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Nokia Increases Cost-Cutting Measures

Feb 24, 2009 (09:02 AM EST)

Read the Original Article at http://www.informationweek.com/news/showArticle.jhtml?articleID=214502799


The faltering economy is hitting the mobile phone market, and the world's largest cell phone manufacturer is making deeper cuts to its workforce.

Nokia said Tuesday it's seeking 1,000 employees to sign up for a voluntary resignation package, and the company is encouraging short-term unpaid leaves and sabbaticals. The move comes a month after the company closed down a German production plant, leading to 2,300 job losses.

"The response from employees and employee representatives in proposing ideas to help reduce personnel-related costs has been encouraging," said Hallstein Moerk, Nokia's head of human resources, in a statement. "We have considered these and now announcing voluntary initiatives that could contribute to our efforts to adjust our cost base to the current market environment."

The major issue in the market is that consumers either don't have money to spend on new cell phones or they're holding off upgrading their handset because of the economic woes. While the smartphone segment will still continue to grow, the overall market is expected to decline by as much as 10%.

Nokia isn't the only company feeling the pain, as multiple mobile companies have seen revenue plummet and are looking to workforce reductions to cut costs. Motorola is still looking to find a hit handset to replicate the success it had with the Razr, and its handset division has lost more than $2.7 billion since the start of 2007. The company announced it would cut about 7,000 jobs in order to save about $1.2 billion in costs.

LG Electronics, Samsung, and Sony Ericsson also have gone through massive reorganizations to combat the slowing economy.