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 ?
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.
"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.
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.
"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.
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?
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.
As we unveil EE Times’ 2015 Silicon 60 list, journalist & Silicon 60 researcher Peter Clarke hosts a conversation on startups in the electronics industry. Panelists Dan Armbrust (investment firm Silicon Catalyst), Andrew Kau (venture capital firm Walden International), and Stan Boland (successful serial entrepreneur, former CEO of Neul, Icera) join in the live debate.