Salo, Finland - Nokia workers in Salo thought chief
executive Stephen Elop signalled that their plant, Europe’s last major mobile
phone factory, would survive when he visited in February, but last week he
announced its closure anyway.
This final chapter in Nokia's long goodbye to manufacturing
in Finland will claim about 850 jobs, on top of 1 000 announced earlier in the
year, and rob the town of 90% of its tax revenue.
Once the world's dominant cellphone provider, Nokia has been
bested in a smartphone war by Apple and Samsung and other phones running Google
software. It is also losing share in the market for more basic phones.
Its strategy to reverse its fortunes, abandoning its own
Symbian smartphone software in favour of a largely untested alternative from
Elop's former employer Microsoft, has limped from setback to setback.
Sales of Nokia's new Windows Phone models, the Lumia series,
have been slow to pick up, while the bottom has fallen out of the market for
old phones running dead-end Symbian.
As recently as this week, Microsoft revealed that a new
version of its software won't run on the existing Lumia range, and a Wall
Street analyst said the software giant was looking at making its own phones in
direct competition with its new partner.
Over two years, workers at Nokia have become familiar with
bad news, but are still not inured to it.
"During my whole time, 15 years and 10 months with
Nokia, someone was always saying Nokia will abandon Finland. But it was still a
surprise," said Katja Taskinen, who took a buyout offer in an earlier
round of cuts this year.
Rivals have long been focused in Asia, and analysts had said
Nokia should do the same, but the workers believed they had been made an
"We were promised continuity," said Anne Malm,
head shop steward of the Salo plant, which was set up in the 1970s and often
held up as a model for other Nokia factories around the world.
"Salo is where it all began. Salo has been the
benchmark. If there were troubles at other factories, Salo has been the place
from where teams were sent to extinguish those fires."
Some are hoping for government intervention.
"The government promised us that they'll use all the
instruments available to help us," said Antti Rantakokko, Salo's mayor.
Jukka Roos, a local member of the Social Democratic Party
and former lawmaker, said the government should not allow the country's
flagship technology company to make such drastic cuts.
"The government and unions should react and put
pressure on Nokia," he said. "What the hell are they doing?"
At its peak, Nokia accounted for around 4% of Finnish gross
domestic product and supported an ecosystem of suppliers and technology
startups in an economy previously focused on forestry and metalworks. Now it
accounts for less than 1%, according to analysts.
Its problems have had a knock-on effect on Finnish
electronics companies, including Elcoteq, which filed for bankruptcy last
October after Nokia turned to cheaper Asian suppliers.
In Salo, local unemployment is around 11%, already above the
national average of 8%, and the city expects it to spike to around 20% once the
Nokia jobs go.
The government has said it will accelerate an existing programme
in which it plans around €300m in capital spending and tax breaks for research
and development during its term, which ends in 2015.
But beyond that, there was little Prime Minister Jyrki
Katainen could promise when he visited Salo recently. He had cancelled a trip
to a United Nations conference in Brazil to visit Salo and Oulu, another town
affected by Nokia layoffs.
"I completely understand the outcry," he said.
"But we also have to keep in mind that Nokia brought us enormous wealth in
He rejected suggestions that the state should buy Nokia
shares, which have fallen over 50% since the start of the year.
While the state holds stakes in companies considered crucial
to its national interests, including forest and chemical companies, and is a
majority shareholder in airline Finnair and energy company Fortum, owning
shares doesn't help beat global competition.
While Finland is one of a dwindling band of triple-A rated
countries in the eurozone, its exports have been declining, with old industries
like forestry also struggling to compete with lower-cost rivals.
Its current account slipped into the red last year, and the
central bank expects the deficit to continue through at least 2014, by which
time analysts say Nokia could be short on cash if it continues to burn through
reserves at the current rate.
While analysts have begun to think the unthinkable, Finns
find it hard to contemplate the loss of a company that has become integral to
Harri Niinisto, coincidentally a cousin of Finnish President
Sauli Niinisto, also a Salo native, remains hopeful, though he took a
redundancy package from Nokia this year and set up his own consulting firm.
"At the moment, we can't see what will end up
happening," said Niinisto. "Still, I want to keep believing in