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Nokia to end European phone assembly operation

Around 4,000 jobs are being lost in Finland, Hungary and Mexico as the mobile phone company shifts manufacturing operations into Asia.

Image: Andrew Matthews/EMPICS Sport/PA Images

NOKIA CORP has announced it will end the assembly of mobile phones in Europe by year-end as it shifts production to Asia in its latest attempt to cushion its finances from stiff competition in the smartphone sector.

The Finnish company said it plans to complete 4,000 job cuts at three plants in Finland, Mexico and Hungary this year as it reorganises its global manufacturing operations to compete better with the likes of Apple Inc’s iPhone and handsets using Google Inc’s Android operating software.

The job cuts come on top of nearly 10,000 layoffs announced last year.

Nokia said it had increasingly shifted mobile phone assembly from Europe to Asia where the majority of component suppliers are based to help it reach markets faster.

But the company said it would not close the three factories in Finland, Hungary and Mexico.

“There will no assembling of mobile phones at our plants in Europe after this,” Nokia spokesman James Etheridge said. “We plan to focus product assembly at our plants in Asia where the majority of our suppliers are based, while our facilities in Salo, Komarom and Reynosa will focus on the software-heavy aspects of the production process.”

Nokia said the shift to Asia would enable it to introduce innovations into the market more quickly and “ultimately be more competitive.”

Under pressure

Nokia, once the bellwether of the industry, has lost its dominant position in the global mobile phone market, with Android phones and iPhones overtaking it in the growing smartphone segment. It’s also been squeezed in the low-end by Asian manufacturers making cheaper phones, such as ZTE.

Nokia has been the leading handset maker since 1998 but after reaching its global goal of 40 per cent market share in 2008, the company has gradually lost overall market share. It plummeted to below 30 per cent last year.

In an attempt to remedy the slide, Nokia launched its new Windows Phone 7 in October, eight months after CEO Stephen Elop announced a partnership with Microsoft Corp. That heralded a major strategy shift for the Espoo-based company as it adopted the Windows operating system in its new phones.

But analysts have said it could take a few quarters before Nokia’s success can be measured.

Last month, Nokia reported that smartphone sales plummeted 23 per cent globally in the fourth quarter as net revenue fell 20 per cent to €10 billion compared to a year earlier.

Nokia stock was up more than 1 per cent €3.93 in Helsinki.

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