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Nokia axes 4,000, shifts smartphone manufacturing East

Factories hit in cost-cutting drive

Internet Security Threat Report 2014

Having reviewed operations at its manufacturing facilities in Hungary, Mexico and Finland, Nokia has decided to halt its assembly lines there. Smartphones will still be customised at the three sites, but the gear itself will be built in Asia.

The change will affect 4,000 jobs between the factories – loading custom firmware onto handsets and sticking SIMs in boxes doesn’t require as many people as assembling the devices themselves. The manufacturing work will be switched to existing Nokia facilities in Asia.

This move isn't a complete surprise: Nokia announced last September that it would be considering the future of the three facilities, and not in a good way. This is part of the ongoing cost reduction already announced by the company, but it's not just reduced labour costs which are pushing companies to the Far East.

Most of the components in a phone are made nearby, and that makes manufacturing more flexible. Nokia claims the move will enable faster innovation and better time to market, though low pay and an often-more-relaxed attitude to employment law are obviously attractive.

The downsized sites will remain open, fiddling with handsets rather than making them. That means creating operator-variants, which may be loaded with specific software such as Three's "3 Hub", or just with an operator SIM in the box or pre-slotted into the handset. The bigger the order, the greater the variation allowed, although these days Nokia will take money too.

That's small compensation for the sites, as is Nokia is making the usual noises about "supporting our personnel and their local communities during the transition". ®

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