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SylvieBarak
+1 :) Every little helps!!
yalanand
This is a very good move by Nokia considering the fact that the most of the ...
Nokia shifts assembly to Asia, plans to lay off 4,000
Sylvie Barak
2/8/2012 3:58 AM EST
SAN FRANCISCO-- Finnish phone maker Nokia has announced it will be cutting down on its manufacturing operations in Hungary, Mexico and Finland in order to move device assembly work to its Asian factories instead. Nokia said the move would cause approximately 4,000 workers to be laid off.
"Shifting device assembly to Asia is targeted at improving our time to market,” said Nokia in a statement. The company added that the transition would allow Nokia to work more closely with suppliers and enable it to “introduce innovations into the market more quickly and ultimately be more competitive.”
"We recognize the planned changes are difficult for our employees and we are committed to supporting our personnel and their local communities during the transition," said Niklas Savander, Nokia executive vice president of markets.
Nokia’s European factories are based in Komarom, Hungary and Salo, Finland, while its Mexican facility is in Reynosa. Savander said the factories would now shift to focus on smartphone product customization rather than assembly.
"With the planned changes, our factories at Komarom, Reynosa and Salo will continue to play an important role serving our smartphone customers,” said Savander.
Personnel reductions are planned to be phased through the end of 2012, with Nokia noting it will offer “a comprehensive locally-tailored support program, including financial support and assistance with local re-employment.”
"Shifting device assembly to Asia is targeted at improving our time to market,” said Nokia in a statement. The company added that the transition would allow Nokia to work more closely with suppliers and enable it to “introduce innovations into the market more quickly and ultimately be more competitive.”
"We recognize the planned changes are difficult for our employees and we are committed to supporting our personnel and their local communities during the transition," said Niklas Savander, Nokia executive vice president of markets.
Nokia’s European factories are based in Komarom, Hungary and Salo, Finland, while its Mexican facility is in Reynosa. Savander said the factories would now shift to focus on smartphone product customization rather than assembly.
"With the planned changes, our factories at Komarom, Reynosa and Salo will continue to play an important role serving our smartphone customers,” said Savander.
Personnel reductions are planned to be phased through the end of 2012, with Nokia noting it will offer “a comprehensive locally-tailored support program, including financial support and assistance with local re-employment.”
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NitroWare
2/8/2012 4:17 AM EST
Product customisation? huh?
Finland traditionally made the flagships, does this announcement mean the head factory will make carrier variant handsets or region specific handsets only?
Last years launch of the Lumia they had a camera at the factory showing an early production run so its a bit strange a few months later to change face.
The satellite factories in Hungary and Mexico - are they owned by subcontractors or Nokia themselves? Those regions are known manufacturing centers for handsets let alone other devices.
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prabhakar_deosthali
2/8/2012 7:21 AM EST
I think this move was planned by Nokia about 6 months ago and I remember this magazine publishing a blog on the same.
Nokia is said to be the pride of Finland, but when money matters and the pride has to be brushed aside to embrace the hard facts about how to counter the competition and Nokia, once mobile user's darling baby is no exception.
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chanj
2/8/2012 12:01 PM EST
I believe the labor cost in Mexico is comparable to that in most Asian countries. The move makes sense more or less because of closer to suppliers.
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eewiz
2/8/2012 12:07 PM EST
Nokia mostly sells phones in Asia. This atleast can save some shipping cost!
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SylvieBarak
2/10/2012 1:11 AM EST
+1 :) Every little helps!!
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green_ee
2/8/2012 3:13 PM EST
Second-degree outsourcing. Firstly the assembly work gets outsourced to Mexico, etc, then off to Asia. Someday, Asia will be deemed "too expensive", and then we'll see further outsourcing to other regions, probably Africa and parts of the Middle East.
Each time a company relocates it's operations, a devastating void is left in the region that was shut-down. It would be much more socially responsible to keep stable operations in-place, then if additional capacity is needed a different geography would be considered.
I agree with @chanj: The labor costs in Mexico are probably very similar to Asia.
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PJames
2/8/2012 4:34 PM EST
"It would be much more socially responsible to keep stable operations in-place"
Based on the big assumption that said company wouldn't lose market share due to noncompetitive products and have to lay off the people eventually anyway.
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DMcCunney
2/8/2012 5:23 PM EST
"It would be much more socially responsible to keep stable operations in-place, then if additional capacity is needed a different geography would be considered."
Consumer electronics all tend to wind up in the same place: devices become commodities, with commodity pricing and paper thin margins, the only real difference between equivalent products from different manufacturers being price, and competition all *on* price. There is enormous pressure on costs because the lowest cost producer wins.
It's no surprise that Nokia is trying to lower costs, since they largely *are* in the commodity end of the market.
"Social responsibility" is two-edged: moves intended to protect jobs in areas with higher costs means higher prices for consumers buying the products to cover those costs. You don't get one without the other.
And as mentioned, higher prices may make your products uncompetitive, and force you to shift production and layoff workers to avoid going out of business.
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selinz
2/8/2012 3:49 PM EST
I guess with relatively small items (e.g. phones), geographical proximity doesn't matter. I can order knock off batteries at 1/3 price from Hong Kong with free shipping.... Will the US eventually be forced to get nastier with tariffs?
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DMcCunney
2/8/2012 5:25 PM EST
"Will the US eventually be forced to get nastier with tariffs?"
What purpose would tariffs be intended to serve?
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DMcCunney
2/8/2012 5:09 PM EST
I'd call this cost savings, overall, with labor costs only one factor. Nokia currently *assembles* phones in Finland, Hungary, and Mexico, but were do the parts that are assembled come from? They're all made in the Far East, and if I'm concerned about optimizing my supply chain, I'll want the factory that does the assembly close to the one that make the parts I'm putting together.
And since my principle growth market is in the Far East, I'm building my devices closer to the customers I hope will buy them.
It's easy enough to see why Nokia is doing this.
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Chee Choy
2/9/2012 12:18 AM EST
Would it be like Motorola moved to China, Tianjin ? Eventually worst in quality, it is better follow Apple kind of supply chain management, if follow Motorola, it will be end up like Motorola, lah !
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chanj
2/9/2012 2:24 AM EST
The reality is most electronics products are made in China, final assembly or some major parts/ modules. History shows quality can be improved by proper manager and time. Today there are more smart phones that are made in China than there was regular phones that were made in elsewhere.
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yalanand
2/9/2012 4:00 AM EST
This is a very good move by Nokia considering the fact that the most of the Nokia users are situated in Asia region. But sad to know that it plans to lay off 4,000, do it mean that these jobs are shifting to Asia ?
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