Technology: Jun 22, 2012

Nokia workers in Room thought chief executive Stephen Elop signaled that their plant, in Europe last major mobile phone factory, survived when he visited in February, but last week he announced his closing anyway.

This last chapter in Nokia long goodbye to manufacturing in Finland will claim about 850 jobs, about 1,000 announced earlier in the year, and rob the city of 90 per cent of its tax revenue.

Once the world's dominant mobile phone provider, Nokia has been exceeded in the smartphone war to Apple and Samsung and other phones running Google software. It is also losing share in the market for more basic phones.

His strategy to reverse his fortune, leaving his own Symbian smartphone software in favor of a largely untested alternative of Microsoft, Elop's former employer, he limped from recession to misfortune.

Sales of Nokia's new Windows Phone models, the Lumia series, has been slow to pick up, while the bottom has fallen out of the market for old phones running Symbian dead end.

As recently as this week, Microsoft revealed that a new version of its software does not run on the existing Lumia range, and the Wall Street analyst said the software giant looking to make their own phones in direct competition with his new partner.

For two years, workers at Nokia have become familiar with bad news, but not yet inured to it.

"During all my time, 15 years and 10 months with a Nokia, someone was always saying Nokia will leave Finland. But it still came as a surprise," said Katja Taskinen, who took a buyout offer in a previous round of cuts this year.

Rivals have long been focused on Asia, and analysts said Nokia should do the same, but the workers believed they had made an exception.

"We promised continuity," said Anne Malm, chief shop steward of the Salo plant, which was set up in 1970 and is often held as a model for other Nokia factories around the world.

"Room is where it all started. Room was the benchmark. If there were problems in other factories, Room was the place where teams were sent to extinguish these fires."

Promises, promises

Some hope for government intervention.

"The government promised us that they will use all instruments available to help us," said Antti Rantakokko, Room Mayor.

Jukka Roos, a local member of the Social Democratic Party and a former lawmaker, said the government should not allow the country's flagship technology company to make such drastic cuts.

"The government and unions have to react and push Nokia," he said. "What the hell are they doing?"

At its peak, Nokia accounted for about 4 percent of Finnish GDP and supporting eco-system of suppliers and technology start-ups in the economy previously centered on forestry, and metalworks. Now represents less than 1 percent, according to analysts.

His problems had a knock-on effect on Finnish electronics companies, including Elcoteq, which presented the bankruptcy last October after Nokia turned to cheaper Asian suppliers.

In Sales, local unemployment is around 11 percent, already above the national average of 8 percent, and the city expect it to spike to about 20 per cent once the Nokia jobs to go.

The government has said it will accelerate an existing program in which they plan to around 300 million euros in capital spending and tax breaks for research and development during his term, which ends in 2015.

But beyond that, there was little Prime Minister Jyrki Katainen could promise when he visited the Chamber on Wednesday. He had canceled a trip to the United Nations conference in Brazil to visit Salo and Oulu, a city affected by Nokia lay-offs.

"I quite understand the cry," he said. "But we must also bear in mind that Nokia has brought us enormous wealth in the past."

He rejected suggestions that the state should buy Nokia shares, which fell to 50 per cent since the beginning of the year.

While the state holds stakes in companies considered crucial to its national interests, including forest and chemical companies, and is mostly a shareholder in the airline Finnair and energy company Fortum, owning shares does not help to overcome global competition.

While Finland is one of a dwindling band of triple-A rated countries in the euro zone, its exports have been declining, with old industries such as forestry is also struggling to compete with low-cost rivals.

Its current account slipped into the red last year, and the central bank expected the deficit to continue through at least 2014, when analysts said Nokia might be short on cash if it continues to burn through reserves in the current rate.

While analysts began to think the unthinkable, Finns find difficult to contemplate the loss of a company that has become integral to national pride.

Harri Niinisto, accidentally first Finnish President Sauli Niinisto, also Room native, remains hopeful, although he took a redundancy package from Nokia this year and set up his own consulting firm.

"Today, we can not see what will end up happening," said Niinisto. "Still, I want to keep believing in Nokia."

Friday, June 22, 2012

At the Salo end of Nokia's deep crisis

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