its books at the end of December 2017.

"The planned transformation measures are essential to secure Nokia's long-term competitiveness," said Tommi Uitto, Nokia's country manager in Finland, in a company statement. "We will redouble our efforts to ensure that Nokia's disciplined operating model remains a source of competitive advantage for us, and that we maintain our position as the industry leader in cost management, productivity and efficiency."

The update comes a few weeks after Nokia warned that plans to reduce annual operating costs by €700 million ($800 million) would trigger job losses across the company. Besides cutting central support functions, and consolidating some activities, Nokia said it would scrap some roles as it invests in new digital tools and the further automation of its business. (See Nokia Warns of Job Cuts in €700M Shake-Up.)

Like Swedish rival Ericsson AB (Nasdaq: ERIC), Nokia has struggled to grow sales during a period in which major customers have reduced spending on network rollout and modernization. The European vendors have also been under constant pressure from aggressive Chinese rivals Huawei Technologies Co. Ltd. and ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763), although a recent backlash against those firms -- both of which have been accused of breaching US trade sanctions and posing a security risk -- could be a fillip this year for Ericsson and Nokia.

Amid tough conditions, the operating margin at Nokia's main networks business, which accounts for 89% of total sales, shrank to just 2.6% for the first nine months of 2018, from 7.2% for the year-earlier period. Its latest savings initiative indicates that an older program, designed to reduce annual operating costs by €1.2 billion ($1.4 billion) between 2015 and 2018, has not delivered sufficient benefits.

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Similar pressure drove Ericsson into loss-making territory in 2017, but the Swedish company returned to profitability last year after making hefty cuts to its workforce. Overall headcount has fallen by around 17,000 since current CEO Börje Ekholm took charge of Ericsson at the start of 2017, to about 94,500 employees at the end of September 2018. (See Ericsson Will Take $860M Hit to Prop Up Digital Services.)

In today's statement, Nokia said that its restructuring and cost reduction program was "proceeding" in other countries.

The company has indicated that it will provide support to employees affected by the latest savings plan. Uitto said it would also continue to recruit staff in Finland with expertise in "key new technologies."

— Iain Morris, International Editor, Light Reading

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