Acquisition by Alcatel-Lucent impacts jobs at Nokia
06 April 2016
Nokia's acquisition of Alcatel-Lucent for a whopping €15.6 billion in April 2015 (See: Nokia to acquire Alcatel-Lucent in $16.6-bn stock deal), will now lead to its employees facing the axe.
The Finland-based company said on Wednesday that in order to hit a cost-cutting target of €900 million by 2018, employee expenses must be brought down.
Post acquisition reports predicted a rough patch for Nokia. Those predictions are now turning out to be true.
Nokia did not specify how many jobs will be affected internationally but, according to Reuters, 1,400 members of staff in Germany and 1,300 in Finland will be axed. The company employs about 6,850 people in Finland, 4,800 in Germany, 4,200 in France, out of a global workforce of approximately 104,000.
In France, however, following a deal with the French government during the acquisition, 400 of the jobs lost will be offset by the creation of 500 posts in research and development. But Nokia employees in Finland were left in the lurch.
"This (1,300) is a terrible figure, we have rather difficult employment situation in the sector to begin with," Pertti Porokari, chairman of the Union of Professional Engineers in Finland, said. "Seems that Finnish workers have lost this match (against the French)."
It is initially expected that the cuts will affect primarily Germany and Finland. But with Nokia having meetings with work councils and representatives in almost 30 countries, cuts are likely in other offices of Nokia as well.
Nokia also plans to cut costs in real estate, services, procurement, supply chain and manufacturing. This will enable the ailing smartphone maker to focus on more futuristic areas such as 5G networking, the cloud and the Internet of Things (IoT).
"These actions are designed to ensure that Nokia remains a strong industry leader," said Nokia president and CEO Rajeev Suri.
"When we announced the acquisition of Alcatel-Lucent we made a commitment to deliver €900 million in synergies - and that commitment has not changed. We also know that our actions will have real human consequences and, given this, we will proceed in a way that is consistent with our company values and provide transition and other support to the impacted employees."