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As Much as 14% of Workforce to be Cut by Nokia following Alcatel Deal


04/06/2016


As Much as 14% of Workforce to be Cut by Nokia following Alcatel Deal
As part of a plan to save more than $1 billion annually following its merger with networking hardware rival Alcatel-Lucent SA, Nokia will reduce as much as 14 percent of its workforce and would be cutting jobs across the globe.
 
There were reports in the media quoting people familiar with the plan that Nokia had plans to embark on a massive retrenchment program that would eliminate about 10,000 to 15,000 positions out of a combined staff of 104,000 worldwide.
 
On Wednesday Nokia said that as part of cuts that will affect about 30 countries, about 1,300 jobs will be reduced in Finland alone. This is a little more than the total job cuts in Germany, sources said.
 
After a goal of lowering annual operating costs by about 900 million euros ($1.02 billion) in 2018 was announced by the company Chief Executive Officer Rajeev Suri last year, the union officials have been bracing for the cuts.
 
The company announced that the reduction in operating costs would be achieved through reduction of overlapping products, services and sales positions as they would happen after the $18 billion takeover deal with Alcatel.
 
Through the slashing of costs and the focusing on more lucrative equipment and service contracts, Suri had earlier managed to revive Nokia’s struggling networks business.
 
Sources with knowledge said that Suri had discussed the moves with union representatives on a telephone conference call on Wednesday. The company said in a statement that the company will meet with workers in more than two dozen countries in coming weeks.
 
Reports of the planned cuts helped Nokia rebound from earlier losses. Valuing the company at 30 billion euros, the stock rose 1.7 percent at 5.17 euros at 3:04 p.m. in Helsinki.
 
Sources said that intense competition from China’s Huawei Technologies Co. and enabling Nokia to cope with a challenging business environment in 2016 are the other reasons for the reductions.  
 
As wireless carriers begin to pull back on investments in fourth-generation wireless networks, Nokia, Huawei and Ericsson AB of Sweden are facing revenue pressures. Nokia and Ericsson are both looking to cut costs while seeking out other pockets of growth in software and services as global spending on 4G base stations is expected to tumble about 15 percent in 2016.
 
Finland, which is grappling with a delicate economic recovery and continued high unemployment, would be hard hit by the Nokia cuts. It is also the home country of the company. After buying Nokia’s phone business in 2014, Microsoft Corp. slashed 2,300 jobs in the Nordic country.
 
As Nokia dominated the global market for mobile phones, the company employed 24,000 in 2000 in Finland. Last year after the Microsoft deal and previous job-reduction programs, that had dropped to about 7,000.
 
In addition to having employees in about 120 countries, Nokia and Alcatel-Lucent’s networks businesses have about 4,800 workers in Germany and about 4,400 in France.
 
With Nokia trying to make good on a pledge to keep about 4,200 jobs in the country, France will avoid the biggest reductions. As Nokia sought approval for the takeover, it promised the French government to keep jobs and maintain the country’s key role on innovation.
 
(Source:www.bloomberg.com)