Stockholm: Nokia Oyj will reduce as much as 14 per cent of its workforce, cutting jobs across the globe as part of a plan to save more than $1 billion annually following its merger with networking hardware rival Alcatel-Lucent SA.
The company is set to eliminate about 10,000 to 15,000 positions out of a combined staff of 104,000, according to people familiar with the plan, who asked not to be named because the information isn’t public. About 1,300 jobs will be reduced in Finland as part of cuts that will affect about 30 countries, Nokia said Wednesday. Slightly more than that will go in Germany, people said.
Union officials have been bracing for the cuts since last year, when Chief Executive Officer Rajeev Suri set a goal of lowering annual operating costs by about 900 million euros ($1.02 billion) in 2018 by reducing overlapping products, services and sales positions after the $18 billion takeover. Earlier, he revived Nokia’s struggling networks business by slashing costs and focusing on more lucrative equipment and service contracts.
Suri discussed the moves with union representatives on a telephone conference call Wednesday, people said. The company will meet with workers in more than two dozen countries in coming weeks, it said in a statement.
Challenging environment
Nokia rebounded from earlier losses on the planned cuts, first reported by Bloomberg. The stock rose 0.7 per cent at 5.12 euros at 1:50pm in Helsinki, valuing the company at €30 billion.
The reductions are also aimed at helping Nokia to cope with a challenging business environment in 2016 and intense competition from China’s Huawei Technologies Co, said one of the people.
Nokia, Huawei and Ericsson AB of Sweden are facing revenue pressure as wireless carriers begin to pull back on investments in fourth-generation wireless networks. As global spending on 4G base stations is expected to tumble about 15 per cent in 2016, Nokia and Ericsson are both looking to cut costs while seeking out other pockets of growth in software and services.
The cuts are the latest blow to Nokia’s home country of Finland, which is grappling with a delicate economic recovery and continued high unemployment. Microsoft Corp slashed 2,300 jobs in the Nordic country after buying Nokia’s phone business in 2014.
Nokia employed 24,000 in 2000 in Finland as it dominated the global market for mobile phones. That had dropped to about 7,000 last year after the Microsoft deal and previous job-reduction programs.
Nokia and Alcatel-Lucent’s networks businesses have about 4,800 workers in Germany and about 4,400 in France, and also have employees in about 120 other countries.
