* To close Romania plant with 2,200 staff cuts
* To cut 1,300 jobs in Location & Commerce unit
* Flags cuts at Finland, Mexico, Hungary plants in 2012
* Jesper Ovesen to replace Kallasvuo as chairman of NSN
* Nokia and Siemens inject 500 mln euros each in NSN
(Adds comments from Romania president and analyst, details on
By Tarmo Virki, European Technology Correspondent
HELSINKI, Sept 29 Nokia Oyj , the
world's largest cellphone vendor by volume, is cutting 3,500
jobs in its second major restructuring in six months as it
struggles with falling sales and profits.
Chief Executive Stephen Elop, who took over at
Nokia a year ago, unveiled the plan on Thursday which includes a
factory closure and a new executive chairman for telecom gear
joint venture Nokia Siemens Networks .
The company said it would close the Cluj plant in Romania
which opened just four years ago and manufactured more simple
cellphone models, leading to 2,200 job losses.
"Just as I received with satisfaction the news of Nokia
investing in Romania ... we must accept that such type of
investment carries the risk that we've seen today," Romanian
President Traian Basescu told reporters.
The plant's turnover was comparable to 1.3 percent of
Romania's GDP last year, but eastern European investment group
Avaron said due to large component flows the value created at
the plant was only around 0.25 percent of GDP.
Nokia said a further 1,300 jobs would be cut at its Location
& Commerce business unit, which includes the world's largest
digital mapping business Navteq.
Nokia said it was also evaluating the future of its plants
in Finland, Mexico and Hungary and this would result in job cuts
"Nokia is a rather bloated company and it undoubtedly needs
to continue to make tough decisions to streamline its business
to make it more agile and able to react to a rapidly changing
market," said analyst Tim Shepherd at research firm Canalys.
The latest redundancies come on top of cost cut plans set
out in April, which included laying off 4,000 staff. Thursday's
cuts are included in Nokia's savings target of more than 1
billion euros, which was unveiled in July.
"This is very shocking. As if they had no policy at all in
human resources, only lay-off talks rolling all the time. I
wonder how people can work there, how people can focus at all,"
Pertti Porokari, chairman of the Finnish engineers' union said.
Nokia has struggled with falling sales and profits after the
group said in February it would switch to Microsoft Corp
software for its smartphones, but the first of these
models will reach the market only later this year.
"We are seeing solid progress against our strategy, and with
these planned changes we will emerge as a more dynamic, nimble
and efficient challenger," Elop, Nokia's first foreign chief
executive, said in a statement.
Nokia shares has halved since it announced the Microsoft
deal on worries the group will lose so much market share before
the new phones come out that it might never make up lost ground.
Nokia's quarterly phone sales to end-June dropped 20 percent
at a time when the market grew 10 percent, and its 15-year reign
at the top of the smartphone market ended as both Apple Inc
and Samsung Electronics surpassed it.
"Now the volume has come down, clearly Nokia is looking for
new saving targets," said analyst Jari Honko from Swedbank in
Helsinki. "I hope this extensive review does not mean that
Nokia has lost so much scale that in-house production will no
longer be competitive. It has been the most important strengths
The shares were 1.7 percent higher at 4.25 euros by 1317
GMT, outperforming a flat sector.
Separately, Nokia supplier Digia said it was cutting 250
jobs or 22 percent of its Finnish staff.
Nokia also said it and Siemens AG (SIEGn.DE) will both
inject 500 million euros ($680 million) into their 50:50 telecom
gear joint venture Nokia Siemens Networks (NSN) to strengthen
its financial position.
Jesper Ovesen would take over as executive chairman of NSN,
replacing former Nokia CEO Olli-Pekka Kallasvuo.
Ovesen, 54, has worked as chief financial officer at many
top Danish firms. He helped turn Lego around during his spell as
CFO of the toy group in 2003-2007 and took telecoms operator TDC
public late last year.
"We view the 500 million euros capital injection as negative
for Nokia given that they are losing share in handsets currently
and profitability of Devices and Services has declined
substantially to just about break-even," said analysts at JP
Morgan Cazenove in a note.
Siemens and Nokia would like to take NSN public at some
point, but the company has struggled to report profits, battling
against rivals Huawei and Ericsson (ERICb.ST).
(Additional Reporting by Terhi Kinnunen and Jussi Rosendahl in
Helsinki, Radu Marinas and Luiza Ilie in Bucharest; Editing by
David Holmes and Elaine Hardcastle)